Demand for locally produced rum in the Philippines is expected to decline as consumers shift to brandy and premium, imported rums, according to a recent market research report made by just-drinks and The IWSR, two sources of global beverage industry news and data.
The report entitled Global Rum Insights – Market Forecasts, Product Innovation and Consumer Trends Research reveals that large markets for locally produced rums such as India and the Philippines will decline. Both countries will lose a total of more than 17 million cases in 2014 to 2019.
“In both India and the Philippines there has been a switch in consumption out of rum and into ‘brandy’. I use the inverted commas because it’s not brandy as we would understand (i.e. it’s not made from grapes), but made from a neutral alcohol base spirit,” Richard Woodard, an analyst and regular contributor to just-drinks, tells Hospitality News Philippines.
“In both cases, brandy products are adding sales year by year, and attracting local consumers who were previously rum drinkers. For instance, Emperador in the Philippines and McDowell’s in India. Both are multi-million case brands in their respective markets,” he adds.
Around the world, total volumes in the rum sector will drop by a CAGR of 1.73 percent from 2014 to 2019, representing about 12 million cases, according to the report.
While a large portion of the decline will be seen in the lower tiers of the rum market, the forecast for premium and imported rums is more optimistic. In fact, without considering value and low-priced rums in the picture, volume will actually increase by nearly 5.5 million cases to 64.5 million in 2019.
About 97 percent of global rum sales in 2009 came from standard-and-below quality rums such as low-price, value and standard segments. Between 2008 and 2013, the growth of higher quality rums like premium, super-premium and ultra-premium outpaced standard-and-below rums, according to the report.
“Growth in premium, imported rums is coming as economies evolve and grow,” says Woodard. Such growth will be fueled by emerging middle class consumers with larger disposable incomes and who aspire “cool” Western brands like Captain Morgan, Bacardi and Havana Club, he adds. “As this happens, it may also further erode the market share of local brands.”