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A STORM OF CHANGE is on the horizon for white rum. The Havana Club trademark is a hot topic of debate which continues to rage. Since beginning to write this feature, half a dozen press releases have been distributed with counter statements to the litigation announcement and what – if it finally happens – this could mean for Pernod Ricard and the category as a whole. When Barack Obama visited Cuba in March, he became the first US president to have done so in more than 50 years. It’s a momentous time, but first let’s concentrate on the category picture right now – everything else is a distant figure on the horizon.

White rum is in historical decline and it’s forecast to stutter for another two years. The category reported volume and value decline in five of its top 10 international markets in the five-year period from 2009-14, according to Euromonitor International. Globally, during this time it was up a mere 1% in volume and down 2% in value.

“The explosion of brown spirits has overshadowed the importance and relevance of white spirits (including not only rum, but vodka as well),” says Mauricio Bermudez, director of marketing at Bacardi Rums.

“The proliferation of flavoured white spirits overflowed the markets and drove the collapse of the white category across all price tiers. A lack of consumer understanding between various white spirits and knowing when it is best to use each – for example, when to use a rum instead of a vodka in certain cocktails – also added to the challenges facing white rums.”

Patrick Rabion, Diplomático rum export director, says rum producers have realised that there is an opportunity to diversify the white rum offering, and have started to develop this category.

“Things have been evolving in recent years, thanks to the premiumisation of the rum category, and in particular the dark rum segment. Consumers are becoming more educated and are discovering new ways to appreciate rum, which is now competing directly with traditional sipping spirits such as cognac and whisky,” he says.

The rise of dark/aged rum has increased awareness of the overall category, according to Bermudez. “It has introduced new consumers to the world of rum. Many of whom are white spirit drinkers or traditionally enjoy white spirit cocktails, along with appreciating a great sipping spirit every now and again.

“By increasing category awareness and consumer base, the decline of white rum will slowly stabilise as these consumers discover rums within this subcategory that fulfil their white spirit expectations, as well as the diverse experiences to be found within the different styles in the category.”

Ben Jones, North America regional director for Rhum Clément, says rum itself is in an interesting space at the moment. He says: “Overall the category is flat but the most successful rums are driving growth but from a very small base. Value and standard volumes are going down. They are big pieces of the overall pie. Overall in the rum market there’s a tremendous amount of interest and buzz with people who are very much into rum.”

Jones confesses that the popularity of aged rums means white rum isn’t a category Clément focuses heavily on in the US, but he does recognise its importance: “We don’t make the best aged rum without first making the best white rum. There’s a unique flavour profile.

“In white rum we focus on the cocktail market, bars, restaurants and hotels that want something unique and different and don’t necessarily need that loss leader.”

CONSUMER UNDERSTANDING

For Bacardi, consumer education and better understanding of white rum is key. Bermudez says the on-trade will be the driver.

He says: “The on-trade has certainly played a role in driving awareness of brown spirits, including aged rums. The rise of complex cocktails and classics from the golden era of bitters and amaros helped drive the use of brown spirits. However, the craft cocktail scene is currently experiencing a return to simplicity in cocktails, simple infusions, and a heightened focus on service. White rum cocktails will play a bigger role in this trend cycle.”

Paul Rutasikwa, co-founder of Matugga Beverages – producers of a new British craft rum – believes standard expressions of white rum maintain a significant place within the on-trade and off-trade due to the competitive price point. He says: “However, current industry trends reveal a downturn in fortunes, some of which can be attributed to increased competition from golden, dark and spiced rums. The recent launches of new white rum variants are encouraging, and could be a welcome stimulus for the category.”

Looking ahead, he says: “All trends point towards growth in the premium and super-premium end of the spirits market, and there are a few brands that are leading the way towards the premiumisation of white rum. The increasing availability of high-quality white rums, particularly from smaller craft producers, could elevate consumer interest, experimentation and appreciation of category.

“We believe that the future trend will be for producers/rum brands to innovate by creating new, exciting varieties of white rums for discerning consumers and rum connoisseurs. Producers of craft, premium and sipping white rums will also seek to promote new ways to enjoy their expressions in order to justify the position as a top-end offering.”

Rutasikwa has put his money where his mouth is and is seeking to extend Matugga’s portfolio with a white rum. Why now? He says: “We feel that the tide that is currently elevating the profile of golden, dark and spiced rums, could also be leveraged to raise the image and appreciation of the white rum category among rum connoisseurs and aspirational consumers. It is also important to remember that there are parts of the world where only white spirits are consumed. There is potential for growth in those regions if producers can seize the opportunity.”

Another new entrant will come in the form of Saint James. Nadège Perrot, international brand manager for Saint James rum, says: “White rum will follow the same trend as the whole rum category, that is to say that consumers will be more and more implicated and interested by the elaboration process, the origin, the history, the tradition behind each rum. That’s the reason why we’ll be launching soon a new Saint James white rum reference for the international market.”

MARKETS

The US is the biggest global market for white rum. It reported 0% growth in volume and -13% in value in the five year-period 2009-14, according to Euromonitor.

“We’ve seen Bacardi and Captain Morgan continue to lead the US rum market with a combined share of close to 60% and expect that trend to continue as both leading brands intensify their efforts to regain ground lost during the past few years,” says Marina Velez, senior product manager for data & insights at the Beverage Information & Insights Group.

“While the major players were challenged, over the past few years competition has grown from smaller newcomers to the category,” she says.

The lifting of the embargo in Cuba would change the face of the US market not only for Pernod Ricard, but also for its competitors.

Diageo told Drinks International: “We believe white rum will further grow with the removal of the half-century trade embargo in Cuba, as this is likely to stimulate conversation about new imports, increasing the interest in the rum category again. We expect to see a similar renaissance trend we’ve witnessed in gin, when new premium and/or craft brands entered the category and reignited the consumer interest.”

From a US analyst’s perspective, Velez says: “We don’t expect to see much of an immediate impact. Most of the major players have already been operating outside of Cuba. What small brands that do operate in Cuba have been producing and shipping to all other markets, except the US, for all the years since the embargo was placed and would have already been major competitors to the key rum brands on a global basis. By lifting the embargo, yes it would open business ties with the US market, perhaps infuse renewed interest in the category, but we would not expect key brands like Bacardi to be adversely impacted by those smaller brands.”

For Perrot at Saint James, the opening up of the category in any way can only be a good thing. She says: “I think it will bring a big dynamism to the category at first, that will then calm down. An opening of this kind can only be positive, for the sector and all the rest.”

Looking to the horizon – embargo or no embargo – white rum is forecast to stabilise and steer its way out of decline. With new entrants to the category and a concerted effort to educate consumers on the spirit, it is hoped that white rum can piggyback on the success of brown spirits and gin.

Politically, economically and socially, all eyes are fixed on the soon-to-be squally white rum category.