SWOT: U.K. Rum Market
The UK rum market has seen very strong growth in recent years, reaching £1 billion in 2017. However, there are signs that this growth may be flattening and could even decline as the spirit market shifts towards gin, which could leave the nearly 200 brands sold in the UK (up from just 50 in 2006) vulnerable during a period of contraction and consolidation.
- Rum sales have grown rapidly in recent years, reaching £1 billion in 2017 and growing another 4.1% in 2018. However, see Weaknesses below.
- Rum sales have outgrown all other categories of spirits in the UK until recently.
- Millennials, who are "a key market for boutique drinks brands," have greatly increased in their spending power.
- The Wine and Spirit Trade Association (WSTA) is very enthusiastic about the market, claiming that there are no signs of it slowing. However, this may be over-optimistic, as detailed below.
- The rum market may have peaked in the UK, with market growth flattening in 2018 and "minor declines" expected through 2021.
- However, the number of spirit distilleries in the UK — including but not limited to rum — jumped 30% in just one year, from 131 in 2016 to 170 in 2017.
- Similarly, the number of brands on the UK market has grown from 50 in 2006 to nearly 200 in 2019.
- Even more new rum-manufacturing companies and micro-distilleries launched in 2018.
- Taken together, the above points suggest that the market may be over-saturated and therefore vulnerable to the expected global slowdown and/or decline in the rum market.
- The UK spirits industry, in general, is seeing growth, particularly in premium-priced spirits.
- Flavored rums, particularly coconut, are growing in popularity, "appealing to bartenders who are looking for fun and quirky ways to make cocktails."
- Dan Buckland, Co-founder of the Drum & Black Rum Co., states, "Consumers are becoming more adventurous with their beverage choices, and the more exploration they do, the more knowledgeable they become." He also notes that consumers are gravitating towards premium, spiced sipping rums.
- Consequently, micro-distilleries and craft spirits have proven very successful. For example, a family of four from London moved their micro-distillery to "a state-of-the-art facility [in] Livingston, West Lothian," with an expected 400% increase in their annual sales.
- The Cariforum-UK Economic Partnership Agreement (EPA) was signed in March 2019 and ensures that there will be no tariffs placed on goods from Caribbean states, including rum. This agreement was particularly welcomed by the West Indies Rum and Spirits Producers Association (WIRSPA).
- WSTA predicts "that by the end of 2019, flavoured and spiced rums will knock white rum off top-spot as the most popular type of rum for shoppers picking up their tipple in shops, supermarkets and off-licenses."
- Also, tastes are changing to golden and dark rum, with golden rum sales increasing 7% to £374 million (in contrast to the flat growth of the industry noted above), indicating rapidly-changing tastes in consumers.
- Rum's 2018 market growth (+4.1%) was entirely overshadowed by a surge in gin's popularity (+52.2%).
- With the UK's withdrawal from the European Union (aka Brexit), there are concerns that regulatory changes in both entities could have a detrimental effect on the UK's spirits market.
We began our research by seeking market reports for rum and/or liquor either focused on the UK or in which the UK is prominently mentioned. While these are most often proprietary and expensive to obtain, there are usually sufficient details in the public abstracts to guide our research further. This also has the benefit of allowing us to locate publicly published articles which comment on the contents of the report and provide additional details. In this case, due to the surge of popularity of rum in the UK, locating good and authoritative sources was not an issue. Indeed, most of our research time involved sorting through and collating the immense amount of information available.
We should note that the picture that we believe emerges from the data is somewhat bleaker than the exuberant market predicted by some experts, most notably those getting their information from the WSTA, though it is perfectly consistent with the predictions of Obis Research on the global rum market and the slowdown seen in the UK rum market in 2018 (see above). We hypothesize that the WSTA is spinning the data optimistically to avoid talking down the market and harming its members. Nevertheless, we have included the WSTA's observations about shifts in the tastes of the UK's drinking population, as there is very little public data on this subject that could not ultimately be traced back to the WSTA and we see no reason why their optimism would affect their observations in this regard.