Brown-Forman highlights rum potential in UK
The purchase of Diplomático has provided Brown-Forman with a “market-leading point” to enter the fast-growing super-premium rum category in the UK, according to the company’s managing director for UK and Ireland.
Ryan Van Arnam, vice-president and managing director, Brown-Forman UK and Ireland, said the company’s latest acquisitions, Diplomático rum and Gin Mare, “happen to be in white spaces that we don’t play in”.
Diplomático is the first rum to join Brown-Forman’s portfolio, while Spanish brand Gin Mare marks the company’s entry into ultra-premium gin.
According to IWSR 2021 data, Venezuelan brand Diplomático is the “number-one super- and ultra-premium rum and the second biggest-selling super-premium-plus rum worldwide”, Van Arnam said.
The firm noted that super-premium-plus rum has grown at an annual rate of 17% over the past five years, with rum accounting for approximately 8% of spirits.
According to Van Arnam, golden rum, “where Diplomático plays”, is outperforming total rum in the UK on-trade, growing by 36% (IWSR data) over the last 12 months, compared to three years ago. “Rum is a big opportunity from a growth standpoint,” he added.
“We’re excited about the potential for that brand in the UK,” he said of Diplomático, which officially joined the portfolio this month (January).
Brown-Forman completed its purchase of Gin Mare in November, said to be the world’s number-one ultra-premium gin.
“Ultra-premium gin in the UK has grown at 5% over the last five years; it’s still small but this is where we believe that the future category growth is going to come from,” Van Arnam said. “So this gives us an entry point with a really distinct brand into a subcategory within gin that is driving a lot of growth.”
He noted that a decline within gin in the UK would come from the standard price segment.
Van Arnam said Gin Mare “complements Fords Gin with a very different taste profile”. Brown-Forman acquired Fords Gin in 2019 as its first super-premium gin.
Double-digit growth in UK
Brown-Forman launched its UK subsidiary in May 2020, bringing distribution in-house for the first time since the company entered the market.
“We’ve seen double-digit growth for total Brown-Forman spirits since we launched our distribution,” Van Arnam said. “And that’s why we’ve grown faster than the total distilled spirits market. So we’ve grown share and double-digit growth for the total portfolio during that period of time.”
Following its creation, Brown-Forman developed an emerging brands team to focus on all brands outside of the Jack Daniel’s portfolio, Van Arnam explained.
Van Arnam said the company is “still accessing the brand strategy” for driving growth of its recently acquired brands.
“Our strategy is to continue to build brands that are going to give us long-term sustainable growth and drive that growth,” Van Arnam explained.
“With Jack Daniel’s being our number-one focus, we need to make sure that brand continues to be healthy for the next generation, on top of adding these new brands that balances us out.”
He also said the company would look to drive growth of premium US whiskey and Tequila in the UK. “Woodford Reserve is the number-one premium-plus Bourbon in the UK, and the number-one super-premium-plus whiskey globally now,” he added.
Van Arnam said El Jimador is the number-one premium Tequila in the UK.
“Herradura is an amazing super-premium-plus Tequila that has seen fantastic growth and we feel very ambitious about what that will look like over the next five years,” he continued.
He added: “The strategy really is about finding this balance of driving growth of Jack Daniel’s and balancing the portfolio with a faster growth rate.”
He noted that Brown-Forman is the “number one premium-plus spirits supplier in the UK in value terms over the last 12 months”.
For the firm’s Irish business, Van Arnam said the company’s biggest focus is on the Jack Daniel’s family and Slane Irish whiskey.
Regarding the issues facing the UK market, Van Arnam said the cost-of-living crisis is a concern, however he noted that the macro trends of premiumisation continue. “People continue to drink higher quality than quantity,” he noted. “Our portfolio is positioned in that space.”
The firm is also “consistently monitoring pricing structures and looking very closely” at whether it would need to increase prices of its products in the UK based on market trends, Van Arnam said.
Brown-Forman’s net sales for the first half of fiscal 2023 grew by 11%, with the UK recording a 2% organic sales rise.