Whitefish, MT / ACCESSWIRE / October 23, 2014 / The October 2013 IWSR (International Wine & Spirit Research) global forecast indicates that the international spirits import market is on track to grow at a 3% CAGR through 2018, with rum emerging as one of the top three fastest growing categories alongside whisky and vodka. Total rum sales volume is set to climb from the 146M cases of nine liter bottles currently sold annually to over 156M cases, while consumption in the broader spirits market is set to rise 290M cases over 2012 levels, to around 3.37B cases by 2018.
Rum is now widely viewed in the liquor industry as the next big thing according to market research from Just-Drinks, with the branded and premium segments seen as having the most room to grow, when directly compared to how well developed these segments are for spirits such as cognac, whisky, and vodka. The Decade of Rum report compiled by the West Indies Rum and Spirits Producers' Association (WIRSPA) even indicates that super-premium rum volume will jump 50% in the next three years alone, partially on the mounting strength of spiced varieties. Spiced rums, which have shown excellent traction amongst younger demographics, have posted double digit sales volume growth over the last decade according to the WIRSPA report and they now make up around 8% of the overall rum market.
Rising Rum Lacks A Premium Front-Runner
The WIRSPA report even contains a quote from global brand director at sector giant Diageo (NYSE: DEO), known the world over for their Captain Morgan brand, who noted that the super-premium category was still bizarrely underdeveloped. Diageo's global brand director was also quoted in the Just-Drinks/IWSR report last year on the rum market as saying that, when the super-premium rum category starts to take off, it will be pretty quick and dramatic. The rum market has yet to find its front-runner premium brand in terms of price and volume, as is the case in the vodka market with brands like Absolut (Absolut ELYX being the super-premium version), produced by Pernod Ricard (OTC:PDRDF) subsidiary V&S Group, or in the gin market, where Diageo's own Tanqueray holds this distinction. At any rate it seems clear that, as The Spirits Business and other industry analysts have noted, rum's party image is rapidly maturing, with spiced premium rums helping to cement the spirit's popularity among more distinguished drinkers in western markets.
Rum has been quietly making its way towards the top shelf over the last decade, after years of being seen primarily as the base for drinks like daiquiris and pina coladas. The liquor's versatility/mixability (especially white rums), as well as the emergence of high-end brands now increasingly enjoyed in a standalone capacity on the rocks, has garnered considerable favor within cocktail culture, from both consumers and bartenders alike. Yet even as RumFest 2014 drew to a close earlier this month in the UK, where 350 plus rum fans broke the Guinness World Record for the largest rum tasting in history, rum has yet to find a premium front-runner, even though brands like the diverse Cruzan Rum, bottled in the U.S. Virgin Islands by Suntory Beverage & Food (OTC:STBFY), have gained a seat alongside fine scotch and cognac at many upscale bars and restaurants. US Department of Commerce data on the Virgin Islands in particular indicates that despite a shrinking economy, rum exports were up 22% last year, with a 2.2% rise in tourist arrivals helping to keep the rum market humming and premium rum brands now looking like a viable high-end export market.
Few Opportunities For Investors To Profit
Edrington Group's 61% acquisition of the top golden rum producer in the Caribbean, the privately-held Brugal (Dominican Republic) several years ago, was a clear play to harness the attractive dynamics of the rum industry and make a bid for seizing the premium rum pole position. Eight years on they are now in a position to execute, with a 360 degree marketing plan underway in select geographical regions and a very dry, aged, smooth white rum that should appeal to premium consumers. The top international brand in rum today according to IWSR is the privately-held, Cuba-based company known for their white rum, Bacardi, which has largely failed to capture the coveted premium rum market, despite their renowned branding prowess.
Such references as these illustrate just how little access most investors have to the potential upside of a premium rum brand taking off in the way Bacardi's Grey Goose vodka has, as the major players are either huge market cap companies with a high share price, or privately-held entities. Until recently one of the only accessible targets in the space has been Castle Brands, Inc. (NYSE:ROX), which is partnered with one of the oldest rum producers in Bermuda, Gosling Brothers, whose record sales in recent years have been led by the success of their flagship Black Seal Rum brand.
Accessible New Contender With An Ingenious Brand Strategy
A challenger has appeared in this hotly contested industry in the form of Blue Water Global Group, Inc. (OTCQB: BLUU), a company for whom brand identity is a core concept and which is therefore potentially poised to become a serious contender, perhaps succeeding where even giants like Diaego and Bacardi have as yet somewhat failed to really strike a lasting chord with premium rum consumers. Focused squarely on the Caribbean, Blue Water Global Group is cementing their overall brand identity via a chain of casual dining restaurants which cater to the Caribbean lifestyle expectations of the booming North American tourism market. By providing sumptuous menus of food whose quality is consistently good from location to location and an idealized Caribbean-themed atmosphere that includes features like an open-air tiki roof and swimming pool with swim-up bar, the Blue Water Bar & Grill(TM) brand is being executed in a manner similar to the popular Hard Rock Cafe, complete with branded merchandise available in-restaurant.
With an initial location on the island of St. Maarten (Dutch West Indies) at Indigo Bay, a lush tropical beachfront commercial/residential project in the heart of what has become one of the Caribbean's top duty-free shopping Meccas, complete with pristine white sand beaches and brilliant blue coastal waters, Blue Water Global Group is off to a great start branding-wise for the proliferation of their line of premium rums. Distilled locally in the Dominican Republic with crystal clear water and organically-grown sugar cane, spiced Blue Water Caribbean Gold(TM) and the flagship Blue Water Ultra Premium Rum(TM) will also be contained in gorgeous (imported), then packed six at a time in custom four-color printed cases. Such an articulate strategy to capture the essence of the Caribbean via their restaurant brand, and then telegraph that articulation to the rapidly growing rum market via a line of top-shelf, premium branded rums, may just be the ticket to capturing the imagination and tastes of premium drinkers the way Grey Goose and other brands have done in vodka and other spirit categories.
Blue Water is set to start shipping product soon, after recently announcing the initial shipment of bottles, stoppers and four-color box cases, with this first release of the high-end spirits representing nearly 20k 1-liter bottles. Beyond featuring the rums at their restaurants, the company plans to fully leverage their network of Caribbean distribution contacts for maximum brand impact and they have already secured access for both the Port of St. Maarten and the duty free shopping area of St. Maarten's airport.
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SOURCE: Emerging Growth LLC