A rum boom has been on the cards for some time. Now, it looks like the tipple is finally about to explode.
The performance of established and challenger brands proves the point. Rum leader Captain Morgan, for example, is worth £139.8m in grocery [NielsenIQ 52 w/e 10 September 2022], making it the seventh-biggest name in spirits. Sure, it lost 4.4% of value last year – but its decline was markedly slower than that of 14 other top 20 brands and the overall spirits category.
Then there are disruptor premium rums like Dead Man’s Fingers. Its value rocketed 22.1% in the 52 weeks to 30 April 2022 [NielsenIQ], strengthening its place in a domestic rum market that Campari Group values at £1.2bn.
And, as the market matures, Brits are increasingly developing a taste for fancier lines. Take London’s Duppy Share. It bagged £2m last month in a fundraising round and is forecasting 10% growth in the UK in the 2023 financial year. Rival British brands Libations and Tidal have enjoyed similar success in attracting investment.
Meanwhile, big name distillers have upped their game. Pernod Ricard became the UK distributor of La Hechicera rum in January 2022, some months after expanding its Havana Club brand into spiced variants. Also last year, Brown-Forman announced the acquisition of Venezuelan brand Diplomático.
No wonder, then, Captain Morgan owner Diageo has snapped up Don Papa, a premium dark rum from the Philippines, in a deal worth up to €437.5m (£383m). The booze behemoth will pay €260m upfront, with a further potential sum of up to €177.5m through to 2028. This is subject to Don Papa’s performance and reflects ”the brand’s current growth potential”.
“This acquisition is in line with our strategy to acquire high-growth brands with attractive margins that support premiumisation, and enables us to participate in the fast-growing super-premium-plus segment,” John Kennedy, president of Diageo Europe & India, said this week.
Don Papa was founded in 2012 by former Rémy Cointreau executive Stephen Carroll. It’s distilled by Ginebra San Miguel on Philippine island Negros – nicknamed Sugarlandia for its abundance of sugar cane – and aged in American oak barrels. Carrol believes it is a good fit for Diageo. “Diageo has a strong track record in nurturing founder-led brands,” he said at the time of the announcement. “They believe in our unique story and have genuinely embraced our brand idea.”
With a price tag of £53.99 for 700ml, Don Papa won’t suit everyone’s bank balance. But the trend for fancier rums and marketing might of Diageo could convince many that it’s a price worth paying – even during a cost of living crisis. It’s not unknown for drinkers to trade up during an economic downturn, choosing quality over quantity as a treat to combat tough times.
The days in which rum was largely seen as grog for sailors, pirates and – for TV viewers of a certain age – a grizzled DJ in the Caribbean, look long gone. And with the gin craze in fairly significant decline, a power vacuum in spirits is opening up. It could soon be full of rum.
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