Bacardi, Campari, and Diageo Are Investing Big in Premium Rum

Before bartender Brian Miller met and fell in love with rum, he favored whiskey. Lately, he’s been busy encouraging others to take the same leap of faith he took and give rum a try.

As Americans have helped liquor makers reach historic high sales, rum remains a laggard. In 2018, rum’s volumes dipped 3.1% from the prior year, badly underperforming the growing demand for whiskies from America, Ireland, and Scotland, as well as the vodka, tequila, and cognac. Over the past five years, volume has slipped from 25.6 million 9-liter cases to 23.9 million.

“In the U.S., whiskey is America’s drink and there’s a lot of knowledge about this category—people know the mainstream brands,” says Matt Crompton, a director at Nielsen.

The rum and coke is the spirit’s most high profile and, problematically, most uninspiring cocktail. Rum has other perception issues. Because the spirit is made from sugarcane byproducts, there’s an assumption rum is overly sweet. Rum is produced in dozens of countries, resulting in a heritage story that’s ill defined. Other spirits with one native home like Mexico’s tequila or America’s bourbon have a more streamlined, singular national identity.

“There’s a lack of education about the heritage, the process, and the drinkability of rum,” Crompton says.

But Miller, who dove into the bar scene thanks to inspirations ranging from Tom Cruise’s Cocktail character to world-renowned bartender and American Bar author Charles Schumann, is one of rum’s most ardent supporters. He has had success converting the masses. With a menu featuring a mix of classics like the Mai Tai and a “tiki-fied” Old Fashioned, Miller’s The Polynesian in Midtown Manhattan sold 800,000 tiki drinks in the bar’s first year in business.

Innovative craft cocktails play into rum’s key bright spot. Volume for “super-premium” rums—those priced at roughly $44 a bottle or higher—leaped 27% in 2018, according to industry advocate the Distilled Spirits Council. That was a greater increase than all other “super-premium” priced spirits.

This shows that investments made by liquor Bacardi, Campari, and Diageo are starting to pay off.

“If we look at the rum category in the U.S., it is probably the last of the big categories to be premiumized,” says Roberto Ramirez Laverde, vice president of Bacardi North America. “Premiumization” is industry lingo for a greater focus on higher priced, better quality spirits that justify their price points longer age statements, limited quantities, compelling packaging and some savvy marketing.

Family-owned Bacardi last year launched one of its biggest portfolio expansions in the company’s history when it debuted four new pricy rums, including a $100 expression that contained rum aged for an average of 12 years. Bacardi is pushing for bartenders to use more rum in classic cocktails, aiming for a swaps in a Negroni or an Old Fashioned. To further promote the line, Bacardi also hired action superstar Michael B. Jordan to direct and star in a commercial.

Bacardi recently hired actor Michael B. Jordan to direct and star in a commercial for the liquor brand. Bacardi

Campari is leaning into the Appleton Estate brand and the Italian liquor giant has focused on launching new rare blend age statements including the 2017 debut of the “Joy” anniversary blend, which is priced at $250 and is in honor of Master Blender Joy Spence. Last year, Appleton debuted a nearly $500 per bottle 30-year-old Appleton and made only 4,000 bottles available globally.

Both are blends of aged rums, and Campari thinks that’s advantageous.

“In the world of Scotch whisky, blending isn’t always a positive,” says Melanie Batchelor, vice president of marketing at Campari. “But in rum, it drives the complexity and the diverse flavors that you can create.” Batchelor says the unique blends in Appleton rums are a credit to the skill of blender Spence.

Rum’s renaissance is even surprising industry insiders. Christina Choi, senior vice president of Diageo’s rum, tequila, and gin categories, says she used to think of rum only in the context of basic drinks like a piña colada. But during a memorable rum-dessert pairing in Costa Rica last year, she discovered rum’s diversity.

“Rum has the same complexity as a whisky or a peaty Scotch, but it isn’t difficult to drink,” Choi says.

To further educate consumers about Diageo’s Zacapa rums, the British-based liquor maker brings physical display trunks to bars, restaurants, and liquor stores to explain how the rums are blended and aged. One key differentiator: a process called “fractional blending,” in which Zacapa rum is aged in a barrel, removed, and blended with older rums, then put back in the barrel for further aging. Zacapa 23, for example, is blended with rums between six and 23 years old. Zacapa has four expressions, with the priciest sold for $110.

Though price points are creeping higher, “super-premium” rums are cheaper than what Scotch and bourbon can command. And while consumers are increasingly gravitating toward these more elevated expressions, Miller isn’t sold on the marketing hype.

“I think [premiumization] is a bullshit marketing term that allows people to charge more money,” he laments. “Rums needs to keep it real.”