Rum could be the next spirit to benefit from the cocktail culture, according to Bloomberg. The business news service spoke with Edward Mundy, an analyst for Jefferies International in London.
Mundy noted the Campari Group is in talks to acquire three rum brands sourced from Martinique — Trois Rivières and Maison La Mauny premium rums, plus a local brand called Duquesne. The three posted 2018 sales of 24.1 million euros, or about $27 million, Campari said in a July 20 release.
Rum has been a relatively slow-growing segment during the past 10 years, Mundy told Bloomberg, but he indicated a "rumolution" may occur if big players such as Pernod Ricard increased investment in the space. The French beverage giant owns brands including Chivas Regal scotch, Jameson Irish Whiskey, Absolut Vodka and Malfy gin, among other brands.
Campari's release said it is in exclusive acquisition talks with Rhumantilles SAS, which owns most of Martinique-based Bellonnie & Bourdillon Successeurs. Should the deal go through, the Italian spirits company would fold the premium rum brands into its portfolio and "add significant critical mass" to its French market.
Campari called rum a category at the heart of the mixology trend and growing cocktail culture that is benefiting from premium brands. Other factors that could be pointing toward the resurgence of rum include what Mundy called "gin fatigue" in the U.K.
Through the acquisition, Campari could also push the category to new heights. Mundy told Bloomberg the company is known for buying lagging brands, putting resources into them and enhancing performance. An example is Aperol, which he said the company turned into a popular summer cocktail.
Other major players in the rum category are making more investments, especially in premium brands. Last year, Bacardi introduced three rum products — two that are premium and one that is a relaunch. At the time, Bacardi said the spirits industry had seen positive recent growth from premium brands of tequila, gin and bourbon, and that it was time for rum to join them. Of all rum brands sold in the U.S., premium varieties only make up about 15% of total sales, the company said. If more upscale positioning pushed that to 25%, Bacardi said it could mean $550 million for the industry.
Sales of distilled spirits are up, Beverage Dynamics reported, citing figures from the Distilled Spirits Council. Last year was the ninth straight year of record sales and volumes, the council noted, with volumes up 2.2% to 231 million cases compared to 2017.
Rum is seeing some of this growth too. According to Nielsen data reported in The Spirits Business, ultra-premium rum sales in the U.S. jumped 15.8% in the 12 months before July 2017. The U.S. rum market posted the third-highest sales volume in the industry in 2016, just behind vodka and whiskey, according to data from Statista. The market is projected to grow by 3.7% per year between 2019 and 2023, Statista said.
Some of this growth is coming from baby boomers. It's also being driven by millennials, whose interest in vintage cocktails and premium sipping liquors have increased retail spirits sales. A 2016 survey found that millennials are more interested in drinking alcohol than baby boomers or Gen Xers. They also like to experiment more with different brands and beverages.
These consumers aren't all that loyal when it comes to liquor brands. Any spirits companies looking to get into premium rums and put generous marketing budgets behind them will need to be alert to the fickle factor. It might also help to stay relevant by introducing exotic cocktails including rum that have intriguing backstories.
Other potential sales boosts could come from organic versions, craft rum and flavored products such as spiced rum. According to Nielsen, flavored and spiced rums comprise an almost 40% share of total sales and have eclipsed white rum as tops in the retail sector.