Growth and Survival Strategies In The Rum World

by ,

One of the most common questions I received this year during consulting engagements is “How can a rum brand better position itself to survive a tough economy?”

My answers are always customized, based on each client’s specific situation, risk tolerance and installed capacity (production and distribution).  But here are a few points that should apply to most:

  • Know where you are: Understand which tiers your products retail in (Value, Premium, High-End Premium or Super Premium) and what the 3, 5 and 10-year growth patterns are for those tiers.
  • Know your competitors: Understand who dominates each tier, how they promote their products (tastings, ads), how often they refresh their image, their on/off premise allocations, etc.
  • Analyze your costs: What percentage of your total COGS (Cost of Goods) is labor, materials, freight?  Are you overspending on freight because your primary markets are located far away from your bottling/manufacturing?  Are you using the same bottle for both your low-end and high-end products?  If so, your COGS/Profit ratio will be imbalanced for low-end products.
  • Be creative: If you only bottle your products at 40% ABV, consider diluting less (or not diluting at all), to offer discerning consumers “cask strength” versions of products they already love, but at a higher price.  The results may surprise you.

I am always happy when consulting clients approach me with a desire to collaborate on these and other strategies.  It shows me that they are not blinded to reality (everyone is facing challenges) and that they are open to changing the way they do things.  Norman Vincent Peale -one of my favorite authors- famously wrote “Change your thoughts and you change your world.”

This being my last editorial of 2024, I’d like to close the year by wishing all members of the rum industry calmness, wisdom, kindness and happiness, so that 2025 can be the best year yet for themselves, their families, their clients and their employees.

Cheers!

Luis Ayala,

Editor and Publisher

http://www.linkedin.com/in/rumconsultant