With tequila and vodka-based RTDs dominating the sales charts, is there room for rum to make a play?
Fueled by premiumization trends, spirits-based prepared cocktails have been on an upward trajectory, growing +39% year-over-year in the off-premise through August 12 according to NIQ data. RTDs with vodka and tequila bases, such as High Noon and Cutwater, have been driving that growth, and dominating all but one spot of 20 in the highest sales for the category off-premise.
But rum-based RTDs are generating momentum. The category did $89.5 million in dollar sales in the 52 weeks off premise prior to July 8, up 35.6% since a year ago and coming in behind tequila (which did $266.3 million), according to NIQ. Distribution is also growing: in that time weighted distribution off-premise for vodka and tequila-based RTDs only increased by 3 and 3.8 points, respectively, which is less than rum-based (6.5) American whiskey-based (7.5) and Canadian whiskey-based (18) RTDs.
While new rum brands don’t seem to be taking shelf space away from vodka or tequila canned cocktails, some are seeing the base as a less competitive jumping off point into a growing category.
An RTD Entryway
As many BevAlc companies embrace total beverage, Heineken is betting on white space in rum RTDs. Heineken’s Jamaican lager Red Stripe launched a canned rum cocktail this spring.
“We saw this as an opportunity to authentically bring the Red Stripe brand to a new audience looking for new, quality choices,” said Karla Flores, Red Stripe brand director at Heineken USA. “We wanted to expand Red Stripe to meet the needs of a new generation of consumers willing to explore new flavors.”
With the launch of the rum cocktails, the company’s goal has been recruiting new consumers in “higher energy occasions” while increasing total awareness and adoption for the brand, she added. The primary distribution channels for the Red Stripe RTDs are liquor, grocery and on-premise, building on the current distribution and brand awareness of Red Stripe Lager. It’s not a huge leap to leverage the brand’s Jamaican heritage with rum, although in the age of authenticity, it should be noted that the rum is labeled Caribbean, not Jamaican.
While it’s somewhat early for sales data, Flores added that the brand clearly sees the new product as an opportunity to capture more share among a multicultural shoppers, whom account for 50% of Red Stripe’s volume and are 58% more likely to purchase Red Stripe than the average consumer according to NielsenIQ Spectra.
Other beverage players outside of alcohol have made similar moves as a way to leverage their own brand equity.
Last year, Vita Coco’s CEO characterized the company’s canned coconut water spiked with Captain Morgan rum as a fit with Vita Coco’s top-line strategy of creating “beverages that fit into every occasion” and its recent focus on introducing itself to a new set of customers. He cited the product as an opportunity to generate momentum for Vita Coco as a premium mixer, a usage occasion which he called “underdeveloped.”
Growing Share With Innovation
For premium RTD brand Tip Top, its newest expression is aimed at extending innovations for its current audience, and a rum cocktail fits the bill. With availability of flavor and brand reputation the top consideration for consumers when choosing an RTD brand according to a recent NIQ report, The Jungle Bird aims to boost both.
“One of our goals from the beginning has been to show the discerning consumer who has potentially developed a stigma around canned cocktails being cheap or overly sweet, that there is a prepared cocktail brand that really speaks their language,” said Neal Cohen, co-founder and chief brand officer of Tip Top. “The Jungle Bird is kind of an ‘if you know, you know’ industry sweetheart, and that’s one of the reasons we wanted to put it out.”
The 25% ABV drink made of rum, lime, pineapple, and red bitters was initially produced as a small-batch, experimental homage to cocktail culture in January, and the company released another batch in July to 12 states, plus online ordering. The company has aimed to create buzz based on its wins in spirit competitions like the San Francisco World Spirits Competition.
Other RTDs with less popular bases have also leaned on building a story around a cocktail: The Finnish Long Drink has positioned itself successfully as an authentic representation of Finland’s national cocktail, with no mention of gin in its marketing (Top Gun actor Miles Teller sharing that story may have been a boost, however).
Devoted online consumers were quick to pick up Jungle Bird, and now that it has a wider distribution in the general market, Cohen says it’s picking up in liquor channels, and because of the difficulty of perfecting the cocktail, some bars have also responded to it well.
“People have been talking about rum beginning to have its moment for a few years now, but the sophisticated buyer is now really starting to dig in with the category, therefore it does seem like there’s a great opportunity for our Daiquiri and Jungle Bird (and perhaps some others) to do really well,” said Cohen.
As of now, major brands like Cutwater and Beam Suntory-backed On The Rocks lead rum-based RTD sales, but Tip Top represents a craft RTD brand that echos the optimism of rum brands who are aiming to upgrade the spirit’s reputation and see potential to find a niche among other premium products. Other players are betting on higher end rum too: spirits-focused private equity group InvestBev poured $1 million in Ten to One Rum just last week.
But if RTD sales continue to mirror the trends of its mother spirits, the rum category as a whole still has a little ways to go.
Rum sales by volume fell 2.8% from 2021 to 2022 according to the Distilled Spirits Council of the United States (DISCUS), although premium-plus rums have fared a little better and been a growing bright spot for the category globally. The rum category as a whole was down -3.4% off-premise in the last four weeks ending August 12, with super premium and ultra down -1%. Premium-plus rum volumes are expected to climb by a CAGR of +7% between 2021 and 2026 in the U.S., with value increasing by a CAGR of +8%, forecasts data company the IWSR.