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Bacardi Wagers That Rum Will Be The Next Liquor To Go Upscale

Published on Mar 25 2018 10:00 AM in Drinks tagged: Trending Posts / Bacardi / rum / Premium Alcohol

Bacardi Wagers That Rum Will Be The Next Liquor To Go Upscale

Premium tequila, gin and bourbon have spurred alcohol industry growth. Now Bacardi says that it’s rum’s turn.

Bacardi is introducing two new premium rum products and relaunching an existing brand to push the category in a fancier direction.

Across the market, pricier varieties make up only 15% of rum sales, according to the company. Driving that number up to 25% is worth $550 million to the industry.

In the premium space, Bacardi already has Grey Goose vodka and Dewar’s scotch. Those cater to a group of consumers who consistently spend upwards of $20 for a bottle of booze, regardless of the drink type.

That’s missing for rum, according to Ned Duggan, vice-president and brand managing director of Bacardi rum.

“About a third of those premium-spirits consumers do drink rum, but they trade down when they do,” Duggan said. “What this shows us is that, as a category, we’ve been leaving a lot of business on the table.”

Total rum volumes in the US have declined by 3.6% over the past four years. While super-premium lines made up just 2.2% of volume in 2017, they jumped in that four-year period, according to the Distilled Spirits Council, a trade group.

Rum could follow the path of tequila, which has been on a growth spurt for more than a decade, Duggan said.

Fifteen years ago, most tequila drinkers imbibed standard lines, with few trading up to more expensive varieties. Today, 58% of the tequila sold is at a premium price point or higher, he said. High-end tequila volumes in the US more than quadrupled between 2002 and 2017, and super-premium volume grew ninefold, according to the council.

‘Similar Opportunity’

“We look at tequila and what’s happened there and see a very similar opportunity for rum,” Duggan said.

Bacardi stepped up its tequila holdings when it announced in January that it was buying Patrón Spirits International in a deal valuing the company at $5.1 billion.

Its new premium rums are Añejo Cuatro, aged at least four years, and Gran Reserva Diez, aged at least ten years. Bacardi will also offer a revamped Reserva Ocho, and all the spirits will reach US store shelves in the next 45 days.

Bacardi, which is based in Bermuda, wants to see rum join the cocktail renaissance.

“We’ve seen classic cocktails come back into favour in a huge way, and rum, as a category, has kind of sat on the sidelines while that has happened,” Duggan said. “[The strategy moving forward is] really a combination of the cocktail culture and rum cocktails, as well as neat and sipping consumption.”

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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