Travel retail in focus: Rum
As rum brands large and small continue to push for premiumisation, SB questions whether consumers even understand the category and asks what barriers must be overcome to secure growth in travel retail.
DFS Group’s Wines & Spirits Duplex store at Changi Airport, Singapore, stands as the epitome of luxury in travel retail liquor. It is the first of its kind in the channel – and frequent flyers know it as an essential stop not only for high-end spirits, but cocktails, too. It’s become an icon for the category, much like Le Clos in Dubai and World of Whiskies in the UK. In stores like these, the respective retailers meticulously cater to the whims of novice gift-givers and picky connoisseurs alike.
This is true for categories like Scotch and Cognac – and even high-end vodkas have a place. But what is missing from the global TR footprint – save for rare one-off activations – is a logical premiumisation ladder for rum.
The third-largest spirits category in the world is often misunderstood, by passenger and retailer alike. “Most consumers don’t expect to find super-premium rums anywhere, let alone in travel retail,” says Steve Bewick, founding partner and creative director, Purple Creative, an agency which has worked with the likes of William Grant & Sons and Beam Suntory.
Gautom Menon, chief brand officer, Wild Tiger Rum, agrees that consumer awareness is lacking and believes travel retail is missing out to other channels as a result. “One unified point is the lack of innovation and availability of new and bespoke labels,” he says. Those looking for rarer rums are forced elsewhere. “Rum consumers look to online resources and rum clubs when they are seeking high-end rums; they simply aren’t available in duty free and even if they are [it is] sporadic and not enough to get the connoisseurs excited.”
Wild Tiger Rum is produced in India, where Menon reckons the rum category accounts for less than 8% of spirits sales. His aim is to tap into the souvenir market, the Indian diaspora and, of course, rum consumers.
For Nude Brand Creation, an agency which has partnered with Havana Club, narrowing the demographic is key. “Frequent business travellers expect to find products unique to travel retail,” explains co-founder Bernard Gormley. He says Havana Club has recognised how important this market is and has developed rums accordingly. “In travel retail, around 60% of all purchases are for gifting so this presents a great opportunity for rum,” he adds.
An unmissable opportunity
Bacardi Global Travel Retail (GTR) is, as expected, also clamouring to capitalise on the opportunity presented by the gap in the market. “Travel retail rum is the biggest long-term opportunity in global travel retail spirits. This is a premium environment and rum has yet to maximise that potential,” attests Mike Birch, managing director, Bacardi GTR. “There is massive room to grow and we have the ability, insights and full range to drive transformational change.”
For Bacardi, that “change” is in stepping up consumer interaction and raising awareness of the varied drinking occasions offered by the category. In December 2015 Bacardi GTR delivered a “significantly strong uplift” from a campaign at Puerto Rico with retailer Dufry.
Key to this was shifting the consumer conversation to premium offerings and placing an emphasis on the likes of Bacardi Gran Reserva Ocho Años and Gran Reserva Maestro de Ron. The activity put in place a “clear ladder of premium offerings” the company feels is essential to achieving meaningful premiumisation.
Meanwhile Diageo, the world’s largest spirits company with a rum stable spanning Ron Zacapa, Captain Morgan, Bundaberg, Cacique and Pampero, acknowledges that “the super-premium and ultra-premium rum categories are relatively underdeveloped, compared to whisky and Cognac”, says Peter Fairbrother, marketing director, Diageo Travel Retail & Middle East. For him, focusing beyond provenance is crucial to raising awareness. He has identified flavour innovation, new provenance and craft, and premiumisation as key for the health of the category.
“There is a gap in the super-premium rum market and this is a demand our strategy is aiming to meet in the future,” he continues. To tap into this, Diageo GTME introduced Zacapa Edición Negra, a rum matured in double-charred American oak barrels to give the dark rum a “smoky intensity”.
As the market continues to premiumise, Fairbrother foresees further growth in the established markets of Latin America and the Caribbean, along with “opportunity for super- deluxe rum to complete with Cognac in established Cognac markets such as China”.
It’s a bold target, especially with the recovery of Cognac in the market following the 2012-14 downturn. But with momentum finally building behind the last spirits category to fully climb up the value ladder, perhaps it’s finally rum’s time to shine.