Rum Market

Market Overview

The global rum market size was valued at USD 17.16 billion in 2021 and is projected to reach USD 23.78 billion by 2031, registering a CAGR of 3.6% during the forecast period (2022-2031).

Highlights

• Dark and gold Rum dominates the market by Type.
• Specialty stores dominate the market by sales channel.
• Asia-Pacific dominates the global market.

Rum is manufactured by fermenting and distilling sugarcane juice or molasses. The pure distillate is matured mostly in oak barrels. Cocktail culture and premium brand demand fuel this industry. Non-alcoholic drinks compete heavily. "Light" rums are used in cocktails, whereas "golden" and "dark" rums are usually sipped straight, on the rocks, or cooked with. They're generally mixed now. Premium rums are best served neat or with ice. Rum has no clear definition, making it difficult to categorize. Each country's legislation defines Rum. There are rules for alcohol strength, aging, and even naming. 

Market Dynamics

Global Rum Market Drivers

Increasing Demand for Premium Rum Varieties

The rising demand for premium rum is expected to be one of the primary factors driving the expansion of the global rum market. A significant increase in per capita income in developed and developing economies is a significant factor in consumer demand for premium varieties of rum. Between 2017 and 2018, disposable income increased by 7.84% and 13.67% in China and India, respectively. In addition, disposable personal income in the United States increased by approximately 5.24 percent between 2017 and 2018. This has increased demand in Asia-Pacific and North America for premium rum. In 2019, the disposable income of China's residents was USD 4,461.95, an increase of 5.8% compared to 2018. In 2019, the growth of India's households' disposable income decreased to 0.8%.

Growing Online Rum Sales

Internet marketing and sales of liquor are gaining popularity worldwide. Smaller business entities, such as specialty spirits companies, have benefited from online retailing's ability to expose their brands to a large consumer base. Also increasing is the use of e-commerce websites as a tool to engage consumers with their brands. In addition, market participants frequently host contests on their social media platforms and award prizes to the victors.

Such competitions increase consumer participation. Specialized alcohol delivery services, such as those offered by Qizly, encourage online rum purchases. Rum online sales are increasing due to the attractive delivery services offered by third-party retailers like Amazon.com Inc. 

Global Rum Market Restraints

Growing Health Concerns

Increasing health consciousness and a growing preference for healthy lifestyles have stimulated the demand for low-alcohol rum. However, the increasing demand for healthful drinks and beverages is impeding the expansion of the global rum market. As a consequence, overall alcohol consumption has decreased. In addition, global alcohol consumption decreased four times more rapidly in 2016 compared to 2011-2015. According to the Office for National Statistics, between 2005 and 2016, the number of adults aged 16 and older who consumed alcohol in the previous week decreased by 7.3% globally.

Rum makers are pressured to adapt and provide lower sugar and calorie substitutes as more consumers seek healthier options. The possible health effects of consuming significant amounts of sugar and calories, including the danger of obesity, diabetes, and other health issues, are becoming increasingly well-known to consumers.

Increasing Number of Alcohol Abuse Prevention Campaigns

The increasing number of anti-alcohol campaigns poses a significant obstacle to expanding the global rum market. Numerous regulatory and social organizations have launched anti-alcohol campaigns in response to the rising incidence of alcohol abuse and alcohol-related accidents, particularly among the younger population. For instance, the Scottish government launched a campaign in March 2019 to raise awareness about the recommended alcohol limits. Similarly, in September 2018, Public Health England and The Drinkaware Trust, an independent charity working to reduce alcohol misuse and harm, launched a campaign to assist adults in reducing their consumption of intoxicating beverages called Drink Free Days. The primary objective of this campaign is to encourage individuals to take more days off from imbibing and to reduce the severity of adverse effects such as high blood pressure, cardiovascular disease, cancer, and obesity. These campaigns are anticipated to reduce the consumption of rum, which contains 40% alcohol. 

Global Rum Market Opportunities

Increasing Demand from Generation Y

The millennial generation, commonly defined as those between 18 and 34, constitutes a significant portion of the global population. They are open to trying out novel products and varieties. Consequently, the increasing demand for various spirit formulations and flavors among millennials will propel the development of the global rum market over the forecast period. Millennials are becoming increasingly knowledgeable about the authenticity of various intoxicating beverages, such as rum. The expanding multicultural consumer base and the prevalence of social media primarily drive interest in alcoholic beverages.

The Popularity of Rum-Based Cocktails

Customers looking for new cocktails are buying versatile, easy-to-mix rums. Producers can focus on developing rums with flavors and scents that mix nicely with other ingredients.

Technomic, a food and beverage consulting organization, found that Rum, vodka, and whiskey are the top three spirits used in cocktails in the U.S. Rum-loving Americans love the daiquiri. Google Trends shows that American daiquiri searches have grown over the previous few years. Craft cocktails' popularity and interest in unique drinks may contribute to this trend. Canada is increasingly drinking rum-based beverages. The "Dark n' Stormy" rum-ginger beer drink is popular nationwide. Many Canadian bars and restaurants provide rum-based cocktails like the Mai Tai and Rum Sour. This allows regional market expansion.

Segmental Analysis

The global rum market is segmented based on type and sales channel.

The Type is further segmented into white rum, dark and gold Rum, spiced, and others.

The dark and gold rum dominated the market and is expected to register a CAGR of 3.0% over the forecast period. Gold rum is aged in oak containers and has a denser consistency than light rum. Its tawny hue is due to its age in oak casks. In addition, dark rums are the heaviest type of rum. A significant factor propelling the gold and dark rum market is the growing demand for rum concoctions with distinctive flavors. In rum-based concoctions, gold and dark rums are popular selections. These two varieties are also employed in the preparation of various ready-to-drink concoctions. The extensive use of gold and dark rum as key cocktail ingredients is a significant factor contributing to this market segment's expansion. 

Based on sales channels, the market is sub-segmented into hypermarkets and supermarkets, specialty stores, online retail, and others.

Specialty stores are expected to dominate the market, registering the highest CAGR of 3.2% over the forecast period. On-trade distribution channels, also known as on-premise distribution channels, allow customers to consume rum at the place of purchase. These distribution channels mainly include restaurants, bars, pubs, and hotels. The UAE is one of the many Islamic countries with restrictions on alcohol consumption. In these countries, consumers prefer buying rum and other alcoholic beverages through on-trade distribution channels. In Dubai, tourists can buy and drink alcohol only at licensed venues such as hotels, restaurants, and clubs.

Regional Analysis

Based on region, the market is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East and Africa.

Asia-Pacific Dominates the Global Market

Asia-Pacific held the largest market share and is anticipated to grow at a CAGR of 4.4% during the forecast period. In recent years, Asia-Pacific has become the fastest-growing market for intoxicating beverages. This development results from a growing GDP, developing economies, and a rising per capita income. Between 2017 and 2018, disposable incomes in China and India increased by 7.84% and 13.67%, respectively. In 2019, China's resident disposable income reached USD 4,461.95, an increase of 5.8% compared to 2018. In 2019, the growth rate of India's disposable income declined to 0.8%. A significant criterion for purchasing spirits such as rum is disposable income.

Consequently, the rising disposable income of consumers is a significant factor propelling the regional demand for rum. Some regional rum merchants are concentrating on expanding their market presence through joint ventures. In addition, implementing numerous stringent regulations and policies in the region is likely to inhibit the expansion of the regional market. The sale, production, and consumption of intoxicating beverages are prohibited by law in Bangladesh. 

Europe is estimated to grow at a CAGR of 2.7% during the forecast period. Increasing health concerns regarding rum consumption are among the main factors likely to impede the market's expansion in the region. According to the World Health Organization (WHO), alcohol consumption is Europe's third-leading cause of disease and death. Consequently, several nations in the region are concentrating on reducing alcohol consumption. Russia is committed to implementing policies that will reduce alcohol consumption. Since 2005, Russia has increased the price of intoxicating beverages, decreased availability, and raised the legal consumption age. The national law of Norway regulates the hours and days of alcohol sales. This law allows grocery stores to sell alcohol until 8 p.m. during the week and 6 p.m. on Saturdays. Additionally, it is prohibited for supermarkets to sell alcohol on Sundays. These government regulations will reduce the availability of intoxicating beverages and the region's rum consumption.

North America is a significant marketplace. As rum suppliers in the region consolidate, they may expand their product offerings and increase their market share. In July 2019, Constellation Brands acquired a minority stake in premium American artisanal rum manufacturer Montanya Distillers. In North America, the rum market confronts increasing competition from substitute alcoholic beverages such as beer and wine. In Mexico, tequila is more popular than rum. Due to rising consumer demand for breweries, several are concentrating on expanding their presence in North America. For instance, 33 Acres Brewing Co. Inc. (33 Acres Brewing) announced the establishment of a new offshoot brewery and taproom in Vancouver, Canada, in October 2018. In 2018, nearly 1,000 new breweries opened in the United States. Moreover, the United States is one of the countries where craft beer is gaining popularity. The increasing availability of other intoxicating beverages may restrain the growth of the regional rum market over the forecast period.

Recent Developments

• March 2023- Bacardi promoted Stephanie MacLeod to drive whisky premiumization and growth.

Rum Market Segmentation

By Type 

• White Rum
• Dark and Gold Rum
• Spiced Rum
• Others

By Sales Channel 

• Hypermarkets and Supermarkets
• Specialty Stores
• Online Retails 
• Others

By Regions

• North America 
• Europe
• Asia Pacific 
• South America 
• The Middle East and Africa