Premium Rum on the Rise: A Market Shift Fueled by Quality and Innovation

As both companies and consumers focus more on quality, premium and super-premium rums are gaining traction. For years, industry insiders and platforms like Drizly, Master of Malt, and DoorDash have predicted a resurgence in rum’s popularity. Today, rum is being taken more seriously as an aged spirit to sip, not just a base for sweet cocktails.

A Market Driven by Premiumization

Industry data reveals that higher-priced rums are driving growth, much like gin and tequila, in recent years. Despite economic pressures and consumer belt-tightening, a Drizly survey found that one-third of respondents would rather spend money on rum than whiskey.

Ryan McFarland, Chief Commercial and Strategy Officer of Drinksology Kirker Greer believes rum’s resurgence is already happening, particularly in Europe. “The consumer preference for premiumization and the rising appeal of cocktails—both in bars and at home—are fundamental drivers,” McFarland said in an interview for The Spirits Business Magazine.

Impressive Growth Numbers

Global rum sales grew by 9% between 2021 and 2022, according to IWSR data. However, growth is expected to slow to an annual rate of 2% over the next five years. While the premium rum market expanded by 9% in 2022, the super-premium-and-above segment saw even faster growth, increasing by 10%. IWSR projects that super-premium rums will grow at a 6% annual rate through 2027.

Global Markets for Premium Rum

The super-premium rum market is gaining momentum, particularly in markets like Australia, France, Germany, Italy, and the U.S. Matthieu de Lassus, CEO of Spiribam, notes that premium rum, which was once a small niche, now makes up 4% to 5% of the global rum market.

Christian Barré, CEO of Pernod Ricard’s Havana Club, is similarly optimistic. “We anticipate continued growth as impressive sales, new entrants, and product innovations accelerate the rum category,” Barré says.

UK Leading the Charge

Rum is also rising in popularity in the UK. Data from CGA by Nielsen IQ shows that rum sales in Great Britain’s on-trade reached £1.1 billion in 2023, surpassing whiskey. Dark rum is experiencing a 5% growth, while spiced rum and golden rum are seeing declines. Despite these trends, super-premium rum sales in the UK are projected to expand by 8% annually through 2027.

Big Investments Fuel Expansion

The rum market is also attracting significant investments. Diageo recently purchased Filipino rum maker Don Papa, while Brown-Forman added Diplomático to its portfolio. Meanwhile, Ciara-backed Ten To One Rum received funding from Pronghorn, an accelerator for Black-founded companies.

Patrick Fisher, Senior Market Analyst at IWSR, highlights the role of these acquisitions: “The purchase of sweeter rums like Diplomático and Don Papa boosts growth prospects in the premium segment.”

U.S. Market Shows Promise

The U.S., the largest market for rum, could see a boost as interest in ultra-premium tequila wanes. Spiros Malandrakis, head of research for alcoholic drinks at Euromonitor International, believes that “cross-trading” could benefit rum, as consumers shift from more expensive spirits like whiskey and tequila to premium rum.

Can Rum Replicate Tequila’s Success?

Marc Farrell, founder of Ten To One Rum, sees a parallel between rum and tequila. He believes rum could follow in tequila’s footsteps by becoming a must-have in high-end cocktails. “The opportunity for rum lies in repositioning it in consumers’ minds, much like tequila did,” Farrell explains.

Patrizia Damiani, global marketing director of Diplomático, agrees that tequila is a great benchmark for rum. Under Brown-Forman’s ownership, Diplomático aims to strengthen its position in both the U.S. and European markets, particularly France, Germany, and Italy.

Marketing to a New Generation

Brands are increasingly targeting younger audiences with innovative marketing strategies. Havana Club uses artistic collaborations with musicians like Skepta and Burna Boy to attract a younger demographic. “These partnerships offer a gateway into the world of fine rum for new drinkers,” Barré notes.

Similarly, Spiribam’s brands Chairman’s Reserve, Clément, and Bounty are focusing on education and cultural events like the Notting Hill Carnival in the UK to boost brand visibility.

Inflation’s Impact on Rum

Despite its growth, rum faces challenges due to inflation, particularly in Western Europe. For example, Captain Morgan saw a 7% decline in sales in Diageo’s financial results for 2023. However, Havana Club’s sales grew by 6%, largely driven by strong performance in Europe.

Barré remains optimistic about Havana Club’s future, noting that untapped markets in countries like China, India, and Turkey could provide significant growth opportunities.

Rum’s Future Looks Bright

The rum category is seeing steady growth, driven by consumer interest in premium and super-premium products. As economic conditions stabilize and marketing efforts ramp up, the future looks promising for rum, particularly in markets like the U.S. and Europe. While challenges remain, many in the industry are cautiously optimistic that rum will continue its upward trajectory.

Industry Experts Weigh In (by The Spirits Business Magazine)

• Ali Pickering, Chief Marketing Officer, Drinksology Kirker Greer: “Our Kadoo Carnival rum line caters to younger consumers with its bold flavors and vibrant cocktail experience.”
• Christian Barré, CEO, Havana Club: “Cuba Mode, our global marketing platform, celebrates the rich Cuban culture and history behind our premium rum.”
• Alexandra Alfaro, Global Marketing Director, Guatemalan Spirits: “We see continued growth for premium rum, especially for our Botran Rum, driven by younger consumers.”

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Source of information

The Spirits Business Magazine‘s article Is rum finally turning premium? By Nicola Carruthers

The article image is courtesy of Ersler on Canva