Is rum shaking off its party spirit image?

27th February, 2013 by Chris Mercer

The ultimate party spirit, rum is coming of age, backed by a wave of premiumisation, acquisitions and an enduring global appeal. Chris Mercer reports.

Rum-pouring

Rum is moving away from a low-cost image, according to Botran’s Frank Quinones

Rum has travelled in many guises, as a mind-altering fortification for soldiers and sailors, as a household name in the pirating fraternity and as a symbol of hedonistic dirge in Hunter S Thompson’s The Rum Diary. These days, its Latino spirit is embodied by television adverts in which bartenders defy gravity with Bacardi bottles.

Such examples demonstrate rum’s enduring appeal and scope. Euromonitor International figures bear this out, projecting a solid, yet un-flamboyant, 17% rise in global rum volumes between 2011 and the end of 2016, to 1.7bn litres. What’s more, every region should contribute to growth.

In the 21st century, however, this historically unruly, good-time liquor is tentatively absorbing a few airs and graces, thanks to acquisitions and premiumisation cues around ageing, authenticity and cocktails.

“There’s a move away from a low-cost image,” says Frank Quinones, global director of Botran Aged Rums. “Three or four years ago, rum was rum. Now people are more knowledgeable about rum. They read about it, they want to improve their rum experience.”

Dark rum’s prestige is rising. In October, Botran exhibited its Solera and Reserva aged rums for the first time at the Tax Free World Exhibition show in Cannes. Launches in Western Europe and duty free in recent years will be followed by debuts in Russia and Czech in 2013. The Guatemala-based brand sells around 100,000 cases annually, but its medium- to long-term ambition is to hit 1m cases. Keep your eyes peeled, too, for a new aged expression in the not-too-distant future.

Guatemala is awash with aged rum. This adds useful context to Diageo’s acquisition of a 50% controlling stake in Guatemala-based Ron Zacapa, a sister brand of Botran. Via the £150m deal, Diageo is both joining, and helping to drive, opportunities in premium aged rum. Zacapa has cemented its place among Diageo’s high-end Reserve Brands after seeing net sales rise by “strong double-digit” percentage points in the firm’s last fiscal year. Europe and the Americas drove sales.

Diageo looks almost certain to delve deeper into premium Guatemalan rum. Zacapa owner Industrias Licoreras de Guatemala (ILG) has a “put” option that allows it to place remaining shares in Zacapa with Diageo in return for a fee “calculated on a profit multiple”. According to Diageo’s 2012 annual report, ILG can activate the clause after 2016.

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