Rum

Last
year marked a full decade of consistent upbeat momentum for
this second-largest distilled spirits category in the US,
now well up over 2O million cases in total volume sales, and
continuing to build on its consumer appeal with an
ever-expanding introduction of trendy lower-proof flavored
brands, lower-calorie product alternatives, and with
marketing initiatives boosted by an unprecedented hefty
annual category ad spend that, last year, topped the $6O
million dollar advertising plateau for the first time
ever.

Not
surprisingly, a third of this advertising total was invested
by the dominant category colossus, Bacardi USA, whose
whopping nearly 9 million case sales peformance continues to
represent close to a 5O% share of the US rum marketplace.
Other major ad spenders were also familiar big brand leaders
like Diageo’s prodigiously successful Captain Morgan family
of spiced rum products, the Puerto Rican Rum syndicate,
Brown-Forman’s high-flying Appleton labels from Jamaica, as
well as the expansive flavored portfolios of Allied Domecq
Spirits’ Malibu and Cruzan, Ltd.’s widely-assorted flavors,
both long-standing mixed-rum-drink favorites among
bartenders. Without a doubt, it’s been largely this flavors
boom, as with vodka, that’s been driving these rum volume
sales figures skyward and generating most of the category
excitement for many years. But so much for some of the more
sanguine statistics about rum, because there have also been
some disturbing and long-standing downsides to consider
about this category that are not so swell.

Conspicuously
missing and especially frustrating about rum has been the
kind of higher premium cachet that has by now become so
dramatically well-established with luxury-level vodkas,
tequilas and even some ultra-premium gins. In this
all-important image area, the rum category has been left far
behind. And what makes this particularly aggravating, in the
view of many knowledgable rum lovers – myself among them –
is that rum has long possessed a virtual treasure-trove of
fascinatingly complex, cosmopolitan, stylistically diverse
upper-premium sipping experiences which are arguably some of
the most refined in the entire spirits world. Yet, even
today, few of the vast audience of rum drinkers out there
are even aware of these higher category products, let alone
providing them any purchasing support.

However, perhaps
the best news the rum industry could possibly receive this
year is that consumers are starting to wake up. The fog is
lifting. Finally, the outline of a super-premium marketplace
is emerging on the horizon line in significant and promising
ways. Everyone seems determined to create an upscale
consumer acceptance that this under-achieving category has
never really enjoyed, but has long deserved.

In some ways,
today’s rum environment is reminiscent of that bygone age of
infamous16th-century Spanish Conquistadors who ravaged every
nook and cranny of the New World in their zealous hunt to
discover El Dorado, the Aztec’s legendary City of Gold. And
who knows? Maybe that kind of wealth is out there
today.

Some of the
intriguing questions one has to ask about this enigmatical
rum category are, first of all, why has this pitch of
excitement taken so long to develop? Also, what are some of
these promising new upper-tier products and what’s in the
works for their development? Finally, of course, are the
questions on the minds of brand builders in every supplier’s
think-tank on the planet: Can rum truly achieve a marketable
super-premium status? Is it worth rolling the
dice?

To gather
answers, I conferenced with a world-famous rum expert, the
irrepressible owner of a genuine specialty rum bar
restaurant in New Hampshire, as well as leading rum
suppliers, distributors and marketing executives.

Let’s start with
Luis Ayala, the celebrated Texas-based rum guru-at-large.
Internationally regarded as “The Rum Professor”, Luis
graciously provided me the most fascinating and insightful
educational critique of any spirits category I have had the
pleasure to hear. His career has been focused on the
category in several distinguished capacities, as a writer,
critic, publisher, lecturer, and educator. He is also a much
sought-after consultant helping companies with product
development, taste profiles for brands, product staff
training, and tasting seminars for building consumer
understanding of this highly complex spirit.

Among his many
achievements, he is the world’s most-published author on the
rum subject, and is president and founder of Rum Runner
Press, Inc. His works include an exhaustive masterful
reference, The Rum Experience, a comprehensive Encyclopedia
of Rum Drinks, containing over 13OO cocktail recipes dating
as far back as the 18OOs, American Rum, which is a scholarly
and fascinating study of rum heritage in North America from
colonial times to the present, and his recent The Rum
Buyer’s Guide, designed to bring together rum producers,
alcohol wholesalers, importers, and distributors. As such,
it is the first guide of its type ever published.

Not
surprisingly, Luis is much in demand as a celebrity judge at
many of the most prestigious international spirits tasting
competitions, and is noted for his unbiased opinions and
unusually discerning palate. Two years ago, he also founded
an on-line educational vehicle, The Rum University
(rumuniversity.com), whose mission is to increase global
awareness about rum as a quality premium distilled spirit,
and to encourage its responsible consumption. It’s safe to
say that no one on the planet has a better grasp of the
present day rum marketplace, what consumers want, how they
feel about current products, and ways to motivate them to
try new ones.

BOB
BRADFORD The
current craze for flavored rums has been the principal force
driving the category the last few years, but many question
whether they are genuine rum products. How do you evaluate
them?
LUIS
AYALA There’s no
doubt flavors continue to be the category’s most exciting
growth items in terms of volume and trend, but very honestly
I think of flavors as being almost distractions when it
comes to advancing true rum appreciation. I mean, by
themselves, most of these flavor products should not even be
sold as rums, because they’re produced with un-aged ethanol.
And in most other rum-producing countries, this is
unacceptable. For example, you go to Venezuela or the
Dominican Republic or Guatemala, and so many other places of
origin, any rum has to be aged three years by law before a
producer can legally put the word rum on the label. But you
see so many of these flavored products, and there’s not a
single hint on the label that this is a rum. So, the fact
is, any kind of product like this could not be considered a
rum in most of the rum-producing nations of the world. There
are a few flavored products that are exceptions. One, in
particular, is a Santa Theresa Orange from Venezuela. It’s
made with a blend of 3- to 5-year-old aged rums and is a
very legitimate flavored rum brand of distinctive high
quality, and with rum you can really taste. There are a few
others out there, as well, and they stand out in the
flavored segment of the category like pearls in a vast field
of pebbles.

BB
Another quality rum issue that seems to be unclear is the
use of the term “super-premium”. How do you define it, and
when should it be legitimately assigned when describing a
product?
LA
Super-premium is indeed an extremely cloudy and often
misleading terminology about rums, not to mention so many
other spirits categories. It is frequently misused in so
many cases, both in advertising and by producers. You can
call almost anything you want a super-premium because there
are really no set standards, and you certainly can’t depend
on a price-point gauge as a guideline. Obviously there are a
few extreme collector rarities like the Mt. Gay
Tricentennial bottling that retails anywhere from $3OO to
$5OO for a 75Oml, depending on the market you’re in – if you
can even find it, that is. But let’s just consider items
that have a large enough production for an importer to be
able to distribute in more than one niche market, and with a
price that’s not outside the purchasing power of the average
consumer of that segment. And, with rums, this nomenclature
gets very tricky. It’s not at all like brandy and cognac
where XO really means something. So, personally, when I talk
about super-premium products, I’m not looking at price nor
the history of the company nor all the various marketing
spins. I focus on where a product has historically ranked in
major competitions with other rums in the same age group and
style. And the ones that consistently have received superior
ratings is what I look for in determining genuine
super-premium status.

BB
What most excites you about the category today?
LA
What’s really exciting is seeing the amount of consumer
attention the higher market segment is starting to generate.
I recently returned from teaching rum classes at Florida
International in Miami, and had a chance to go to South
Beach and a lot of the happening places. And the excitement
is what you’re seeing with more and more younger consumers
beginning to explore, discover and spend significant dollars
on some of these higher level specialty rums. These are the
consumers that can really start driving the demand for this
segment of the rum marketplace faster than anything else. A
great many of these South Beach establishments have been
notably successful getting younger drinkers to trade up from
tested and true standard classics like Cuba Libre or a
mojito, and now ordering a Cadillac version with some of the
aged products. Quality is really starting to
count.

Rum also derives
contemporary excitement from an identity with the growing
popularity surrounding all the hip-hop and rap music culture
and cuisine that’s been coming, in part, from the Caribbean
and Central and South America. Look what it’s done for the
cognac industry. The more that this wave can work as a
cohesive movement for rum, the more all the surfers on it
are going to benefit.

You’ve got to
get excited about this, because what you’re looking at is
the future of the category. In the classes I teach, I spend
time talking about what I call the ‘old rum generation’,
that lived through the Depression and WW II. It dates all
the way back to the end of Prohibition and, by now, has
pretty much stopped being a driving factor in the economy.
Fact is, it has virtually disappeared. And the next
generation these Old Folks most influenced is also on the
way out, as well. So, what this gives us in today’s market
is an influx of consumers who really have had no firsthand
experience nor any of those stigmas that surrounded rum in
these earlier years, when rum was frequently considered an
“evil spirit” and held responsible for broken homes, abusive
parents and all these kinds of negative images. Forget all
that baggage. It means today’s rum consumers are coming in
with a clean plate and an open mind, and are not jaded by
any cultural prejudices. And they’re also not resisting rum
because it might have been “grandfather’s drink and I’m
going to be different” type of problem that occur in many
spirits categories. All this creates virgin territory and
remarkable new opportunities for rum that are almost
unprecedented. For the industry, it can’t get much more
exciting than this.

BB
Does the phenomenal success and category leadership of
dominating lower market spiced and flavored brands like, for
instance, Captain Morgan, impede this upscale movement in
the category?
LA
Admittedly, although the Captain Morgan persona may be a
phenomenal marketing success story, the rum image it
presents doesn’t do much of anything for a sophisticated
spirits consumer. Captain Morgan is all about party time at
the introductory category level, and, despite the marketing
image, as any student of Caribbean history well knows, the
Captain himself was a less than admirable figure, who
pillaged and burned his way through Jamaica, and, later,
with full autocratic control, was appointed governor by a
decidedly undemocratic process. Plainly speaking, the real
life Captain Morgan was a ruthless tyrant.

But having said
that, the one thing rum has greatly benefited from all these
intense Captain Morgan brand marketing initiatives is that
they have also now created a Captain Morgan Private Stock
higher quality brand level that promotes a trading-up
concept, not only for the brand, but actually for the entire
category. And this really stirs up the market for a large
contingency of young consumers. It’s definitely a
considerable upgrade to the Captain Morgan base brand and it
plants some very significant seeds that can hold consumers
within the category. If this trade-up idea wasn’t there, a
lot of these young party-animal consumers would be changing
out of rum and moving up in other category directions as
their lifestyles mature. So, as long as The Captain is
keeping people in the rum arena, God bless his less than
exemplary soul. Perhaps for the first time in his existence,
he is performing a significant public service to others and
to the rest of the rum category, as well. Also, quite apart
from its own success, the brand has been opening up the
doors for other companies to convince consumers to consider
sideways or upper movements into higher category
products.

BB
You are a well-known brand strategy analyst. What strategies
do you feel make the most sense for the long-term future
health of the rum industry?
LA
A very relevant question, and one of the most effective
things I have seen in all my years is that the companies
that spend all their time and money on strategies that are
long-term are the only ones that are going to benefit
long-term. Short term, you’re going to have a company that’s
funded by entrepreneurs that will spend a couple million
dollars on some hot product and then disappear a year or two
after they’ve made some money. But they don’t have the
confidence or interest to continue with any long-term
investment. It’s the companies, who are my clients, who send
me to places like Miami to teach classes on the differences
of rum and distinguishing quality to future
restaurant-hotel-and bar managers in training at the
universities. These are the companies planting the seeds for
the category with a long-term vision. They don’t want to be
teaching old dogs new tricks later on. They’re trying to get
qualified new people out there who will be very open to
carrying their products in the future. You hear about all
these on-premise wait and bar staff training that go on with
so many brands. But doing it at the initial hotel school and
university training level is head-start education well in
advance.

There’s nothing
wrong with doing on-premise training. But, in so many
markets, whether legal or not, there are all these cash
incentives and companies that go to all these top bars
flipping $1OO bills to the bartenders so they can push their
products. And, while this may be worth it for short-term
business, what happens the next time when someone comes in
with $15O or $2OO. So, these are purely short-term
incentives, and unless you have very deep pockets, you can’t
afford to stay on top. Yes, these on-premise people will
take cash incentives from any company to promote their
products, but, in between, and in the long run, they’ll
revert to the basics they learned in school when you planted
the seeds, and they’ll always be your advocates.

BB
Can you name a few producers and brands you especially find
interesting, and who have this long-term philosophy?
LA
Yes, from Guatemala, Ron Zacapa is an outstanding example.
Their 23- and 15-year-old Ron Zacapa Centenario labels are
tremendous rums, and they’re really putting emphasis on
long-term success of the brand. Their flagship is the
23-year-old, so you can be sure they’re not just throwing
money at a marketing campaign or interested in doubling
their market share from one year to the next. You just don’t
have the volume production capability with very old artisan
rums. So, they’re riding on a game plan for growth that was
put in place a couple of decades ago. Big numbers are not
their concern. They’re looking for being the elite in
whatever market they’re in, and looking for customers who
don’t have to keep being reminded of what the brand
represents in terms of quality. They’re spending a lot of
time, far more than companies ten times their size, on
educating young professionals, who can appreciate the
brand’s classic high premium qualities. I can only say that
when I first tried the 23-year-old, it blew my socks off.
Can any rum top this one, I asked myself? But they’re
introducing an XO this year in very select markets, and I
have to tell you, it’s even better. So, they’re really
delivering on this long-term promise for the brand, and I
have to single it out as a role model at the top of the rum
world’s finest quality. It’s been in leading world-class
blind-tasting competitions, including many I have been asked
to judge in, against maybe 1OO other rums all claiming to be
the nectar of the gods, and it consistently stands out by
itself. All I can say is that any serious rum drinker should
keep their eyes on this brand.

Other specific producers I especially admire include an El
Dorado 15-year-old made in Guyana, and Jamaica’s Appleton
brand lineup. It’s one of those few brand families that
combines notably ultra-premium brand quality with also fine
quality labels at more affordable lower price points. And
it’s a large operation and they can make a lot of it. The
21-year-old shows you what they’re capable of, but the lower
marques are excellent quality products right down the line.
I also admire Mt. Gay, the celebrated Barbados producer,
which is the oldest, legally documented, continuously
operating rum distillery on the planet, now over 3OO years
in the rum business. One thing Mt. Gay does, as opposed to a
great many of the other large volume distillers, is that
they still use small batch pot-stills as well as continuous
column stills, and many of their products are combinations
of the two. This gives you a little of the refined
brandy-like character of the pot-still, plus the clean
neutrality associated with column stills. So, they are able
to produce something that appeals to two major rum consumer
palates, the ones looking for the clean Puerto Rican rum
style, and the ones wanting a more Jamaican fruitness and
heaviness.

Ron Matusalem is
another interesting story, and, for me, it’s sort of a mixed
reaction, because it’s indicative of the kind of hazy
marketing hype that is so prevalent in the rum industry.
While I fully appreciate the challenges that marketers face,
you have to realize that, sometimes, they have to take an
ounce of truth and make it look like a pound with a lot of
skillful adjectives and qualifiers. That’s their job. In the
case of present day Matusalem, it claims to be the original
spirit of Old Cuba, and the suggestion is they are perhaps
the one brand that still uses the classic, complex,
labor-intensive barrel-rotating and blending Spanish solera
aging system for their rums that was brought over from Spain
by the brand’s founding family in the 19th century. The
facts are that quite a number of fine rum producers, like
Ron Zacapa and Santa Theresa, also use the solera aging
technique, but don’t advertise it on their labels.
Furthermore, Matusalem doesn’t own their own distillery,
like they did in pre-Castro Cuba. The brand, today, is
out-sourcing the production of their rums, under the
original recipe or specifications, to other companies in
other countries. So, all this is an example of why you have
to be careful about how you advertise the place of origin
for a brand. In this case, people in Europe are getting
Matusalem rum that was made in the Dominican Republic,
whereas people in the US are getting Matusalem made in
Panama or domestically here in the states. At different
times, they have either gone with companies who were not
operating at 1OO% capacity, so they could take on some
private labeling, or they went to somebody else who happened
to have excess aged rum that fit their specs.