RumVersusTequila

Rum vs Tequila

Head On

RUM VErsus Tequila

Head on, JuNE 2007, COMMENTS

James Robinson [above left], brand manager, Appleton Estate Jamaica Rum and Wray & Nephew White Overproof Rum, and Mark Barrett [above right] tequila ambassador for Diageo GB look at the market potential of two rising stars of the spirit category

James Robinson:

The first time I tried a (quality) rum was in a well-known 5 star London hotel bar, in 1999. I was trying to impress a certain young lady when the bartender asked me for my order. Luckily, I was rescued from potential embarrassment of ordering ‘a pint’ by our erstwhile bartender, who masterfully steered me towards the Daiquiri. This has been one of my staple drinks ever since, along with the Old Fashioned, Treacle and Sazerac (all with aged, golden rum, naturally). Since then, something of a love-affair has taken place with the spirit (unlike the young lady), in which I have had the pleasure of sampling rum from all over the world, always lead by the immeasurable skill & passion of the bartender.

At the moment the on-trade spirits sector is an exciting category because it’s undergoing something of a drinks revolution. For years it has been a sector dominated by white spirits, particularly vodka, but this dominance is now being threatened with strong growth from other spirits, most notably, premium golden rum as consumers increasingly look to trade up and from flavoured rum as younger consumers enter the market.

Tequila is undoubtedly another spirit that is taking advantage of this shift and is wisely developing the premium end of the market by moving away from shots towards aged tequilas with different styles and more refinement.

Personally I’m a fan of aged, sipping tequila and I think it currently has a great opportunity in the UK market but it has its limitations and for me there’s no doubt that rum will always win out over tequila for a number of reasons.

Firstly, we know from our own on-trade research that rum is seen by premium bars as a growing category about which many are truly passionate – bartenders enjoy working with rum and are drinking it themselves. As the role of bartenders becomes increasingly important in influencing consumers so their love of rum will play a critical part in its growth.

Secondly, consumers are undergoing a ‘taste evolution’ and are searching for more challenging flavours which is driving interest in golden, dark and aged rum as well as some of the premium white rums such as Appleton White and Elements 8. Rum is considered easy to appreciate, fitting this trend towards depth of flavour yet not too difficult in the way that perhaps a malt would be.

Following on from the cocktail’s 200th anniversary year rum is also seen by many as an ideal cocktail ingredient. The range of different flavour notes from vanilla, coffee and cocoa to banana, orange peel and spices lend themselves well to a huge range of cocktails and many rum based recipes are becoming established classics in their own right such as the Mai Tai and the Daiquiri.

Rum’s exotic heritage, hailing from the Caribbean’s Spanish, English and French speaking islands adds to it’s appeal as well as its interest as a category with huge differences to be found in say a Cuban, Jamaican or Martinique rum.

Rum was first distilled in the Caribbean in the 17th Century and many of the large producers have a long history. The Appleton Estate for example has been producing rum in Jamaica since 1749.
If the anecdotal evidence on rum’s side isn’t enough then the facts and figures should speak for themselves. Global sales were 108 million cases in 2003 with golden and dark rums growing 23% between 1994 and 2003. Sales of the super premium rums (mostly golden) have more than doubled in the last five years and flavoured rums grew by a staggering 600% between 1994 and 2003. In the UK market sales have now reached around 2.5 million cases in a market worth around £600m at retail, representing 7% of the total spirits market in value terms.

It is worth remembering that although rum is an old category it is not yet a mature one, now it appears, its time has come... I rest my case.

Mark Barrett:

The tequila that is popular today was first mass produced in the early 1800s in Guadalajara, Mexico. It’s not always been an established drink in upmarket or upscale bars, mainly because of negative associations with irresponsible alcohol consumption. From Tequila Slammers to Tijuana, where many young Americans escape to from San Diego to taste alcohol for the first time, there’s been something of an anti-establishment or low brow perception of Tequila as a harsh tasting shooter.

However, the drink remains one of the most popular in the world and in recent years, I’d say since the late nineties, corporate interest has grown massively, so much so that the US has signed the Tequila Trade Agreement in January 2006 to ensure the ease of transport and the quality of Tequilas coming out of Mexico. Meanwhile, the quality Tequila brands such as Cuervo and Don Julio are being supported and distributed with an emphasis on taste profile, purity and the quality of the agave grapes used to create a large but as yet untapped interest in the drink.

The rise of tequila is far more recent than rum, and I would say that it has some way to go before reaching its full market share. Unlike other types of spirit, it has not benefitted from big advertising spends and the drinking public are only just beginning to become aware that upscale tequila brands are available in bars and clubs. A brand such as Cuervo has been established as a ‘hot brand’ brand by Impact magazine in 2005, and in the same year hit 7% volume growth for the third year in a row, which equates to 9% net sales growth, or 4.5 million 9 litre cases. This growth has mainly been driven by adventurous mixologists in upmarket bars such as Lab, Hakkasan, Green and Red and Pacifico.

These venues typically attract drinkers who are smart, fashionable and interested in new products, and such venues try to provide something new and interesting for their regulars to try. This has stimulated interest in the tequila category, with customers and bar staff alike paying attention to the heritage of tequila and the various distinctions between white, gold, reposado, aged and extra aged varieties of tequila. A whole new culture of tequila is being created, and in our experience when the demand begins to expand in this way the implications for the brands are huge. We think that a brand such Don Julio Reposado, made from 100% agave and rested in cask barrels, will become the connoisseur’s lead spirit of choice.

Taste is everything with Tequila. Cuervo, the ninth most popular spirit in the world according to AC Nielson in 2006, has been widely adopted in a whole new generation of tequila cocktails because of its distinctive and cask based ageing process. The complexities of tequila production make it a compelling drink for any mixologist. An aged or rested gold or white tequila, whether mixed or made from 100% agave, is a lot softer and more distinctive than a nuts and bolts tequila. We have seeen many cocktail competitions in which mixologists have experimented by mixing tequila with chilli, ginger, mint and honey flavours, while the agave syrup, now readily available, can been used instead of traditional sweeteners. This has meant that almost any cocktail can be re-interpreted with tequila instead of vodka. Venues such as Pacifico and the Red and Green café have seen an increase in popularity of the tequila margarita (which uses tequila and agave syrup instead of the traditional vodka and sweetener) or a Bloody Maria - the tequila-based version of the classic Bloody Mary.

And while the potential growth for tequila is huge in the cocktail category, it is also gaining increasing popularity in restaurants. As part of our marketing activity we have held a number of taste trials for dry led venues which has paired off Don Julio and Cuervo with sympathetic dishes created by acclaimed chef Enrique Decolsa. Again, this premium association with good quality food and stylish restaurants is potentially a huge market driver for Diageo brands and the tequila category as a whole.

Ultimately, I think it’s too early to say whether there is going to be a competition between rum and tequila, and I think within the growing spirits category there is room enough for the two liquids to co-exist without eating into each other’s market share. Having said that, I believe that tequila is still in its infancy. We have seeded Don Julio in a only a small handful of very influential accounts and while this has raised the demand for the brands, we have still to roll the drink out to a mass market, so it is too early to estimate the final impact of what I believe is a very strong brand.

From: June 2007 Issue

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