The rum market - Portugal (2023)

1.2 World rum market on the rise

The spirits industry had been hard hit by the restrictive measures induced by the pandemic: the ban on going out and the absence of festive or social occasions led to a drop in spirits sales and consumption. In ****, the sector began to recover, and market growth was estimated to accelerate to ***.** billion US dollars by ****, with a compound annual growth rate of *%.

However, the war in Ukraine largely slowed the sector's recovery, and estimates were revised downwards. In ****, the global spirits market is estimated at $***.** billion. This market should reach *** billion US dollars in ****, with a compound annual growth rate of *.*%.

Global spirits market size World, ****-*****, in billions of US dollars Source: ****

The global market is mainly driven by the development of developing countries and the growth of their populations, but also by the premiumization of the market. Digitization and innovation in line with new consumer expectations, particularly with regard to environmental and health concerns.

In ****, spirits sales volume will reach *,***.* million *L cases sold, an increase of +*.*% compared to ****.

Worldwide sales in millions of *L cases Category **** **** % change Spirits ****,* ****,* *,* % Other spirits ***,* ***,* -*,*% Ready To Drink (***) ***,* ***,* **,*% White spirits ***,* ***,* *,*% Whiskies ***,* ***,* *,*% Brandy & Cognac ***,* ***,* *,*% Rum ***,* ***,* **,*% Liqueurs ***,* ***,* *,*% Tequila and mezcal **,* **,* **,*%

Source: ****

Rum is a ...

1.3 The European rum market

Rum sales volume trends and forecasts Europe, ****-*****, million liters Source: ****

The graph above shows the evolution of the value of European rum sales in volume (***), sales had an annual volume of ***.** million liters. Between **** and ****, sales volume evolved with a CAGR of *.**%, and the average annual sales volume is *** million liters. Forecasts indicate a steady growth trend for rum sales volumes in Europe up to ****, with ***.** million liters in ****. Over this forecast period, sales volume evolves with a CAGR of *.**%, and the average annual sales volume is *** million liters. Over the whole period, ****-****, the CAGR is *.**%.

1.4 The growing Portuguese market

In ****, Portugal saw a significant increase in the total volume and current value of spirits sales, marking a recovery from the notable declines of **** in the retail sector. This decline was due to establishment closures and restrictions on catering services imposed by the COVID-** pandemic, which were only partially offset by an increase in retail demand.

However, in ****, the country saw a return to socializing, notably through gatherings, meetings, parties, festivals and other out-of-home activities. This recovery was fuelled by consumers seeking to make up for time lost during the pandemic.

The country also recorded triple-digit growth in inbound tourism, providing a positive boost to the restaurant, hotel and retail sectors. This dynamic has contributed to an increase in the value of retail trade, not only due to inflationary pressure on prices, but also to the revival of catering and the trend towards premiumization.

However, persistent supply and logistics problems have held back further sales growth in this category.

Spirits sales by category Portugal, ****, in liters Source: ****

Rum is the best-performing category in ****, with total volume sales up **% to ***,*** liters.

Furthermore, it is estimated that a *L bottle of rum will cost an average of ** euros in **** (***). Therefore, if total sales ...

1.5 Rum foreign trade

Portugal is a significant player in the global rum trade, both as a producer and exporter. Its production, concentrated in overseas regions such as Madeira, is marked by artisanal methods and a palette of flavors often influenced by the local climate and available resources.

Portuguese rum is exported to many countries, making a significant contribution to the national economy and strengthening Portugal's trade links with the rest of the world.

Using code ****** (***) on UN Comtrade, we can find Portugal's main rum trading partners.

Main sources of rum imports from Portugal Portugal, ****-****, in thousands of dollars Source: ****

Portugal imports rum mainly from Spain, but also from France and the Netherlands.

Main importers of Portuguese rum Portugal, ****-****, in thousands of dollars Source: UN Comtrade In terms of exports, Portugal exports significant quantities of rum, notably to Brazil and Spain, but also to Italy and the Netherlands. The trade balance for rum is very positive for Portugal, which enjoys a production of quality rum, particularly Madeira rum, which is highly appreciated around the world.

2.1 Demand for spirits in Portugal

In****, **% of people aged **-** in Portugal consumed spirits. At the same time, **% of survey participants said they had never tried spirits.

The number of young people drinking spirits Portugal, **** Source: ****

However, when we compare spirits consumption with that of wine and beer, we see that spirits are lagging far behind Consumption by type of alcohol Portugal, ****, in Source: ****

In Portugal, consumption of any alcoholic beverage among people aged ** or over showed a prevalence of almost **% for lifetime consumption in ****. In the last ** months, **% of those surveyed had consumed alcohol, and in the last ** days, **% had done so.

In terms of gender comparisons, alcohol consumption was more prevalent among men, but the biggest difference was recorded over the last ** days, with over **% of men having consumed alcohol, compared to only **% of women.

Latest alcohol consumption Portugal in ****, by period and gender Source: ****

2.2 Variable consumption locations and frequencies

In ****, **% of young people aged **-** said they never consumed alcoholic beverages. Among Portuguese drinkers, **% frequently consumed one type of alcoholic beverage. Among these frequent drinkers, **% consumed two or more types of alcoholic beverage and **% drank only one type of alcoholic beverage.

Frequency of alcohol consumption among the Portuguese Portugal, ****, aged ** to ** Source: ****

In ****, pub, bar and nightclub sales in Portugal fell by around **% on the previous year, after recording a year-on-year increase of over **% in ****. By ****, sales in this industry are expected to recover from the impact of the coronavirus (***) by increasing by over **%.

Percentage change in sales of drinking establishments, bars and nightclubs in Portugal Portugal, ****-****, in Source: ****

Portugal's pub, bar and nightclub industry is valued at *.* billion euros and is ranked *th in Europe in **** (***), again according to the IBIS World study.

2.3 Portugal's favourite rum brands

The rum landscape in Portugal is characterized by great diversity, with national and international brands appreciated by consumers. Preferences vary according to perceived quality, flavor profile and geographic origin of the rum. Local brands, particularly those from Madeira and the Azores, are popular for their links with local traditions.

At the same time, renowned international brands also have a strong presence in the Portuguese market. This diversity demonstrates the richness and variety of the rum offering on the Portuguese market.

Market share of rum brands Portugal, **** Source: ****

The rum market in Portugal is highly diversified, and no single brand has a real monopoly on the market. However, some brands, such as Private Label or Barcelo, are the favorites of Portuguese consumers.

3.1 The Madeira archipelago: a new land of rum

For a rum to qualify as "Agricole", it must meet the following strict criteria:

Have a volatile substance content of at least *** grams per hectoliter of pure alcohol, and Originate from specific regions: Only rums produced in the French overseas departments of Guadeloupe, Martinique, Guyana, Reunion and Madeira are eligible for the "rhum agricole" designation.

Madeira, an autonomous region of Portugal, is poised to become a new rum-producing region, potentially one of the closest to Europe. Thanks to its volcanic soil and subtropical climate, the island offers ideal conditions for growing sugarcane, the raw material for rum.

On Madeira's terraces, *** farmers grow four varieties of sugarcane on very small areas. They supply the two main mills with the raw material, enabling annual rum production of around ***,*** liters at ***% alcohol.

The cane is harvested by hand from March to May, then transported by hand to loading points on the road before being delivered to the mills for crushing. The cane juice is then fermented, usually for ** hours, and distilled in traditional columns.

Madeira's mild climate means that the rate of alcohol evaporation during barrel ageing (***) is lower than in the West Indies for aged rums. This production remains highly artisanal.

According to ...

3.2 Production concentrated on the Madeira archipelago

The production process

A distinction can generally be made between rums made from the distillation of cane juice (***) and those made from molasses. Obtained by crushing sugar cane, cane juice deteriorates rapidly: the producer must ferment it very quickly, then distill it. Molasses, on the other hand, is a thick, viscous syrup produced from the residues of cane sugar refining. It is used in the production of many rums.

Mixed with yeast, the must (***) ferments and is gradually transformed into alcohol, until it becomes a cane wine with an average alcohol content of *% to **%.

There are three different types of fermentation:

Spontaneous fermentation ; Controlled fermentation (***); Controlled fermentation (***).

Rum is distilled using a still. The choice of distillation method is often influenced by the country's colonial history.

As the regulatory framework is often not well defined, rum aging and the resulting appellations may differ from one manufacturer to another. There are no minimum or maximum ageing periods, but very few rums are more than * or ** years old.

Rum can be aged in several types of wood:

Oak, reputed to enhance aging, and used in particular to age whisky Chestnut Cherry Beech Ash

If rum is aged in a tropical region, the aging ...

3.3 Rum production

According to a study by EY Portugal, carried out for ANEBE (***), the spirits industry spent *** million euros on the acquisition of goods and services during ****, **% of which was spent locally.

Cost of producing a bottle of rum Portugal, in Source: ****

It is estimated thatbetween ** and ** million euros a year are spent on bottles and labels.

Revenues from the "distilling, rectifying and blending spirits" industry. Portugal, ****-****, in millions of dollars Source: ****

This statistic presents the revenue of the spirits distilling, rectifying and blending industry in Portugal from **** to ****, with a forecast to ****. Therevenue of this industry in Portugal is projected to be approximately US$***.** million by ****, a forecast based on similarity parameters with existing analyst forecasts. The basis for the original forecasts is a combination of time-series forecasts, forecasts of determining factors (***) from sources such as the World Bank or the International Monetary Fund, and trade surveys.

3.4 Distribution

The EY study, commissioned by ANEBE, highlights the role of the distilled beverage industry in tourism and catering, due to the high margin it offers economic operators, particularly restaurants, bars and nightclubs.

According to the study, the spirits sector has contributed to the creation or maintenance of **,*** jobs in these establishments, where more than half of sales (***) are made. Distribution in supermarkets and hypermarkets accounts for just **.*% of sales.

In the retail sector, **% of alcoholic beverage purchases are made in hypermarkets and supermarkets, and over **% of spirit drinks. Since the COVID ** crisis, companies have been moving into e-commerce, which is likely to change the retail landscape

Distribution of spirits retail channels Portugal, ****, in Source: ****

4.1 Types of rums on offer

Rums can be segmented in different ways:

industrial rums vs. agricultural rums by age imported rums

These rums can be used for a variety of purposes: disgorging or as a base for cocktails

Types of rum Characteristics Examples of brands White rums White rum is light in color, generally sweeter in flavor and lighter in body than golden or dark rum. Saint James Amber or golden rums After a few months, rum aged in wooden casks (***) turns amber. This term refers to its color, but also reveals a different palette of flavors: light aromas of wood and spices, and a more gourmet roundness Diplomatico Old Nick Arranged rums Arranged rum is a preparation of rum in which various ingredients, such as leaves, fruit, seeds, bark or sweets, have been macerated. An emblematic drink on Reunion Island, it is also common in the West Indies and Madagascar Isautier Damoiseau La Mauny Spiced and dark rums These rums are generally enhanced with added caramels and spices to accentuate or even exaggerate the rum's initial qualities. Captain Morgan Bacardi Spiced Clan Caribbean The Kraken Dark or aged rums If a rum has aged for more than a few years (***), it falls into the category ...

4.2 Typology of Madeira rums on offer

The "Madeira Agricultural Rum" appellation authorizes four categories of rum:

Today's rum labels are often marked "Aguardente de Cana", without reference to the appellation "rhum agricole", and generally do not indicate the age of the product. This is due to the disposal of old stocks of labels by producers, following the recent introduction of the DOP (***).

To be sold, rums must undergo analysis and tasting tests by the IVBAM (***).

4.3 Rising prices

We can observe that the price per bottle is growing steadily over the period ****-****, rising from €**.** to €**.**.

The product's popularity and the quest for higher-quality consumption have logically led to a substantial rise in prices over the period.

Evolution of the average price of a bottle of rum Portugal, ****-**** Source: ****

This rise in the average price of rum reflects a general upward trend in the prices of alcoholic beverages, and distilled beverages in particular. In Portugal, there is a tax on alcohol, alcoholic beverages and spiritslcohol, alcoholic beverages and beverages containing added sugar or other sweeteners (***). This tax aims to regulate consumption of these products because of their potential health effects.

ANEBE estimates that **% of the total value of a bottle of spirits is accounted for by IVA (***).

5.1 Current regulations: Non-viticultural spirits

According to the DGAV (***), a "spirituous beverage" is an alcoholic beverage intended for human consumption. human consumption, with specific organoleptic characteristics and a minimum alcoholic strength by volume of **%.

The definition, designation, presentation and labeling of spirit drinks of non-wine origin are regulated by Regulation (***) ****/***. This regulation also establishes rules concerning the ethyl alcohol used in the production of this type of beverage and protected geographical indications.

Here is a non-exhaustive list of the regulations applicable to spirits, as defined by the DGAV:

Decree-Law no. */** of January *: regulates the manufacture, preparation, storage and marketing of spirit drinks Decree-Law no. **/** of February **: Amends certain articles of Decree-Law no. */** of January * Legislative Order no. */**** of June **: Repeals Legislative Order no. **/**** of July *, and establishes procedures for the recognition of foodstuffs with traditional characteristics and traditional production methods.granting of adaptations to hygiene requirements applicable to the production of foodstuffs and for the granting of derogations provided for in Article * of Commission Regulation (***) no. ****/****, of December *. Decree-Law no. ***/**** of October *: Transposes into national law Directive ****/**/EC of the European Parliament and of the Council of September *, **** laying down rules on nominal quantities for prepackaged products and establishing mandatory ranges for wines and spirits. Declaration ...

5.2 Current regulations: Sale and consumption of alcoholic beverages

In ****, the Commission published a guidance document (***) for the implementation of legislation on spirit drinks.

Concerning the consumption of alcoholic beverages in general, Decree-Law no. **/**** of April ** establishes the regime for making available, selling and consuming alcoholic beverages in public places and places open to the public. decree-Law no. ***/**** of June ** amends Decree-Law no. **/**** for the first time, continuing to regulate the making available, sale and consumption of alcohol in public spaces and places open to the public.

Under this regime, it is prohibited to supply, sell or make available alcoholic beverages in public places open to the public, whether for commercial or non-commercial purposes.

This prohibition applies to minors (***), as well as to people who are obviously drunk or have a mental disorder. You may be asked to show proof of age.

With regard to specific locations, the ban on supplying, selling and consuming alcohol applies to canteens, bars and other catering or drinking establishments open to the public located in health establishmentsthe ban applies to canteens, bars and other catering or drinking establishments open to the public located in health establishments, vending machines and service stations located on freeways or outside localities, including ancillary buildings for complementary activities such ...

5.3 Regulations: Production and marketing of Madeira Rum

Rum production and marketing also involve a number of special regulations. In Portugal, Madeira Rum is the only agricultural rum produced and marketed. According to "Rum de Madeira", here is the legislation specific to this practice.

Regional Legislative Decree no. **/****/M, of July **, confirms, defines and characterizes "Madeira rum" and establishes the rules for its production and marketing.

Regulation (***) ****/*** of the European Parliament and of the Council of April **, ****, on the definition, description, presentation and labeling of spirit drinks, on the use of spirit drink names in the presentation and labeling of spirit drinks and on the use of spirit drink names in the presentation and labeling of spirit drinks.presentation and labelling of other foodstuffs and the protection of geographical indications of spirit drinks, the use of ethyl alcohol and distillates of agricultural origin in the production of alcoholic beverages.

Regulation (***) No. ****/**** of the European Parliament and of the Council of October **, **** on the provision of food information to consumers.

6.1 Segmentation

According to Centromarca, the Portuguese Association of Branded Goods Companies, there are * large companies recognized as major distributors of alcoholic beverages:

• Sogrape Distribuição
• Diageo Portugal
• Pernod Ricard Portugal
• Primedrinks Portugal
• Baccardi Martini LDA
• Engenhos do Norte
• Engenho Novo da Madeira