Since the height of the Covid-19 pandemic, rum has performed brightly in global travel retail — the strong US dollar, a surge in international ‘revenge’ travel by US passengers and a widening appreciation of premium-plus rum in markets such as the UK have propelled the category forward. In 2022, an anomalous year marked by the relaxation of Covid-induced travel restrictions, GTR rum sales grew by nearly 100%, according to IWSR Drinks Market Analysis.
Despite these promising signs, the segment still has a way to go to live up to its potential in the channel. The category relies too heavily on the Americas, with the US and the rum-producing regions of the Caribbean and Latin America accounting for nearly 40% of volumes in 2022.
Rum also remains under-premiumised compared with other spirits categories — the standard price tier generated nearly 74% of GTR sales in the same year.
Diplomático comes up trumps in the fight for shelf space
In Europe, where consumer interest in premium-plus expressions in domestic markets such as the UK and France continues to grow, rum struggles for duty-free shelf space. According to recent data from GTR research firm Pi Insight, gin boasts an average of 51 SKUs in European travel retail outlets, compared with only 31 for rum.
Further afield, the situation is even more challenging. At Dubai Duty Free, one of the leading GTR locations for spirits sales worldwide, rum accounted for only 2% of liquor volume sales last year.
Leading brand owners acknowledge the challenges of growing rum’s footprint in the channel, but they remain optimistic. “The super-premium category still needs to be developed in GTR compared to other spirits categories,” concedes Patrizia Damiani, global brand director for Brown-Forman-owned Diplomático Rum. “Likewise, the opportunity for premiumising the category is huge and has been getting the attention of corporations and consumers.
“In the context of GTR channels, the total rum category is forecast to achieve an 8% CAGR between 2022 and 2027,” she adds. “The super-premium-and-above segments are expected to experience even more rapid growth, with a projected CAGR of 13%. This shows the great potential of the category and what we expect is to see further growth and a more competitive landscape.”
Around 80% of Diplomático’s domestic sales are generated in Europe and this regional bias is apparent in the brand’s GTR business too, with France, Czech and the Nordics all strong markets. “We have also been very active in the Americas, particularly the US, Central America and the Caribbean,” says Damiani. “We have opened up new opportunities in the Middle East, Australia, New Zealand, Hong Kong and Singapore.”
The flagship expression for the Venezuelan rum in travel retail is Diplomático Riserva Exclusiva, a blend of exclusive rum reserves aged for up to 12 years. Damiani maintains that as travelling consumer appreciation of higher-quality rum grows, the brand is also keen to focus on its Prestige range, which includes ultra-premium iterations such as Diplomático Single Vintage and the Pedro Ximenez sherry cask-finished Diplomático Ambassador.
Takamaka goes hard on ‘diversity in distribution’
Takamaka Rum from the Seychelles is another upbeat voice. Launched in 2002 by brothers Richard and Bernard d’Offay, the brand is now available in around 44 countries. In 2022, the rum even opened a GTR outlet at Seychelles International Airport, which continues to deliver year-on-year growth.
“Last year was fantastic for Takamaka Rum in the GTR sector,” says Bernard d’Offay. “In one of our leading travel retail markets in the Middle East, we experienced double-digit growth, surpassing the overall category growth. This success reflects the global surge in consumer interest in rum, the trend towards premiumisation, and the fascination with the Seychelles. Combined, these factors have significantly contributed to our brand’s performance.
“Our approach is to remain flexible and responsive to the unique needs of different regions,” d’Offay continues. “In Europe, we collaborate with our national distributor, Maison du Whisky, and in the Middle East and the Indian subcontinent, we partner with a specialist distributor, Gulf Beverages. This diversity in distribution strategies allows us to effectively meet local market needs. We’re open to exploring new partnerships that align with our strategic goals.”
Dead Man’s Fingers ‘thrives’ as the UK moves into third place
The UK has a long and complicated history with rum, stretching back to the 17th Century and closely associated with the country’s empire and powerful navy. On the back of a growing cocktail culture and the appearance of domestic UK craft rums, this most mature of spirits categories has experienced a resurgence in recent years that has filtered into global travel retail. In 2022, rum volumes in the UK’s GTR channel rose by nearly 240%, making the country the third-largest GTR market for rum worldwide.
Fast-growing domestic spiced rum brand Dead Man’s Fingers is thriving, according to Halewood Artisanal Spirits GTR director Eamon Prunty. “Sales of Dead Man’s Fingers Rum have grown beyond all our expectations over the past two years, with sales through airports last year increasing by 250% as passenger numbers recovered and our distribution increased.
“This has been both organic, with retailers increasing the number of SKUs, and through new listings. For example, we’ve recently gone into Ireland with Aer Rianta International, following the brand’s success at ARI’s Cyprus airports.
Prunty says the key GTR markets for Dead Man’s Fingers are currently the UK and Europe, but he sees potential further afield in Australasia and South Africa. “Dead Man’s Fingers is also proving to be a favourite for in-flight sales, and we now have listings for duty-free sales with airlines including Jet2, easyJet, TUI and SAS. We also see potential for the brand on ferries and cruise ships.”
Climbing the ladder with the market leader
Bacardí dominates the category in travel retail. The standard Bacardí Carta Blanca has traditionally held sway, proving a popular drinks cabinet restocking purchase for holidaymakers, but in recent years Bacardí GTR has been actively trying to persuade travellers to trade up to higher-priced expressions in its portfolio.
A prime example of this promotional activity took place in October at Miami International Airport in partnership with Duty Free Americas (DFA). The Bacardí Rum Tales promotion sought to tempt consumers into trading up to premium-plus iterations such as the artisanal Venezuelan rum Santa Teresa 1796, Caribbean blended rum Pyrat and Facundo, an ultra-premium Puerto Rican rum sourced from the Bacardí family’s private reserves.
The activation featured a digital ‘Rum Selector’ platform, which travellers accessed by scanning a QR code in-store with their smartphones. They could then take an interactive quiz asking them about their interests, lifestyles and flavour preferences to guide them to a recommended rum choice. Highlighting the omnichannel nature of the campaign, travellers were also encouraged to try the Rum Selector via a targeted digital marketing campaign that engaged with them before they travelled.
“Rum is a fascinating category, full of heritage and craft; and it’s rapidly premiumising,” says Bacardí GTR’s head of marketing. Ignacio Vazquez. “However, we know it can be a complex category to understand and so, with Bacardí’s position as the world’s most-awarded rum brand, we set out to help new and existing consumers navigate and explore the category, by offering many entry points that encourage new discoveries.”
Havana Club and the premium-plus opportunity
Havana Club international director Nicolas Souchon maintains that GTR operators need to give premium-plus rum more floor space. He says that shelf space for rum in non-domestic GTR does not reflect the category’s growing market share within premium-plus spirits. To support this view, Souchon cites the latest IWSR figures showing that from 2019–22, the growth of super-premium (+7.2% CAGR) and ultra-premium (+15.1%) significantly outpaced that of standard/premium rum (+2.8%).
“This means travel retail operators not giving attention to premium-plus rums are missing an opportunity to engage with serious spirits drinkers, who we also know buy into innovation and provenance, which the channel is well-placed to deliver on,” Souchon says.
“Thanks to its smooth profile, diversity, geographic origin and variety of products, rum has established itself as a fashionable and credible alternative to high-end classics, such as scotch whisky and cognac.”
Souchon maintains GTR remains an excellent testing ground for new launches such as Havana Club Smoky, an Islay whisky cask-finished expression, which was released initially at selected European airports in addition to Cuba. “The good performance of the product in the travel retail channel resulted in our expansion plan for the product, which is now part of Havana Club’s core range,” he says.
Bringing Don Papa to life in GTR
With the exception of the Philippines, where lower-priced products predominate, rum remains relatively small in most of Asia, making it a comparatively hard sell for regional duty-free retailers. If there’s one brand that could break through in this part of the world, it’s super-premium Don Papa, a dark rum made in the Philippines, launched by entrepreneur Stephen Carroll in 2012 and acquired by Diageo in January last year for an initial EUR260m (then-US$281.6m).
“Distilled and aged on the island of Negros Occidental in the Philippines, Don Papa was created as a homage to local hero Papa Isio, who led the independence movement for the country,” explains Diageo Global Travel’s senior brand manager for vodka & rum, Hollie Dempster.
“The Spanish-style distillation process, followed by ageing in ex-bourbon casks, gives Don Papa a sweeter, more accessible taste profile; paired with ginger ale and bitters, it makes the perfect cocktail.
Diageo has an outstanding track record of brand-building both in GTR and within rum: the UK-headquartered multinational has already elevated Guatemalan super-premium brand Zacapa to become one of the top ten best-selling rum brands in the channel.
“We’re excited to gradually bring the Don Papa brand to life across travel retail,” adds Dempster. “We’re obviously proud of its Philippine heritage and production, which brings something new to the existing rum content around. There will be more to come, certainly.”
The future looks bright, then, for Don Papa and Dempster reveals that a channel-exclusive expression of Zacapa is also in the pipeline for 2024. Diageo’s best-selling rum in GTR, meanwhile, remains Captain Morgan, which is only outsold in the channel by Bacardí.
La Hechicera makes the case for GTR one-offs
Another brand gearing up for the release of a GTR exclusive is Colombian rum La Hechicera, already the best-selling spirit at Bogotá’s El Dorado Airport, the Latin American country’s main international gateway.
The brand is also now available at other Colombian airports and seaports, as well as regional airports in Argentina, Panama, Aruba, the Dominican Republic, Florida and, more recently, Ecuador, Brazil, Jamaica and Mexico. Through its partnership with Pernod Ricard – the group acquired a majority holding in 2021 – La Hechicera has also commenced distribution at European airports.
“During the summer, we will be launching an exclusive travel retail pack featuring two of the finest liquids ever produced in our bodega — Serie Experimental No.1, Muscat Experiment and Serie Experimental No.2, Banana — which we’re hoping to roll out worldwide,” says a company spokesperson.
If there’s one step that rum producers could take to turbocharge rum’s progress within travel retail, it would be the development of more of these exclusive products. They provide travellers with an extra reason to purchase and obviate the need for duty-free retailers to try to match downtown prices.
Over the past two decades, the value of exclusives has been well-proven within single malt scotch as both a means of premiumisation and expanding market share. The question now, though, is whether other rum brand owners will follow Diageo’s lead and invest in exclusives over the longer term.
