For Whyte & Mackay, gaining the distribution rights for a brand in the fast-growing and lucrative golden rum segment will complement other areas of its spirits brand portfolio. Furthermore, this deal should offer a growth opportunity for Cockspur Rum, allowing it to compete in a segment where only a handful of key brands play.
Distribution rights for brands change hands all the time. However, the acquisition by Whyte & Mackay of the distribution rights for Cockspur, a Barbadian golden rum, highlights the burgeoning success of the segment in the UK market.
The deal offers mutual benefits to both companies. According to John Taylor, chairman of the West Indies Rum Distillery (which owns the Cockspur brand), one of the key reasons for agreeing to the deal was because Whyte & Mackay's sales structure should give Cockspur "a real boost and help ensure the brand reaches its true potential in the UK market". On the other hand, Whyte & Mackay will be able to expand its portfolio, providing its customers with a broader range of products; the company already distributes vodkas such as Vladivar, Pinky and Snow Leopard (the latter of which Whyte & Mackay co-owns) and whiskies such as the Isle of Jura and the Whyte & Mackay brand itself.
Although the market for golden rum is small in the UK, it is growing; the segment has been championed by Diageo-owned brands such as Captain Morgan and Morgan's Spiced, as well as Pernod Ricard's Havana Club. There are a number of reasons for the spirit's growing popularity. Firstly, it has a broad appeal compared to vodka, for example, which is preferred by women, or whisky, which tends to be drunk by men. As such, golden rum has been able to increase its market share by tempting drinkers from both of these spirit segments, at an equivalent price point.
Furthermore, golden rum is easily mixable and can be used as an ingredient in a wide range of cocktails, as well as being served just with coke. Consequently, the spirit has gained a lot of credibility among bartenders in the cocktail world, who perceive it to be more "characterful" than vodka, but just as versatile for long drink-making. This is a quality on which whisky, with its more distinct taste profile, often misses the mark.
Golden rum tends to be consumed at parties or celebrations, occasions which are growing in importance in both the on-trade and the off-trade sectors. Indeed, this affiliation with up-tempo occasions has made golden rum more fashionable among influential new product adopters. The segment has benefited from the recession-driven shift to entertain at home, coupled with current mixology trends, which have boosted the off-trade sales of some spirits.
Moreover, the spirit is often perceived as more 'authentic' by many consumers; Captain Morgan and Havana Club for example have a brand story, which other segments of the spirits category, such as (flavored) vodka, struggle to match. Datamonitor research has highlighted that the additional aura which authenticity can impart on brands has particular relevance in today's highly competitive markets.
However, aside from Captain Morgan, Morgan's Spiced, Havana Club and Sailor Jerry's, the golden rum segment is represented by relatively few big brands in comparison to the larger vodka or blended whisky segments, in which numerous players with large advertising budgets compete for market share. This suggests that Cockspur may be readily accepted as a viable competitor in the golden rum sector.
The other interesting angle on this deal is that Scottish drinking habits do tend to be rather different from those of the rest of the UK; Tennent's is by far the leading lager brand in Scotland and there is a much greater tendency to drink vodka and golden rum. Indeed, nearly half of all golden rum sales are generated in Scotland, as are nearly all of Morgan's Spiced's sales, making it one of Diageo's biggest brands in Scotland overall. If Cockspur is successful in tempting drinkers away from Morgan's Spiced, the knock-on effect could benefit Whyte & Mackay in its 'home' market.
Going forward, this distribution deal will unquestionably raise competition levels in the burgeoning golden rum sector and will help to drive sales growth. Competing effectively may require new developments in product formatting, marketing and packaging; evidently a shake-up is on the cards.