For RumChata, the Sweet Taste of Success

The drink grabs 20 percent of the U.S. market for cream liqueurs

A decade ago marketing executive Tom Maas was working at distiller Jim Beam looking for ways to get Hispanics to drink more bourbon. That didn’t work out, but the effort introduced him to horchata, a traditional sweet-and-spicy nonalcoholic drink consumed across Central America. Luckily, he didn’t forget the milky concoction of crushed rice, almonds, cinnamon, and other spices when he went off on his own. Today his RumChata, a combination of the Latin favorite, dairy cream, and rum, sits in the profitable eye of a perfect trend storm: Hispanic flavors are hot; rum-infused tiki cocktails are in; and consumers are looking for simple yet novel drinks to mix for themselves at home.

That trifecta has helped RumChata grab one-fifth of the volume in the $1 billion U.S. market for cream-based liqueurs, according to data tracker Euromonitor International. The drink is outselling Diageo’s Baileys, the longtime leader in cream liqueurs, in parts of the U.S., including Wisconsin and Illinois. And it’s luring men to the traditionally female-dominated seasonal quaff; Maas says 47 percent of RumChata’s drinkers are male. These new acolytes are drawn by the drink’s flexibility: It blends with everything from coffee to root beer to whiskey—and even makes for an eye-opening French toast batter.

“It’s rare that a brand comes along that is a real game changer,” says Paul Louis, director of Radius, a trend tracker owned by International Wine & Spirit Research. “RumChata has done that. It’s almost created a new segment.”

Maas, 58, stumbled upon the idea for RumChata after retiring in 2006 as worldwide director of marketing for bourbon maker Beam, now Beam Suntory. Recalling the horchata buzz among Hispanics, he decided to make his own spirit centered on the drink. He sent his son to dozens of Mexican restaurants in search of the best-tasting version. From his home kitchen in suburban Chicago, Maas then blended his cinnamon-laced horchata with different spirits, settling on rum only because a friend thought “RumChata” was a cool name.

All the tinkering landed Maas $200,000 in debt. He was ready to sell his invention to a big spirits maker, but his wife objected, noting that Maas had never made anything that everybody liked—until RumChata. So he tried to sell a few bottles to Chicago-area bars and retailers.

The reaction at first was tepid, in part because Maas insisted on selling RumChata for a few dollars more per bottle than Baileys. The turning point came when a bartender said it tasted like a bowl of General Mills’ Cinnamon Toast Crunch. Maas started sending his salespeople to bars with a zip-lock bag full of the cereal (which is still often used as a garnish atop RumChata cocktails). Binny’s Beverage Depot, the Midwest’s No. 1 liquor store chain, started carrying RumChata in late 2009.

“We put it on the shelf because it was new and innovative, and from there it snowballed,” says Brett Pontoni, Binny’s specialty spirits buyer. “It’s a cream liqueur, but they did a good job of reaching out beyond the category.”

Soon, Maas couldn’t keep up with demand, and after the sweet tipple’s cameo appearance on the TV series Entourage in 2011, some stores had to limit customers to one bottle per visit. Drinkers found plenty of uses for RumChata, and the brand’s website now lists more than 125 recipes, including pumpkin-spice muffins and sweet potato casserole. In November, RumChata will be one of the sponsors—along with Domino sugar—of America’s Baking and Sweets Show in Chicago. “It’s really caught on with mainstream Americans who were not particularly aware of horchata,” Radius’s Louis says. “Cinnamon and dairy are familiar flavors for them, and RumChata taps that.”

The drink also simplifies home cocktail making, says Eden Laurin, managing partner of the Violet Hour, a cocktail bar in Chicago’s hip Wicker Park neighborhood. Drinks with more than three ingredients are confusing to make, Laurin says, so having one spirit with several flavors is appealing. “It cuts out a step by already having cream, spice, and rum combined in pleasant ratios,” says Rebecca Gomez Farrell, a food and drink blogger in California.

Imitators have emerged. Maas filed suit in 2012 against Louisiana distiller Sazerac over its Chila ’Orchata drink, saying it infringed on his trademark on “Chata.” The parties settled last year, and terms were not disclosed. Beam Suntory introduced Cruzan Velvet Cinn, which has a higher alcohol content than RumChata, and Baileys rolled out a vanilla-cinnamon variety in 2013.

So far the competition hasn’t damped RumChata’s sales, which have jumped 29 percent over the past year, to $29 million (not including sales in bars and clubs), according to market researcher IRI. Sales of Baileys are unchanged at $69 million, and sales of Kahlúa, another creamy liqueur, made by France’s Pernod Ricard, have declined 3 percent, to $40 million. “There are a lot of products that have a big bounce at first,” Pontoni, the spirits buyer, says. “You know you have something when that bounce does not slow down.”