Content of the study:
The rum market - Italy

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MARKET SUMMARY

1.1 Definition and presentation

Rum is an alcoholic beverage obtained through the fermentation and distillation of its main ingredient: sugar cane. Sugar cane is a tropical plant whose sucrose is used as a raw material in the food and beverage industry. First records of rum date back to the first half of the XVII century in West Indies, when African slaves discovered molasses – an ingredient generated during the process of sugar refinement- could ferment into alcohol. In no time the popularity of the drink reached North America and not long after that it became one of the most profitable industries of New England. Today rum’s most important ingredient – sugar cane – is the world’s largest crop by production quantity.

Rum can be consumed at home or out of home and as a drink or used in the kitchen. There are different typologies of rum, the three macro categories identifiable are:

  • White rum
  • Dark rum
  • Spicy rum

Global rum sales volume were valued at 180 million liters in 2018, and are expected to grow in the following years, at a CAGR of 0.6% between 2019 and 2023. 

The market in Italy has experienced a boom in the past three years, with production growing by more than 100%. This represents unprecedented growth for this kind of spirit, which is historically not the most popular one in Italy, where the market is driven by traditional drinks like grappa. 

The success of rum is to be attributed to Italy's role in the shift of perception of rum: traditionally a mixing spirit, used mainly for the preparation of cocktails, rum is now starting to have a role in tastings.
Consumption of rum in Italy is expected to be influenced by a series of changing social, demographic and economic factors, such as aging population or increasing interest towards premiumization. 

The main players of the market in Italy include Bacardi, Martini, Pernod Richard and Diageo.

 

1.2 The impact of rum worldwide

The graph below shows us the evolution of the value of European sales in volume (***), sales had an annual volume of ***.** million liters. Between **** and ****, sales volume has evolved with a CAGR of *.**%, and the average annual sales volume is *** million liters. 

Forecasts indicate that a steady growth trend will be ...

1.3 The Italian market

The rum market in Italy has exploded in the past few years: after declining until ****, the production of rum rose sharply and grew at impressive rates to satisfy the newly high demand. From **** to ****, production grew by ***.*%, passing from **.* million euros to ***.* million euros.

Evolution of sold production of rum Italia, ...

1.4 International trade

 In the following section, imports and exports are analyzed through the UN Comtrade, under the following commodity code:

******: Rum and tafia

The graph below shows the evolution of imports and exports: both have been growing exponentially until a slight decline in ****, caused by the pandemic and the crisis which followed. ...

1.5 COVID-19 Impact

The COVID-** pandemic has had devastating effects on many markets and industries. Due to the nature of the virus (***) sanitary measures were put in place, the most significant of which were mandatory, government-mandated closures that kept people home and halted most economic activity. Italy, being the first European country affected by ...

DEMAND ANALYSIS

2.1 Changing alcohol consumption in Italy

Alcohol consumption is experiencing a growth in Italy, drive mainly by lifestyle and aging population. The graph below shows the evolution of alcohol consumption per capita in Italy: we can observe a sharp rise, especilly in more recent years, when the consumption per capit passed from **.* liters per year to **.*.  

Alcohol ...

2.2 Determining factors: premiumization, cyclicity, complementary products

Aging population

The largest age group in Italy is the one represented by the so called “over **s”, which define approximately **.*% of the entire population. Istat data showed that in **** for the first time since ****, this age group has surpassed the “over **s”. Moreover, half of the population is over ** years ...

2.3 Seasonality of demand

The graph represents the proportion of searches for a given word in a given region during a given time period, compared to when it was most searched (***). Thus, a value of ** means that the keyword was used less often in the given region, and a value of * means that there is ...

MARKET STRUCTURE

3.1 Highly concentrated alcohol market

The Italian production of ethyl alcohol and spirits recorded a *% increase compared to **** with an annual production of * million and *** thousand hectoliters. The growth is considerable although the figure itself represents a small portion of the total European production of spirits (***). [***]

Within the spirits market, rum does not play a fundamental ...

3.2 Value chain of the market

The value chain of the rum market is synthesized below.

3.3 Rum off-trade versus on-trade

Business to Business

Production and manufacturing take place in a different company, which in a later stage, once the product is complete, sells it to retailers.

Business to Consumer

Production and manufacturing take place in the same company that handles the client interaction and sales.

The most popular channels in the ...

3.4 Companies and employees in the sectors

 The graphs in this section show the main figures of spirit distillation companies in Italy. 

As the pie chart shows, the majority of companies in this sector are limited liability companies, about **.*%. On the other side, the other most common legal form in the field is sole proprietorship and entrepreneurship, a ...

ANALYSIS OF THE OFFER

4.1 The journey to rum

First phases

The production of rum starts at the very root of its main raw material: sugarcane. Although rum can be distinguished in two varieties on the basis of the ingredient, the initial journey is the same for both. The sugarcane is harvested by hand and consequently crushed by a machine, ...

4.2 Rum price influenced by increasing interest

Rum at its origin was identified with a low-class spirit, it was the alcohol of slaves and pirates. Today though, due to the premiumization of brands and changing consumer tastes, rum has become a mid-priced beverage. A factor that seems to be influencing the increasing interest towards higher-priced verities of rum ...

4.3 The new role of rum: tasting

The role of rum is shifting: if historically it was mainly used in mixing, it is now the latest trend of tasting.

Leonardo Pinto is globally recognized as one of the best rum experts in Europe, trainer and consultant for companies, as well as director of ShowRUM - Italian Rum Festival, ...

RULES AND REGULATIONS

5.1 Rum regime

For the production of spirits, EU countries are subject to the (***) N. ***/****, which gives specificities on the ingredients of rum, the labelling and the geographical origins.

For the distribution and commercial sale, national legislation comes into play, in the general context of the distribution of alcohol on the Italian territory. Norms ...

5.2 Excise regulation

In Europe specific goods are subject to the excise duty, alcohol being among those. Excise duty is an indirect tax that is therefore applied on the production or consumption of certain products (***). the excise generally is applied when those categories of goods are produced or imported in the EU.

Excise duty ...

POSITIONING OF THE ACTORS

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Reviews (1)

Reviews (1)

The rum market - France

Publicado en 19/05/2023 by Joël Cocote Pinel Fereol

Good choice of themes and rigorous analysis.

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Customer cases and references
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