The IWSR Magazine has exclusive access to the full IWSR database, which

tracks 20,500 brand lines across 125 countries with the annual input of more
than 1,850 companies.

Comment
Alexander
Smith
The IWSR
this Issue Magazine
Editor-in-Chief

4 Spirits news This month we dive into the global travel-retail market – one that Editor-in-Chief
6 Finance review Key lessons has been transformed for the better over the past 15 years. The real Alexander T Smith
from spirits category results Email: al@theiwsr.com
watershed was the abolition of intra-EU travel retail in 1999. At the time
10 New products
it seemed like the industry’s death knell, but today it is apparent that it Production Editor
16 Top 100 travel-retail
was the catalyst for much of the growth that the channel has witnessed Eluned Woollven
brands The IWSR’s exclusive
data on travel retail’s top 100 in the ensuing years.
Editorial Assistant
24 Travel-retail trends Weak With the elimination of duty-free sales on intra-EU routes, the old Thalia Fourie
currencies hit travel-retail sales ‘stack ‘em high and sell ‘em cheap’ approach was suddenly less valid. Email: thalia@theiwsr.com
27 Interview: DFS Group It forced the so-called Trinity of suppliers, operators and airport Publishers
Brooke Supernaw on the authorities to reconsider their consumer proposition. Low pricing Val Smith
retailer’s travel-retail success Alastair Smith
undoubtedly remains part of the scheme and is important in some
30 Interview: Schiphol airport
A visit to SAR’s luxury outlet locations, but it is no longer as central in most markets. Luxury has Marketing & PR
32 Packaging innovation Facing been embraced to a much greater extent. A lot of the subsequent Helen Jagger
the craft-distilling challenge supplier innovation has been targeted at the super-premium-plus Email: helen@theiwsr.com

36 Interview: Diageo Travel- area. The proliferation of travel retail-exclusive items is a good Subscriptions
retail chief Doug Bagley example of how the industry is tailoring its offer to give consumers a Justyna Bednarska
outlines the company’s strategy reason to purchase and trade up in travel retail. Email: justyna@theiwsr.com
38 Vodka in Europe Sustaining
The more enlightened operators are really driving consumer trade-up Advertising
the category amid falling sales
46 Global Scotch Is the recent through a variety of means, such as specialist liquor boutiques. There Rina Maiden
downturn a warning signal? have also been dramatic improvements to the quality of retailing in Email: rina@@theiwsr.com

51 Interview: Brown-Forman emerging-market countries. Retailing in many airports in India and Researchers
CEO Paul Varga on the firm’s Latin America, for instance, is unrecognisable from just a handful of Adam Zdan-Michajlowicz
flagship brand and future plans years ago. International operators are playing a leading role in driving Agata Andrzejczak
55 Brown-Forman Travel Retail Alastair Smith
that retail transformation. Ania Zymelka
Farrer Marshall eyes a big
opportunity in the sector
There is still a big opportunity to convert travellers into purchasers, Daniel Mettyear
56 Global Cognac Analysis of the but the industry is indisputably improving. The upshot is that the Giles Gough
Guy Shingles
recovery in Cognac’s sales
Helen Jagger
“The more enlightened travel-retail operators
58 Liqueurs in Europe Premium Humphrey Serjeantson
quality brands lead the way José Luis Hermoso
65 Greece/Turkey Economic Konstanze Kugler

67
turmoil hits the markets
Greater China The crackdown
are really driving consumer trade-up” Piotr Poznanski
Roza Prosser
on extravagance continues to Sandra Newman
affect the market once-yawning qualitative gap in travel retail between liquor and other Simon Molony
70 Caribbean Tourism recovery luxury product categories, such as fragrances and cosmetics or Sophia Holliday
Tim Simmons
helps the premiumisation trend fashion, has been significantly narrowed. Tommy Keeling
73 Wine news It’s not just the improvements in retailing, but also a corresponding Val Smith
74 Sparklers in travel retail A improvement in airports – and not just in emerging markets.
decline in Russian travellers
Underpinning all this is a continuing rise in passenger traffic –
fails to take the fizz out of
sparkling wine something that is projected to continue. The industry has been
78 Wine in travel retail The justifiably rewarded for its boldness, and travel-retail sales continue rise
News
category edges forwards slowly year on year (see related news item on page 3). Sometimes it takes a Please send us your
80 Global wine trends China’s crisis to bring out the best in people or in industry. news, views, photos
downturn hits sales, but other ● AB InBev’s (ABI) audacious, but not wholly unexpected, $100bn and comments
opportunities open up
approach to SABMiller would be the largest-ever deal seen in the
83 Beer, cider and pre-mix To contact us
news
beverage sector and the fifth-largest across all industries. The
The IWSR Magazine
ramifications would be enormous for the beverage sector as it would
39 Moreland Street,
leave ABI with close to a 30% share of total global beer consumption London EC1V 8BB, UK
and a 50% share of the total global profit pool.
However, any deal proposed by ABI will need to be agreed by the Tel
SABMiller board in order for the transaction to proceed and there will be +44 (0)20 7689 6841
All details contained in this publication
hurdles that will need to be overcome.
are believed to be correct at time of going Fax
to press. Under UK takeover rules, ABI has until 15 October to come up with a +44 (0)20 7689 6827
All rights reserved. Nothing may be reprinted
or reproduced in whole or in part without the definitive offer to the SABMiller board. Given the scarcity value of
written permission of the publisher. SABMiller and the obvious attractions of the business to ABI, the price Email
Published by System Three Communications
(London) Ltd 2015 © will need to be high if the deal is to succeed. We shall find out in the magazine@theiwsr.com
ISSN 2046-5769
Printed in the UK by Rapidity. coming weeks.

October 2015 3
in brief
Scotch whisky rebound International The growth of the global The Americas and Asia-Pacific enjoyed the
travel-retail liquor market remained slow in 2014, biggest increase in market share, to 19.5% and
in sight
but represented an improvement on the previous 9.2% respectively.
UK The downturn in Scotch whisky
year, according the IWSR’s Duty Free/Travel The Americas recorded volume sales growth of
sales and shipments over the last two
Retail Summary Report. Volume sales of wines 4.4% and value sales growth of 12.2%. The
years is only a temporarily blip and
and spirits grew 2% in 2014, compared with Asia-Pacific market recovered following 2013’s
the industry already sees signs of
0.9% in 2013. Including premixed drinks, the downturn, posting a 2.9% rise in volumes and a
better things to come, according to
total market grew 1.8% to 30.2m nine-litre cases 6.8% increase in value sales.
Scotch Whisky Association (SWA)
against an increase of 0.8% in 2013. However, as IWSR travel-retail research
CEO David Frost. In 2014 the industry
The trend in value sales growth was more manager Sandra Newman pointed out: “Regional
suffered a -7% drop in value exports,
positive, with 2014 seeing a 7.7% rise in the market trends are likely to shift to some extent
while volumes fell -7% (see related
value of the global travel-retail market for wine in 2015 as tourism in Africa has been affected by
story on page 46).
and spirits, excluding still light wine and mixed the impact of recent terrorist attacks in North
“There are multiple reasons for the
drinks, to almost $9bn. Africa and the Ebola outbreak that began last
slowdown, but we are in 200
Wine volumes showed a slight increase last year in West Africa, while other regions have
markets, so you win some, you lose
year (+0.8%), while the spirits category grew benefited from steady growth in traveller
some. It’s anecdotal at the moment.
2.5%. Mixed drinks volumes declined -19.5%. numbers this year.”
There’s a sense this softening is over
All regions saw healthy growth in travel-retail Market share is much more evenly spread
and that things are picking up
liquor sales last year with the exception of Europe, between the three largest regional markets when
globally. The mood is positive. There
the biggest regional market, where volume sales measured on value sales rather than volume
are difficulties, but we are getting
declined -0.7%. Africa and the Middle East was sales. In 2014, Europe accounted for 37.4% of
through them and we feel the
the fastest-growing region in 2014, with volume the travel-retail wines and spirits market by
uplands are bright.”
sales growing 9% and value sales 16.2%. value, excluding still light wine and mixed drinks,
Frost also pointed out that the
Europe’s share of global travel-retail liquor compared with 31.3% for Asia-Pacific and 21.8%
heavy investment in production is a
volumes fell to 52.7%, down from 54% in 2013. for the Americas.
vote of confidence for the industry.
Most of the major producers have
undertaken large capital expenditure
projects aimed at expanding
production capacity. He also noted
that there have been a large number International The use of age statements in well and it’s also helping to educate customers
of new entrants into the category. Scotch whisky has divided the industry a number that age doesn’t necessarily need to be the
Seven new distilleries have gone into of years, but it is evident that more and more driving factor when you make your decisions and
production in the last 18 months and companies are moving toward non-age you can look at flavour-led references to really
there are 40 projects planned. statements. The obvious benefit is that it provides understand what your preference would be,
greater production flexibility at a time when malt whether it’s for yourself or for a gift.”
Irish Distillers creates supplies at many companies are tight. Releasing Pernod Ricard Travel Retail Europe marketing
micro-distillery younger whiskies is also more profitable. Legally director Jenny Shipton said: “Over the last year
Ireland Irish Distillers has unveiled a Scotch whisky only has to be aged for three years. we have noticed brands moving away from age
new micro-distillery in Midleton, Co. DFS Group senior vice-president spirits, wines statements and into a more singular offer based
Cork. The micro-distillery is a key and tobacco Brooke Supernaw told the IWSR on variety and exclusivity for the [travel-retail]
innovation hub that Irish Distillers Magazine: “A lot of the brands have made a channel.”
says will support the resurgence of conscious decision to move away from aged Pernod Ricard introduced its own non-age
Irish whiskey through references and really focus on flavour-led, or what statement whisky, The Glenlivet Founder’s Reserve.
experimentation with distillations of they’re calling non-aged [whisk(e)y], allowing It has replaced The Glenlivet 12yo in a number of
new and old styles of Irish whiskey. them a little bit more flexibility without having to markets. Critics contend that bottling younger
The first distiller of the be constrained by the year and the [age] whisky often at higher prices risks devaluing the
micro-distillery at Midleton has been statement… The industry has managed it very Scotch category in a bid for short-term profits.
announced as Karen Cotter – one of
Hennessy expands production capacity In September, Hennessy laid the cornerstone
eight alumni of the Jameson
for its new shipping and bottling plant in Cognac, which has been dubbed Pont Neuf.
Graduate Distiller Programme and the
Hennessy recently shipped a record 6m cases, and production will be able to reach
only female distiller in Ireland.
10m cases in 2017 to satisfy growing demand from markets around the world.
Hennessy topped the IWSR’s World Class Brands list in 2015, which measures volume
Please send any news to and value growth. That growth was spearheaded by a 13% rise in travel-retail
al@theiwsr.com volumes and a 10% rise in the US market.

4 October 2015
 spirits news
shorts
Financial Spirits. Baker most recently was global head
UK Diageo said in a trading statement that of liquor and head of category Europe for
further currency weakness will likely depress liquor, tobacco and technology for The
operating profits by £150m ($227.2m) Nuance Group based in Zürich. Baker is
against last fiscal year. Diageo CEO Ivan probably best known, however, for his 20 TFWA Cannes, 18-23 October 2015
Menezes said: “Our outlook for this financial years’ experience of global and regional sales Blue Village – E1
year included the possibility that further and marketing with premium spirits brand
currency weakness could impact demand for companies Brown-Forman and Diageo.
premium spirits in the emerging markets.”
The company also said that the Philippines Philippines drinks giant
performance in North America will be Emperador has appointed former Diageo
comparatively weaker this year despite a executive Jonathan Driver to the newly
positive start to the fiscal year (running from created role of Rare Whisky director.
30 June) and forecasts a net sales decline for Emperador, which acquired Scotch whisky
the division of -2%. firm Whyte & Mackay last year, said that the
Diageo expected the medium-term outlook new role will “provide further impetus” to its
would show improvements, thanks to “ambitious international growth plans”. Driver
investments in route-to-market capabilities. was previously global malts director at Diageo.
Diageo forecasts that from fiscal 2017 it will
deliver mid-single-digit organic top-line Bermuda Bacardi has announced the
growth on a sustained basis and operating creation of a new dual role and immediate
margin expansion of 100 basis points over appointment of Adam Zhu as non-executive
three years. chairman of Greater China for Bacardi and
special advisor to Bacardi CEO Michael Dolan.
UK Independent family distillers, William In these roles, Zhu, who is based in
Grant & Sons reported a record profit after Beijing, will utilise his expertise to help guide
tax of £139.8m ($210.3m) for 2014, an and develop strategic growth plans for the
increase of 4% over 2013. Group turnover region. He will report to Dolan as special
decreased to £933.2m ($1.4bn) due entirely advisor to the CEO, and will work with
to a reduction in the distribution of Bacardi Asia-Pacific regional president Jon
third-party agency brands. The company Grey in his role as non-executive chairman of
noted that this strategic shift has allowed Greater China. Zhu is based in Beijing.
more focus on the group’s owned portfolio of Zhu most recently served as chairman and
core premium brands, which saw turnover CEO of IMG Greater China and vice-chairman
increase by an impressive 9% year on year. of IMG Asia-Pacific (2011-2015).
Strong value growth was delivered from “Now more than ever, we have an
Glenfiddich and The Balvenie, with Hendrick’s opportunity to capture greater market share
gin continuing to grow strongly. Glenfiddich and drive our premium and super-premium
volumes, however, fell -4% to around 1m brand growth in this emerging region,” said
cases, according to the IWSR, as the Dolan. “With his longstanding relationships
company implemented price increases. with leading global and Chinese corporations,
institutions and governments, Adam will
provide greater focus on our biggest market
People
of opportunity: China.”
UK New World wine company Accolade
Wines has appointed its general manager UK
Asia-Pacific Campari has appointed David
and Ireland, Paul Schaafsma to be chief
Halliday as managing director of its
executive officer, succeeding John Ratcliffe
operations in Australia, New Zealand and the
who will become deputy chairman and also
Pacific Islands. Halliday will report to Franco
continue to advise on the strategic
Peroni, Campari's MD for Asia-Pacific.
development of the company.
Halliday was previously Diageo's
Prior to joining Accolade Wines three years
commercial director for the same region and
ago, Schaafsma served as general manager,
chairman of Bundaberg Distilling Co. Halliday
UK and Ireland for Australian Vintage.
fills the role vacated in April by Shane O’Hart,
who passed away in September following a
France Kevin Baker has been named global
long battle with illness.
travel-retail director of Marie Brizard Wines &

October 2015 5
finance review
Challenging conventional wisdom
Financial analyst Graeme Eadie examines some of the key lessons from the lastest spirits sector financial results

Source: Company data

Over the last few weeks many of the companies in the publicly to the change in the timing of the Chinese New Year and the outlook
quoted spirits sector have released their fiscal results. As we have remains poor. Eastern Europe continues to be held back by military
highlighted before, investors typically focus on the pace of organic top- tension in the region and some significant duty increases. Even Asia,
line growth in order to assess the health of the industry. Given that many excluding China, remains a mixed picture, with declines being reported
of the companies have different year-ends, we have attempted to in South Korea, Vietnam and Indonesia. In short, emerging markets
disaggregate the results on the chart above to present the numbers on a are not performing as they used to and, given recent currency
comparable basis. volatility, are not expected to resume their normal rates of growth any
Looking at the first six months of calendar 2015 in relation to the time soon.
same period in 2014, we can see that there has been a slight In Europe there are some encouraging signs in some of the traditional
improvement in the underlying operating environment for the industry. Western European markets that have been in decline for some time,
Whereas 12 months ago, the majority of companies were reporting no particularly Spain. However, the impact of various structural issues,
growth in underlying sales, they have now largely moved back into problems in Eastern Europe and continued economic weakness in some
positive territory with the sole exception of Diageo. However, we are still of the peripheral countries led to a familiar flat outcome.
a long way off the growth rates that up until recently tended to The biggest concern for investors, however, is the performance of the
characterise the industry. US, which for a long time was one of the major drivers for the sector.
The results of industry leader Diageo best exemplify the changing
Geographic organic top-line sales growth dynamics of the market. Its niche, premium brands are all performing
strongly, but represent less than 15% of sales. By contrast, many of its
Company % change more mainstream products are under pressure from increased
USA Europe competition as a result of the continued fragmentation of the industry. At
Brown-Forman 9.0 5.0 the same time many of its core consumers are not seeing any
Campari 3.0 0 improvement in their discretionary spending power, despite the
Diageo -2.0 0 improvements in the economy. The problem of wealth inequality remains
Pernod Ricard 3.0 0 particularly acute in the US. So it is difficult to see any short-term
Source: Company data improvement in the underlying trends.
The geographic trends across the industry remain consistent with
recent reporting periods. Emerging markets continue to be volatile, Bourbon on fire
making it difficult to draw any firm conclusions. Rémy Cointreau’s overall In addition to the numbers themselves, two announcements were made
results reflect this issue given the divergent shipping trends in China over which provide a fascinating insight into how the dynamics of the
the two periods. industry can unexpectedly change. The first was that Brown-Forman
However, in summary, Latin America remains mixed due to economic reported that sales of Jack Daniel’s crossed the 5m-case mark in the US
factors. China evinced some signs of recovery, but this was largely due for the first time ever. This landmark achievement goes a long way to

6 October 2015
P L E A S E E N J O Y O U R D R I N K S R E S P O N S I B LY • S O U R C E I M PA C T S e p t e m b e r 2 0 1 5
finance review
Challenging conventional wisdom
Pernod Ricard paid a high price for Absolut because of its perceived
Top five spirits brands in the US by volume future growth potential. However, it is important to remember, that
they were not the sole bidder in the auction. It was a contested bid
Brand 2010 2014 % change
with at least Jim Beam also willing to pay a high price for the brand.
Smirnoff 9.4 9.2 -2.0
Yet there would not have been a banker, finance director or advisor
Bacardi 8.1 7.2 -11.0
involved in the negotiations that would have assumed in
Captain Morgan 6.3 6.3 0
their financial calculations that volumes would fall by
Jack Daniel’s 4.9 6.0 22.0
-11% in its largest market.
Absolut 4.6 4.1 -11.0
At the time, while many commentators were surprised
Volume in millions of cases Source: the IWSR Database 2015 ©
by the price that Pernod paid for Absolut, few questioned
explaining why the US company is currently outperforming the rest of the brand’s growth prospects given its strong track
the industry to such a large extent. record and the expected boost to sales that was
The impressive aspect of Jack Daniel’s success in the US is that it is anticipated when the brand moved into Pernod’s
going against the prevailing trends in the market. As we have discussed superior distribution network. Yet seven years on,
in previous editions, one of the major threats facing the incumbent overall volume sales are still just above 11m cases.
players in the industry, particularly in the US, is the loss of share
from new entrants coming to the market as a result of the recent Key role in Bourbon
craft phenomenon. As the table above illustrates, Jack Daniel’s is Equally, when Pernod announced the sale of
the only top five brand in the US by volume still growing at a Wild Turkey to Campari in order to help fund the
significant pace. Although our figures highlight 6m cases of Jack €6bn necessary to acquire Absolut, few people
Daniel’s sold last year, this number captures all of the different questioned the wisdom of this move. For years –
styles under the Jack Daniel’s trademark, such as Gentleman Jack, if not decades – Bourbon (with the notable
whereas Brown-Forman alludes to the performance of just the core exception of Jack Daniel’s) was seen as a dud
Black Label brand. The brand’s success highlights the continued category and, within it, Wild Turkey a second- if
vibrancy of the Bourbon category, which remains a key bright spot not third-rate brand. Its performance had been
for the industry and yet, this would have seemed inconceivable lacklustre for a number of years. Campari paid
only a few years ago. only 12x EBIT for the brand, which equated to
€450m – less than the current write-off for
€650m writedown for Absolut Absolut – in what was regarded as being a
The table above highlights the second other key highly uneventful transaction at the time.
feature of the recent results season – the poor Yet, ironically it was Pernod Ricard who lit
performance of Absolut vodka. As a result of the the torch paper to set alight Bourbon’s
brand’s weak US performance, Pernod Ricard renaissance in the US with the launch prior to
announced a €650m writedown on the value of Wild Turkey’s disposal of American Honey. It is this
Absolut on their balance sheet. The brand was style, now much replicated by many other brands in
acquired in 2008 as part of the overall the industry, which helped to make Bourbon more accessible. This has
acquisition of Vin & Sprit in Sweden. Pernod enabled the product to become part of many consumers’ drinking
paid almost €6bn for this business if one repertoire for the first time.
includes the related costs associated The category has not looked back since, yet it was Pernod Ricard
with the transaction. Under any rather than the indigenous producers who had the vision to introduce
conventional financial measure, this was flavours into what had hitherto been seen as a very traditional category.
a high price. The historic EBIT multiple
was around 22x, but with 40% of V&S’ Conclusions
profits coming from its non-vodka The latest developments in the quoted spirits sector illustrate that the
activities, the implied multiple for experts in the industry can often be wrong and how important it is to
Absolut was even higher. Previous challenge conventional thinking.
transactions in the industry had been At a time when Brown-Forman is reporting the strongest results in
well below this level. Return on capital the sector, due to Bourbon’s continued renaissance, Pernod Ricard is
was expected to be a derisory 4% in having to write down the value of its investment in what was once
the first year of ownership. regarded as the iconic vodka brand in the industry. Only a few years
ago there was no one predicting such a reversal in fortune for the
two categories.
Differing fortunes: Jack Daniel’s In the financial world, fortunes are often made betting against
has crossed the 5m-case mark in conventional wisdom. As the world’s most famous and successful investor
the US for the first time ever; Warren Buffett once famously said: “Be fearful when others are greedy,
meanwhile, Absolut’s weak US and greedy when others are fearful.”
performance has resulted in a His comments are highly prescient and germane to more than just the
€650m writedown for the brand financial sector. ■

8 October 2015
SUPERIORITY.
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 new products

Cucumberland Hannover Yuzu Sake Summertime Sparkling

Dry Gin
Île Four’s new Yuzu Sake is a sake-and-fruit Wine producer Australian Vintage Limited has
Cucumberland Hannover Dry Gin (43% abv) flavour fusion drink that has been launched in launched Summertime, a new low-alcohol
has recently been launched in Germany in a Germany. fruit-flavoured sparkling wine, in the UK.
bid to put the city of Hannover on the world’s
gin map. Combining the traditional Japanese drink with The Summertime range includes passion fruit,
modern Western culture, Yuzu Sake (10.5% mixed berry, and watermelon, and is aimed at
Cucumberland’s recipe includes 27 botanicals, abv) blends the juices of the yuzu, a citrus women aged between 18 and 35 years who
such as gently macerated juniper, spruce fruit that grows in Japan, with premium sake enjoy “sweet-tasting, easy-drinking alcoholic
sprouts from the Deinster Forest in Lower to create a drink that is sweet, bitter, sour and beverages”.
Saxony, and elderflower from the Hannover even slightly salty.
region. Said to have a distinct flavour, Described as an “innovative and full fruit-
Cucumberland is best enjoyed neat or over ice Said to have the consistency of a limoncello, it infused wine”, Summertime is packaged in
with tonic water and a slice of cucumber. is recommended served on its own over ice, corked dark glass bottles with a simple label
or as a cocktail mixer. Suggested drinks and a starred font that signifies the bubbles
Cucumberland’s release follows two-and-a-half include the Yuzu Spray (Yuzu mixed with inside the bottle.
years of experimentation by three young Champagne) and the Konami cocktail (Yuzu
entrepreneurs – Mannen Christian Moritz, mixed with gin, pineapple juice, sugar or An increased focus on healthy living has
Guido Baumgarten and Christoph Jahn. The vanilla syrup, and coriander leaves). driven up demand for lower-alcohol offerings
trio were inspired by Hannover’s close in the UK market.
association with England, the home of gin. The brand could successfully tap into the
Between 1714 and 1837 a number of British budding cocktail movement in Germany’s hip Australian Vintage general manager UK and
kings came from the House of Hannover, urban bars. Younger consumers, who are Europe Julian Dyer says: “There is a trend
some of whom bore the title of Duke of becoming more exposed to international currently towards lighter styles without
Cumberland. drinking trends, are increasingly compromising on taste. Summertime is the
experimenting more outside Germany’s ideal beverage for those who enjoy the
The super-premium gin segment, where traditional local spirits categories (e.g korn, sweeter things in life and love having a good
Cucumberland will sit, is flourishing in schnapps and wacholder). time, no matter what the occasion. It’s fun,
Germany. The segment grew by 90.3% in easy to drink and perfect for sharing with
2014, reaching 55,000 cases, driven by strong The Île Four Sake range also includes Momo friends. We are convinced that shoppers will
growth in the on-trade. (peach) and Umu (apricot/plum). love this drink.”

Brand: Cucumberland Hannover Dry Gin Brand: Yuzu Sake – €19.00/£13.25/ Brand: Summertime Sparkling –
– €29.95/$33.44 RRP (50cl) $20.70 RRP (50cl) £5.49/$8.59 RRP (75cl)

10 October 2015
& marketing By Sophia Holliday and Thalia Fourie

Innovation
Spotlight
The new Jameson Caskmates release,
the result of a collaboration between
Jameson and Franciscan Well Brewery,
is one of the latest examples of
widespread cross-category experi-
mentation that is helping to broaden
the scope for new product develop-
ment across the drinks market.

Merging together the worlds of whiskey and

beer, Jameson Caskmates pushes at the
boundaries of the Irish whiskey category,
while keeping in line with the tradition and
heritage of the parent brand. Midleton
master of whiskey science Dave Quinn says:
“We definitely have an interest in innovating,
but innovating within the framework of
tradition, as well as rules and regulations.
The more knowledge consumers get and the
more they understand, credibility and
authenticity certainly play a role in how they
evaluate a whisk(e)y.

“The pairing of whiskey and beer is nothing

new, but bringing them together in one is
Laphroaig 16yo Royal Brackla certainly unique. It’s not just about mixing
one with the other; it’s about allowing the
The rare Laphroaig 16yo has been launched Royal Brackla, one of Scotland’s oldest
chemistry between the whiskey, wood and
exclusively to the travel-retail channel. distilleries, has released a new range of
beer during the maturation process to
proprietary bottlings.
create something quite different.”
A limited edition created to celebrate the
Laphroaig Distillery’s 200th anniversary, this The Royal Brackla single malt range includes a
Islay single malt (48.4% abv) features an 12yo (flavours of almonds, vine fruits and Jameson Caskmates will be able to draw on
initial burst of citrus accompanied by notes of spices), 16yo (vanilla, soft caramel and ripe a pool of consumers from both categories,
sweet vanilla and orchard fruit. When water is apricots) and 21yo (summer berries, dark while also creating an attractive offering
added, a more intense fruit aroma comes chocolate and star anise). All are bottled at for increasingly demanding Millennial
forward with additional caramel notes. The 46% abv, and are available in 10 initial consumers. Quinn says: “It does seem to
first taste is peppery, but the liquid mellows, markets, including travel retail. resonate with craft beer drinkers who might
revealing soft orchard fruit flavours with a not have been whiskey drinkers in the first
tang of sea salt and a hint of the signature Established in 1812 on the Cawdor Estate, instance. But they are happy to see the link
Islay peat smoke resolving into a dry and Royal Brackla Distillery was founded by with some of the ‘beer characteristics’
lingering finish. Captain William Fraser, who returned to the coming through in the whiskey.”
family farm after military service. The distillery
Michael Cockram, Beam Suntory GTR uses traditional production techniques to help There is further scope for Caskmates.
marketing director, says: “This year marks protect a distilling heritage that spans more Quinn says: “We’ve done some smaller
Laphroaig’s 200th anniversary and, with this than two centuries. one-off collaborations with craft brewers in
milestone, comes an exceptional liquid. the UK and the US. This allows the
Laphroaig 16yo is something to savour and To allow for the development of complexity
brewers to create a style of beer they think
share with good friends and family. and fruitiness, extra time is taken at the
suits the whiskey barrels, and allows us to
fermentation stage, which acts for up to 80
create a limited-edition Caskmates for that
“Matured for 16 years, the liquid is truly hours; far longer than most Scottish
local market.”
unique and brings something special to travel- distilleries. The whisky is finished in first-fill
retail shelves for the fans of Laphroaig.” sherry casks, which enriches it with notes of
2015 also marks the 21st birthday of Friends muscovado, dates and walnuts. Radius, the IWSR’s product
of Laphroaig, the brand’s loyal group of fans innovation tracker, is an IWSR
and supporters. Brand: Royal Brackla 12yo – publication
£45.99/$69.59 RRP; Royal Brackla 16yo
Brand: Laphroaig 16yo – €45/$50.25 – £84.99/$128.83 RRP; Royal Brackla
For more information, contact
RRP (35cl) 21yo – £174.99/$265.23 RRP
graziella@theiwsr.com
www.IWSR-Radius.com

October 2015 11
 new products

Champagne Lanson Black Bowmore Mizunara Cask Mr Black Cold Press Coffee
Label Finish Liqueur
An exclusive travel-retail gift box has been A first for the single malt whisky world, Australia’s award-winning Mr Black Cold Press
released for Champagne Lanson Black Label Bowmore Mizunara Cask Finish brings Coffee Liqueur is now available from Harvey
Brut Non-Vintage. together two of the world’s most renowned Nichols stores across the UK, as well as its
whisky islands, the UK and Japan, to create a website.
The matte black box with black lacquer and refined, elegant and complex single malt.
gold finish features travel symbols and seals Black, bitter and with a big coffee flavour, Mr
chosen to highlight specific points of the Bowmore Mizunara has been finished in oak Black can be enjoyed neat over ice or used to
brand’s historic past. The iconic symbols have casks handcrafted from Japan’s rare Mizunara add a caffeinated kick to cocktails.
been redesigned to incorporate the Lanson tree; these casks are said to be the first of
Cross, while some of Lanson’s old seals have their kind to ever leave Japan, having Mr Black (25% abv) is made entirely using a
been transformed into stamps, making the gift travelled 6,000 miles to be laid to rest in cold extraction process. Speciality Arabica
box totally unique. The subtle use of French Bowmore’s legendary No.1 vaults in Scotland. coffee beans from Ethiopia, Brazil and Papua
flag designs further highlights the brand’s New Guinea are chosen for their distinctive
French origins. With an abv of 53.9%, Bowmore Mizunara flavours. The blend is cold-extracted for over
Cask Finish boasts flavours ranging from 12 hours to produce a full-flavoured coffee
Olivier de la Giraudière, export director of sweet vanilla, cedar, mango, honey-rose without the acidity and bitterness of an
Lanson Champagne, says: “This original gift blossom to the instantly recognisable espresso.
pack, exclusive to travel retail, is another Mizunara oak flavours, all balanced by
indication of Champagne Lanson’s Bowmore’s signature smokiness which creates A 250kg basket press is then used to extract
commitment to the channel. a rounded, complex whisky that is best the liquid from inside the coffee infusion. This
enjoyed neat. is then blended with pure Australian grain
“We pride ourselves on giving our travel-retail spirit, which allows the coffee blend’s rich
customers unique and outstanding products Availability is limited to 2,000 bottles, which flavour to shine through. This time-consuming
that cannot be bought in the domestic are on sale globally from Harrods, Selfridges, process results in a less acidic brew with a
market. […] We have created a very relevant The Whisky Exchange and The Whisky Shop. rounder mouthfeel and big coffee flavour.
item for the category; one that we hope that A limited number will be available in travel Mr Black’s bottle features a striking owl
travellers will want to enjoy with their friends retail. illustration from Australian artist and tattooist
and family.” Dale Bigeni. The dark liquid hides the image
Brand: Bowmore Mizunara Cask Finish – entirely and it only becomes visible as the
Brand: Champagne Lanson Black Label £650/£990 RRP (70cl) bottle empties.
Brut Non-Vintage – €30.00-€35.00/
$33.45-$39 RRP, depending on the Brand: Mr Black Cold Press Coffee
market (75cl) Liqueur – £39.50/$60.15 RRP (70cl)

12 October 2015
PLEASE MEET US AT
TFWA WORLD EXHIBITION
YELLOW VILLAGE – BOOTH G54
WE ARE LOOKING FOR PARTNERS TO CONTRIBUTE
TO SAINT JAMES EXPANSION
www.saintjames-rum.com
www.la-martiniquaise.com · export@la-martiniquaise.fr

Please enjoy SAINT JAMES responsibly.

 new products

Disaronno Riserva Jameson Caskmates Minus 33

After a successful launch in the global duty- Jameson Caskmates has launched in eight New UK company LoCa Bev has launched
free market, Disaronno Riserva, a unique markets worldwide, including the US, South Minus 33, a low-calorie spirit that is described
blend of Scotch whisky and Disaronno liqueur, Africa and Ireland, following a successful as “fresh and floral with hints of juniper,
is now available from a selection of luxury limited run in Ireland. citrus, lavender, elderflower and angelica”, to
retailers worldwide, such as Fortnum & Mason name some of the nine botanicals used to
in London. The brand was created by the Midleton create the product.
Distillery (Irish Distillers) in collaboration with
The company says only 10,000 bottles will be micro-brewer Franciscan Well Brewery, also Minus 33 contains no artificial flavours,
available each year. Parent brand line based in Co Cork. Irish Distillers loaned a few preservatives or added sugar and, at 46
Disaronno currently sells 1.3m cases Jameson casks to the brewery to discover calories per serving, it contains almost a third
worldwide and is present in over 85 markets. their influence on Irish stout and, when the fewer calories than most major gin brands.
stout-seasoned barrels were returned to the
The creative process for the brand begins in Midleton Distillery, they were refilled with Founder Sam Trett wanted to create
Scotland where Disaronno’s aromatic notes Jameson Irish whiskey; the liquid then “something better” than gin. He said:
are combined with a blend of Scotch malt matured for around six months. “We created this in a lab and spent about a
whiskies, almonds, toasted hazelnut and year experimenting with different flavours
burnt honey. The liquid then travels to The result is Jameson Caskmates (40% abv), and abvs.
Disaronno’s home at the Cantine Florio in which retains the triple-distilled smoothness of
Marsala, Sicily, where it ages in Marsala Jameson Original, while adopting additional “What we found was that everyone agreed
barrels dating back to 1938. notes of coffee, cocoa, butterscotch and the spirit tasted best at 33% [abv] – but
gentle hints of hops. The whiskey can be then you cannot call it a gin. It didn’t really fit
The result is an initially sweet touch of spice served neat, on the rocks, or as a beer pairing into any other existing category, so we
softened by light hints of vanilla-almond, with and in beer cocktails. decided upon ‘juniper-distilled spirit’ as it’s the
fruity overtones and a peppery finish, recalling perfect description.”
dried fruit with a touch of madeira. The launch taps into the existing consumer
demand for craft beer and whiskey, as it fuses As health and wellbeing grows in importance
The suggested serve is neat or on the rocks. the two categories. The tagline behind the products using natural flavourings and
creative, ‘Triple distilled, once stouted’, low-abv alternatives are already finding
Brand: Disaronno Riserva – £250 ($381) reinforces the union of whiskey and beer. success in the UK market, particularly among
RRP (50cl) health-conscious Millennial consumers.
Brand: Jameson Caskmates –
€38.99/$29.99 RRP (70cl)
Brand: Minus 33 – £30 ($45.70)
RRP (70cl)

14 October 2015
spirits review
Travel retail’s Top 100
Simon Molony analyses this year’s Top 100 brands in travel retail
In the travel-retail market spirits volumes Top 100 grew in volume, led by Johnnie Walker. The Glenlivet Master Distiller’s
grew by 2.5% in 2014, adding 537,000 nine- The brand’s growth came from Africa and the Reserve is claimed to have been
litre cases to reach 22.1m cases in total. While Middle East, and recovery in Asian markets. a huge success in travel retail
growth rates remain slow – by comparison According to Diageo: “Across GTME (Global
volumes have increased at a compound annual Travel Retail Middle East), Diageo brands gained
growth rate (CAGR) of 5% since 2010 – it share particularly in whisk(e)y, led by Johnnie the core 12yo brand line.”
represents an improvement on the 1.4% Walker in Global Travel Asia, where premium- The Glenlivet posted double-
increase seen in the previous year. and-above variants drove the brand’s net sales digit growth in 2014, adding
The leading 100 spirits brands accounted for growth.” (See related interview with Diageo over 20,000 cases mainly in
18.5m cases, or 84% of the total 22.1m. GTME’s Doug Bagley on page 36.) Asia and the Middle East.
Diageo’s Johnnie Walker Scotch whisky brand Four of the five Pernod Ricard-owned Scotch The Master Distiller’s
remains by far the largest of these, with 2.25m brands represented in the Top 100 delivered range performed
cases, having added 47,000 cases in 2014. positive growth in 2014: Chivas Regal especially well in Asia,
Indeed, the most notable trend in the sector (+32,000 cases), Ballantine’s (+1,670), The where volumes
during 2014 was the strong recovery in Scotch Glenlivet (+21,000) and Passport (+27,000). doubled. A new
whisky volumes: 217,000 cases of Scotch were Chivas, Pernod’s leading Scotch brand and extension of the brand
added, accounting for 40% of all additional the third highest-ranked brand in the Top 100, line has since
spirits volumes in the travel-retail channel. recovered from a sharp volume decline in 2013 launched to the
Johnnie Walker declined by almost 150,000 to deliver growth in its key travel-retail markets global travel-retail
cases in 2013, as the total Scotch category fell of Asia, the Middle East and North America. market: the Glenlivet
by around 80,000 cases. Much of this was due Cristina Carmueja, consumer marketing Master Distiller’s
to difficult conditions in the Asia-Pacific region, manager at Pernod Ricard Travel Retail Europe, Reserve range.
where political and economic factors, austerity tells the IWSR Magazine: “Chivas Regal has Nikki Burgess,
measures in China and destocking by built on the success of travel retail-exclusive brand director for
customers hit volumes hard. The Chivas Brothers Blend, and the ongoing The Glenlivet,
In 2014 the category recovered to surpass its success of Chivas 18yo, supported by a new said: “Master
2012 levels, as 16 of the Scotch brands in the master brand campaign delivering growth on Distiller’s Reserve

Travel retail’s Top 100: 1-25

Rank Brand Owner Category Volume Volume Volume % CAGR % change
2014 2013 2010 2013 2014 2009-’14 2014 on ‘13
1 1 Johnnie Walker Diageo Scotch whisky 1,761.2 2,210.3 2,256.3 8.8 2.1
2 2 Absolut Pernod Ricard Vodka 970.8 912.5 918.4 1.3 0.6
3 3 Jack Daniel’s Brown-Forman US whiskey 525.2 872.3 899.7 15.7 3.1
4 4 Chivas Regal Pernod Ricard Scotch whisky 790.4 855.3 887.4 8.2 3.8
5 5 Bacardi Bacardi Rum 618.0 695.6 676.8 3.5 -2.7
6 6 Baileys Diageo Liqueurs 628.4 620.3 614.8 0.3 -0.9
7 7 Ballantine’s Pernod Ricard Scotch whisky 506.7 586.5 588.2 9.0 0.3
8 8 Smirnoff Diageo Vodka 583.0 526.5 582.4 0.0 10.6
9 9 Hennessy LVMH Cognac 358.5 482.8 545.2 15.1 12.9
10 11 Famous Grouse Edrington Scotch whisky 346.2 390.4 391.8 3.2 0.4
11 13 Jim Beam Beam Suntory US whiskey 289.4 375.6 389.2 12.1 3.6
12 12 Jameson Pernod Ricard Irish whiskey 283.6 386.5 382.1 8.7 -1.1
13 14 Bombay Bacardi Gin 271.7 353.1 365.5 9.5 3.5
14 10 Finlandia Brown-Forman Vodka 314.9 395.1 345.4 5.3 -12.6
15 15 Courvoisier Beam Suntory Cognac 231.3 345.3 329.3 17.9 -4.6
16 16 Grant’s William Grant & Sons Scotch whisky 336.9 312.0 315.8 -1.1 1.2
17 19 Martell Pernod Ricard Cognac 195.4 250.1 298.3 16.0 19.3
18 17 Gordon’s Diageo Gin 316.1 265.6 291.6 -1.6 9.8
19 18 Grey Goose Bacardi Vodka 163.6 257.0 291.0 19.6 13.3
20 20 Captain Morgan Diageo Rum 179.1 243.1 281.0 12.4 15.6
21 23 Jägermeister Mast-Jägermeister Bitters 146.5 212.3 243.0 12.0 14.5
22 24 Russian Standard Roust Vodka 132.2 203.4 223.5 16.7 9.9
23 22 Rémy Martin Rémy Cointreau Cognac/Armagnac 289.7 215.7 217.9 -3.2 1.0
24 26 The Glenlivet Pernod Ricard Scotch whisky 115.9 194.7 215.7 20.1 10.8
25 25 Danzka Behn Vodka 126.2 196.6 198.5 13.4 1.0
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

16 October 2015
 VODKA EXCEPTIONNELLE
FINISHED WITH A HINT OF PRECIOUS COGNAC
spirits review
Travel retail’s Top 100
Travel retail’s Top 100: 26-50
Rank Brand Owner Category Volume Volume Volume % CAGR % change
2014 2013 2010 2013 2014 2009-’14 2014 on ‘13
26 21 Glenfiddich Wm Grant & Sons Scotch whisky 205.2 220.1 189.0 3.0 -14.1
27 27 Stolichnaya SPI Vodka 96.1 179.6 179.7 17.3 0.0
28 29 Dewar’s Bacardi Scotch whisky 131.2 176.6 175.7 8.7 -0.5
29 30 Crown Royal Diageo Canadian whisky 136.2 176.2 169.9 2.5 -3.6
30 34 Yeni Diageo Aniseed 120.0 145.5 156.5 5.9 7.5
31 28 Beefeater Pernod Ricard Gin 142.0 177.8 149.9 6.0 -15.7
32 33 Amarula Cream Distell Liqueurs 81.8 148.7 148.5 16.3 -0.2
33 35 Metaxa Rémy Cointreau Brandy 111.4 143.5 147.2 5.7 2.6
34 31 J&B Diageo Scotch whisky 150.0 152.0 138.6 -3.5 -8.8
35 32 Havana Club Pernod Ricard Rum 136.8 150.6 137.1 3.7 -8.9
36 36 The Macallan Edrington Scotch whisky 97.0 132.6 119.4 5.9 -9.9.
37 38 Tanqueray Diageo Gin 92.6 112.7 119.0 7.3 5.6
38 37 Malibu Pernod Ricard Liqueurs 129.6 129.5 114.4 -0.4 -11.7
39 43 Royal Salute Pernod Ricard Scotch whisky 83.7 106.0 105.2 13.5 -0.8
40 39 Cruzan Beam Suntory Rum 109.7 112.4 105.2 -2.3 -6.4
41 47 Tullamore Dew Wm Grant & Sons Irish whiskey 81.0 98.3 103.7 12.5 5.5
42 41 Campari Campari Bitters/Spirit aperitifs 139.7 110.0 103.5 -7.1 -5.9
43 44 Bushmills Cuervo Irish whiskey 48.1 102.2 101.8 18.0 -0.4
44 40 Nemiroff Nemiroff Vodka 64.4 110.5 101.4 24.5 -8.2
45 45 Cointreau Rémy Cointreau Liqueurs 100.7 100.2 100.4 1.7 0.2
46 58 Passport Pernod Ricard Scotch whisky 40.6 71.2 97.9 35.1 37.4
47 46 St Rémy Rémy Cointreau Brandy 81.8 99.0 95.7 3.6 -3.3
48 54 Cuervo Cuervo Tequila 55.9 82.3 95.6 20.9 16.3
49 42 Sheridan’s Diageo Liqueurs 84.7 106.5 95.1 5.5 -10.7
50 49 Teacher’s Beam Suntory Scotch whisky 140.8 90.7 93.5 -2.7 3.1
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

has proven to be a huge success in global travel Much of the brand’s growth has Jack Daniel’s Sinatra Century, priced at
retail. It has been a natural next step for us to come from innovations such as the $499, sits between the Select and Century
extend this into a permanent travel retail- flavoured Tennessee Honey brand line, Family Reserve versions
exclusive range to further our credentials in the which added volume in all regions in
super-premium whisk(e)y category. International 2014, with particularly strong growth distribution timings fell in different months as
travellers are a specific group with a thirst for in the Americas. There has also been well, which wouldn't necessarily align with
innovation and exclusivity, and The Glenlivet is in a greater focus on the premium-and- calendar year cut-offs. Jack Daniel’s also indexes
prime position to deliver this.” above brand lines which delivered strongly to Russian consumers, so some impact
The US whiskey category showed robust positive results, mainly from on year-on-year comparisons can be
growth at 4.6% in 2014, although this was a the ultra-premium segment in attributed to that effect.”
slower rate than in the previous year, when the Asia, the Americas and Looking forward, Jack Daniel’s will
category enjoyed a huge expansion thanks to Australasia. continue to push those brands with
leading brand Jack Daniel’s. The Brown-Forman- Farrer says: “Jack Daniel's put greatest value potential while expanding
owned US whiskey remains in third place in the a stronger emphasis on its flagship brand volumes: “Our primary
travel retail Top 100, with volumes falling just establishing our super- and ultra- brand initiatives will remain focused on
short of 900,000 cases in 2014. premium trademark extensions, creating value growth for Jack Daniel’s and
Jack Daniel’s added over 27,000 cases in the which is continuing in 2015. This accessing new consumer purchase
year, helping to drive growth in the category is opening up new occasions for occasions,” says Farrer.
albeit at a slower rate. Marshall Farrer, VP and Jack Daniel’s and growing value “Sinatra Select, Sinatra Century, and
managing director, global travel retail at Brown- faster than volume.” Sinatra Century Family Reserve have seen
Forman, says: “Jack Daniel's had a good rate of So while the brand’s volume price points established at $150, $499, and
growth in travel retail for 2014, advancing growth slowed, the opportunity $1,500 respectively. In some cases the
3.1%. While the volume growth rate may have is there for higher-value brands product has sold out before it has hit
slowed from 2013, it has nothing to do with the to take off, while Farrer goes on the shelves.”
US whiskey category seeing overall declines. In to explain that volume figures Brown-Forman’s launch of a flavoured US
fact, the category continues to demonstrate may be slightly misleading: whiskey extension – Jack Daniel’s Tennessee
strong growth and expanding interest globally.” “Various promotional and new Honey – was intended to broaden the

18 October 2015
spirits review
Travel retail’s Top 100
appeal of a category traditionally dominated by Absolut Warhol released globally in October
the older male consumer. Farrer sees the 2014,” says Carmueja.
flavoured whisk(e)y’s success as an indication The most significant decline in the vodka
that the Jack Daniel’s brand is increasing its category was Finlandia, which lost 50,000
appeal across a broader demographic. cases to go from 10th to 14th in the list. The
“Our flavours are extending along a horizontal reason for this decline is the brand’s high level
axis and reaching more female, younger and of exposure to the Russian market: in 2013
diverse consumers than previously before. This Finlandia was the largest vodka brand in the
all bodes well for the Jack Daniel's franchise.” Russian Standard was among the Russian travel-retail market by a considerable
The honey-flavoured variant of Jim Beam, highest-performing vodka brands distance, but it is now second to Russian
the second highest-ranked US whiskey in the and innovation of US whiskey brands within Standard after volumes fell by 34,000 cases.
Top 100, was the main driver of growth for the the travel-retail sector. Farrer explains the notable decline in
Beam Suntory-owned brand in 2014, adding Overall, the vodka category performed well Finlandia’s travel-retail volumes: “Finlandia relies
over 20,000 cases; Jim Beam Red Stag, a in travel retail in 2014, with Absolut and heavily on the Russian consumer. In GTR (global
cherry flavoured variant, also grew volumes, Smirnoff among the top 10. Of 16 vodka travel retail), that means the Russian traveller,
while the newly-launched maple-infused brands in the Top 100 list only three saw a and they have nearly evaporated following the
extension accounted for an additional 1,700 decline in volumes, including Koskenkorva significant devaluation of the ruble. So the brand
cases of Jim Beam consumption in the travel- which fell by less than 100 cases. has been impacted probably more than any
retail channel. Absolut achieved only limited growth at other global brand due to the heavy consumer
Along with super-premium Jim Beam 0.6%, adding 6,000 cases, although this was a interaction. The brand is showing good health in
Signature, the success of these brand lines marked improvement on a sharp decline in other markets and regions.”
managed to offset a decline in volumes of the 2013 volumes, and Pernod Ricard continued to Russian Standard was among the highest-
core Jim Beam White brand line; Jim Beam push its core brand with new initiatives: “2014 performing vodka brands, adding 20,000 cases
climbed to number 11 in the Top 100 list in saw difficult trading conditions within travel to reach 223,500 in total. A small decline in
2014, despite the faltering growth of its retail, but despite that, Absolut saw the release Russia (-4,000 cases) was offset by growth in
leading brand line by volume. This of two limited-edition bottles – Absolut Karnival almost every other market, as the brand saw
demonstrates the potential for premiumisation GTR Exclusive release in April 2014 and growth across all quality segments.

Travel retail’s Top 100: 51-75

Rank Brand Owner Category Volume Volume Volume % CAGR % change
2014 2013 2010 2013 2014 2009-’14 2014 on ‘13
51 51 Glenmorangie LVMH Scotch whisky 49.9 86.2 89.8 15.2 4.3
52 48 Kahlúa Pernod Ricard Liqueurs 120.1 92.5 88.7 -1.5 -4.1
53 50 Koskenkorva Altia Vodka 88.7 88.5 88.4 -4.5 -0.1
54 53 Sauza Beam Suntory Tequila 69.6 83.1 85.4 8.4 2.8
55 52 Disaronno Illva Saronno Liqueurs 86.3 85.2 83.4 -0.1 -2.1
56 55 Camus Camus Cognac/Armagnac 78.7 82.0 82.1 2.4 0.2
57 56 Canadian Club Beam Suntory Canadian whisky 89.4 80.8 78.3 3.6 -3.1
58 57 Grand Marnier Marnier Lapostolle Liqueurs 73.0 73.1 77.1 3.1 5.5
59 65 Hendrick’s Wm Grant & Sons Gin 20.1 56.2 73.8 49.8 31.3
60 62 Belvedere LVMH Vodka 31.7 58.0 71.6 27.2 23.4
61 67 Buchanan’s Diageo Scotch whisky 62.2 53.7 70.1 15.2 30.5
62 63 Cîroc Diageo Vodka 11.2 57.0 67.4 51.2 18.1
63 60 Ricard Pernod Ricard Aniseed 62.0 62.4 65.1 0.6 4.3
64 64 Skyy Campari Vodka 60.1 56.9 63.6 0.6 11.8
65 59 Drambuie Wm Grant & Sons Liqueurs 58.6 63.6 63.3 3.0 -0.4
66 73 Aperol Campari Bitters/Spirit aperitifs 21.8 48.0 63.0 87.1 31.3
67 66 Fundador Beam Suntory Other brandy 41.9 54.8 59.9 3.1 9.2
68 61 Bénédictine Bacardi Liqueurs 64.0 60.4 58.7 0.3 -2.9
69 75 Appleton Campari Rum 30.7 44.7 55.0 13.8 23.1
70 70 Southern Comfort Brown-Forman Liqueurs 54.5 50.0 52.7 0.5 5.3
71 97 VAT 69 Diageo Scotch whisky 15.2 34.3 51.4 45.1 49.8
72 71 Torres Torres Other brandy 22.2 49.1 51.2 20.9 4.3
73 100 Żołądkowa Gorzka Stock Vodka 12.5 33.3 50.0 101.6 50.3
74 78 Zacapa Diageo Rum 21.9 44.1 49.7 20.9 12.7
75 74 Brugal Edrington Rum 8.7 47.7 49.0 43.7 2.8
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

20 October 2015
spirits review
Travel retail’s Top 100
Travel retail’s Top 100: 76-100
Rank Brand Owner Category Volume Volume Volume % CAGR % change
2014 2013 2010 2013 2014 2009-’14 2014 on ‘13
76 New Laphroaig Beam Suntory Scotch whisky 41.0 31.3 47.4 7.5 51.4
77 80 Mount Gay Rémy Cointreau Rum 40.3 43.0 45.7 5.0 6.3
78 68 Bowmore Beam Suntory Scotch whisky 54.7 52.8 45.2 -3.5 -14.5
79 93 Licor 43 Diego Zamora Liqueurs 22.1 36.1 44.9 21.4 24.5
80 69 De Kuyper De Kuyper Liqueurs 57.1 50.4 44.3 -6.4 -12.2
81 87 Bell’s Diageo Scotch whisky 57.3 37.9 43.4 -5.9 14.5
82 79 Fernet-Branca Branca Bitters 46.1 43.1 42.7 -1.2 -0.9
83 85 Becherovka Pernod Ricard Bitters 22.1 39.2 40.5 21.7 3.3
84 81 The Balvenie Wm Grant & Sons Scotch whisky 44.6 42.9 40.2 2.5 -6.2
85 77 Otard Bacardi Cognac/Armagnac 37.8 44.2 39.8 1.7 -9.9
86 88 Old Parr Diageo Scotch whisky 32.2 37.5 39.7 4.8 5.8
87 96 Bardinet La Martiniquaise Brandy 14.0 34.8 39.5 29.0 13.6
88 99 Dooley’s Behn Liqueurs 29.7 33.9 39.5 7.7 16.7
89 90 Saaremaa Altia Vodka – 36.9 37.3 – 1.1
90 89 Sierra Borco Tequila 24.0 37.2 36.7 12.6 -1.4
91 72 Olmeca Pernod Ricard Tequila 36.9 48.4 36.6 5.0 -24.5
92 92 Molinari Molinari Aniseed 31.2 36.1 36.0 5.2 -0.5.
93 New The Singleton Diageo Scotch whisky 18.4 28.8 34.8 15.2 20.9
94 94 Asbach Underberg Brandy 35.2 35.8 34.6 0.3 -3.3
95 91 Jura Whyte & Mackay Scotch whisky 15.3 36.6 34.4 27.1 -5.9
96 New Żubrówka Roust Vodka 20.4 32.9 34.3 18.1 4.3
97 New Beluga Sygroup Vodka 12.6 29.0 32.7 38.0 13.0.
98 New Fireball Cinnamon Sazerac Liqueurs – 23.0 32.4 – 41.0
99 New Meukow CDG Cognac 0.6 30.9 32.3 139.4 4.4
100 New Lauder’s MacDuff Scotch whisky – 27.0 32.0 – 18.5
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

Andrew Notcutt, travel-retail marketing premise shot consumption among Meukow Cognac entered the top 100
director for Roust, says: “Russian Standard younger consumers and, since its launch for the first time
continues to outperform the category at 10% into the travel-retail channel in 2012,
annual growth, driven especially by Russian Fireball has hit volumes of 25,000 cases
Standard Gold and Russian Standard Platinum in the US duty-free market alone, and While Martell volumes declined in China, the
which are now 55% of our sales. These 32,400 in total. Volumes increased by other key south-east Asian markets of Hong
premium variants are driving our growth as 9,400 cases in travel retail, making it Kong and Taiwan have picked up the slack,
shoppers trade up through the brand.” the highest-growing liqueur brand in along with US/Canada, to deliver positive
The brand is well-established across most absolute terms. growth. These results offer a good
regions in travel retail, while its strong More than half of the 15 opportunity for Pernod Ricard to push
presence in key domestic markets means it is liqueur brands in the Top the brand in 2015. “This year Martell
well-placed to further expand in travel-retail 100 lost volume in 2014, celebrates its 300th anniversary.
channels where volumes remain relatively low, as the category To mark the momentous occasion
such as the UK. “We are a strong fourth continued to struggle for in travel retail, an immersive
premium vodka in global travel retail with a growth. Martell pop-up store has been
strong 11% market share in EMEA,” says Meukow Cognac is installed in various airports
Notcutt. “We are a true international brand another new entrant to around the world as part of it
domestically, the number two premium vodka the Top 100 in 2014, extensive tricentenary
in the UK and Germany, which is of course having grown at a celebrations.”
linked to our success targeting these travellers.” modest 4.4% to pass 2014 saw growth in all spirits
Fireball Cinnamon Shot is a notable entrant 32,000 cases. Indeed the categories bar liqueurs and
to the Top 100 list; the whisk(e)y and Cognac category as a whole national spirits in the travel-retail
cinnamon-flavoured liqueur has proved a has shown resilience after a difficult year in channel, with premium-and-above
massive hit in the US domestic market, 2013. Total volumes increased by 62,000 offerings helping to deliver positive results –
reaching 810,000 cases in 2012 on the back of cases, driven by strong volume growth of most notably for the leading Scotch and vodka
the booming flavoured whisk(e)y category. Hennessy (+62,000 cases) and Martell brands, and a resurgence in the Cognac
The brand has become a favourite for on- (+48,000). category after a challenging previous year. ■

22 October 2015
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spirits review
Weak currencies hit travel retail sales
Currency volatility and declining Russian spend have been challenging travel-retail spirits. Joe Bates reports

Retailers are using pop-ups to attract travellers in Europe

The global travel-retail wines and spirits

business rose a lowly 1.8% in 2014 to reach
Global travel-retail liquor sales
30.2m cases in what was undoubtedly a Rank/Country Volume Volume Volume % change % CAGR
challenging year. Spirits grew at faster rate 2010 2013 2014 2014 on ’13 2009-’14
than wine (both still and sparkling), pushing Scotch whisky 5,784.3 6,806.3 7,016.5 3.1 7.5
ahead by 2.5% compared to just 0.8%. The Vodka 3,069.8 3,677.5 3,789.5 3.1 6.6
potential brakes on international travel were Liqueurs 2,088.3 2,189.8 2,169.0 -1.0 2.4
not hard to spot in a year marred by Cognac/Armagnac 1,376.5 1,647.0 1,708.5 3.7 9.3
widespread economic turbulence, conflicts and Rum 1,359.0 1,593.2 1,616.7 1.5 5.2
multiple tragedies, both natural and manmade. US whiskey 909.8 1,349.2 1,411.5 4.6 13.9
From the conflict in Ukraine to China’s Gin 952.4 1,067.3 1,109.4 3.9 5.4
anti-corruption drive, the outbreak of Ebola in Other brandy 598.5 723.1 735.8 1.8 4.3
West Africa, weakening Asian currencies, the Irish whiskey 437.3 614.7 618.2 0.6 10.6
moribund economies of the eurozone, political Bitters/Spirit aperitifs 476.5 563.3 594.3 5.5 6.0
unrest in Hong Kong and Thailand, the tragic Others 1,145.1 1,329.1 1,321.7 -0.6 5.0
disappearance of Malaysia Airlines flight Spirits total 18,197.3 21,560.3 22,091.0 2.5 6.7
MH370 – the list of events that had the
potential capacity to destabilise international Still light wine 5,877.3 5,885.5 5,907.0 0.4 1.0
travel in 2014, was seemingly endless. Sparkling wine 1,017.5 1,177.8 1,255.8 6.6 6.1
Yet despite these potentially destructive Fortified wine 180.5 186.5 188.3 0.9 2.2
factors, Airports Council International (ACI) Light aperitifs 538.8 552.0 512.5 -7.2 0.8
figures show that overall airport passenger traffic Wine total 7,614.0 7,801.8 7,863.5 0.8 1.7
grew 5.1% in 2014. Growth in Asia was down on
2013’s rate of 9.2% to 5.9%, due in large part to Mixed drinks 305.0 346.0 278.0 -19.5 Nil
the slowing economies of many countries in the Overall total 26,116.0 29,708.0 30,233.0 1.8 5.5
region. However, sales of duty-free wines and All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
spirits in Asia bounced back from 2013’s -5.6%

24 October 2015
 spirits review

slump to record an increase of 3.9%. Continued East a 6.8% share of the global business. UAE- strong year of growth in 2014, with some
growth in Chinese air travel, despite the based Dubai Duty Free (DDF) easily remains 22.1m people taking a cruise, according to the
country’s slowing economy, contributed much the region’s growth driver, posting liquor sales Cruise Lines International Association. North
to this recovery. Passenger numbers on the top of $290m in 2014, an increase of 6% on 2013. Americans still dominate the typical cruise ship
three overseas destinations for the mainland Whisk(e)y remains DDF’s single largest passenger mix, accounting for 56% of cruise
Chinese – Hong Kong, Macau and Taiwan – product category, generating 46% of liquor sales guests, but Asia is a growing focus for the
increased 12.1%, while overall international at its 11 outlets. Single malts outperformed cruise line industry. The number of cruise ships
passengers numbers climbed 11.7%, according blends for the UAE-based operator in 2014, deployed in Asia has grown by 10% in the past
the Civil Aviation Administration of China. growing nearly 14%. Other strong performing two years.
“The figures clearly point to the fact that this sub-categories included vodka (+13%), gin Boasting a captive mix of comparatively
is the growth market in global travel retail even (+12%) and wine (+9%) – healthy growth rates affluent customers, the cruise ship business is
if we’re not seeing quite the same hyper-growth that reflect both the impact of changing tastes becoming of greater interest to wine and spirits
in the region that was being driven five years among younger passengers and a recovery in companies as each year passes, with
ago by the meteoric rise of the Chinese,” says spend by European travellers. multinationals, such as Bacardi GTR and Diageo
Ryan Hill, Edrington managing director Asia GTME, continuing to invest in bartender
travel retail. “The new airport infrastructure Passenger growth in North America competitions and onboard activations.
being built in the region – with retail facilities a In North America international passenger traffic “Not so long ago the cruise line sector was
core component – is opening up new locations has grown by 6% in 2015. Duty-free liquor all about beer, rum and vodka,” says Brown-
and opportunities to showcase our brands. sales grew 4.4% in the region in 2014 – a Forman director of Americas travel retail/global
“The reduction in spending in both Asia and better performance than that achieved by either key accounts Monte Wilson. “That has changed
Russia has been quite dramatic, but Asia in Latin America (4.2%) or the Caribbean (3.4%). dramatically over the past few years due to the
particular still remains one of the regions with Liquor and wine sales at Canadian airports elevation of consumer taste profiles and the
the most potential for many brands,” adds rose a healthy 9.7% in 2014, according to data interest of cruise ship buyers demanding a
Nicola dal Toso, export director at Italian from the country’s travel-retail body the more innovative and comprehensive strategy
liqueur producer Antica Sambuca. “The level of Frontier Duty Free Association on the back of from suppliers. Brown-Forman Travel Retail is
spending may not return to what it was a comparatively strong passenger growth at key definitely ‘on-board’ with this business plan and
couple of years ago, but it will still be high in hubs such as Toronto Pearson (6.8%) and we recently put forward a cruise ship strategy
comparison with other regions.” Vancouver (7.7%). In contrast, the country’s with Carnival and others that is paying off.”
The Middle East continued on the strong independently owned border store businesses Airport passenger traffic has continued to
growth path of recent years, with passenger had a much tougher year as a severe winter, grow steadily over the first half of 2015,
traffic up 10.1% in 2014 despite the ongoing tougher border security checks, and the according to figures released by ACI. Asia
civil wars in Iraq, Libya and Syria. Wine and weakening Canadian dollar led to an annual (+8.6%) and the Middle East (+8.8%) led the
spirits sales in the region outperformed traffic drop in liquor sales of -0.7%. way and a recovering Europe (+4.6%) was
growth, rising 11.3% and giving the Middle In contrast, the cruise line sector enjoyed a marginally ahead of North America (+4.4%).

All the fun of the fair

Figures from the IWSR show that the European travel-retail With sales up 40% on the previous year, the 2015 Festival
liquor business has a problem. Sales growth rates across the featured a women-only launch event, aimed at highlighting
continent in 2014 made for depressing reading, with key whisk(e)y’s wider appeal to the female market, and the
markets such as the Nordics (0%), North-West Europe (0%) showcasing of exclusive lines such as Oban Little Bay and The
and Southern Europe (2%) all either flat or sluggish. Glenlivet Nadurra First Fill Selection.
A host of different factors – increased domestic market Meanwhile, Sweden’s Viking Line has been running its
competition, low consumer confidence, continuing restrictions annual Whisky Fair each winter season for the past seven
on liquids, aerosols and gels in hand luggage, reduced years, a time when passenger numbers normally drop. This
spending by emerging-market travellers, especially the year’s three-day fair onboard the Viking Line MS/Cinderella
Russians – are arguably to blame. attracted more than 4,600 passengers and 620 different
Worryingly, a study conducted in 2015 by research firm M1nd- whiskies from 30 suppliers, including distillers from as far
set, based on interviews with 2,200 travellers at European afield as Taiwan (Kavalan), India (Amrut), Japan (Suntory)
airports, found that 76% of travellers who visited the liquor and Australia (Hellyers Road).
section of the travel-retail store left without buying anything. Swedish distillery Box produced an exclusive whisky for the
The main reasons given by those not buying were that prices fair, Box Archipelago, limited to 700 bottles, which sold out
were too high and they were unwilling to carry purchases home. over the three days, while the most expensive bottle of whisky
To counter these low conversion rates, duty-free retailers purchased was a SEK78,000 ($9,407) bottle of Glen Grant
are increasingly turning to in-store festivals, pop-up shops and 50yo. Suppliers staged over 100 masterclasses for guests
events to improve footfall and conversion. For instance, for the during the three one-day cruises between Stockholm and the
past six years World Duty Free Group (WDFG) has staged a tax-free Åland islands and an annual charity auction in aid of
one-month annual Whisky Festival at its UK airport stores. the Baltic Sea Fund raised SEK82,600 ($9,962).

October 2015 25
spirits review
Travel-retail trends
There is also more positive news from the
Counting the cost of consolidation
World Tourism Organization (WTO):
international tourist arrivals were up 5% in the Last year saw a hugely accelerated rate of consolidation on the retailer side of the
Middle East, Europe and Asia, with the travel-retail business. In June, Basel-based travel-retail giant Dufry took yet another
Americas not far behind on 4%. Only Africa – step towards industry domination with the $1.7bn acquisition of Swiss rival The
struggling with the aftermath of the Ebola Nuance Group. It gave Dufry a 15% share of the airport retail market; entry into
outbreaks, falling commodity prices and new markets such as India, Malaysia and the UK, and a combined store network of
continuing Islamist terrorist attacks – recorded nearly 1,750 outlets in 63 countries.
a drop in tourist numbers of -6%. Although Dufry forecast it would take 12-18 months to incorporate Nuance,
generating synergies of some CHF70m ($72.2m) by 2016, the company still had
Currency factors appetite for an even larger acquisition: World Duty Free Group. This game-changing
Despite a 6.1% increase in international CHF7.8bn ($8.3bn) transaction gives Dufry a 24% share of the airport retail market
passengers over the first half of 2015, the and a presence in coveted international hubs such as London Heathrow, Gatwick,
travel-retail business has been hit by the Madrid Barajas and Vancouver.
weakening value of emerging-market Clearly, such industry consolidation has significant ramifications for the travel-retail
currencies against the US dollar, the euro and liquor business. Concerns centre around Dufry’s beefed-up purchasing power, the
the Swiss franc. In a recent presentation to introduction of a new possibly global pricing structure, and the worry that successful
investors, Swiss travel retailer Dufry noted that concepts such as World Duty Free’s World of Whiskies outlets might be altered.
the Brazilian real, the Russian rouble and the Others prefer to take a more upbeat view, noting that a single listing with Dufry
Mexican peso had weakened -38%, -51% and can now potentially mean a simpler, more cost-efficient route-to-market and a one-
-18% respectively against the US dollar in the stop access to a much wider store network, which encompasses much of the globe.
second quarter of the year. “With consolidation of retailers there is always a likelihood that there will be
Rémy Cointreau Global Travel Retail director supplier rationalisation,” says Rupert Firbank, commercial director global travel
of Americas Sebastien Devallet tells the IWSR retail for Accolade Wines. “Wine is a massively fragmented industry with many,
Magazine: “The currency devaluations in most many suppliers so, yes, there will be some that lose out. For Accolade Wines, I would
of the [Latin American] countries affect the hope that as a company willing to invest and helping to active the category we
purchasing power of the customers, who then would thrive as we can bring both well-known brands, as well as niche offerings
change their purchasing habits. This situation from smaller producers we own. We can be a one-stop shop for wines from multiple
forces us to adapt our offer to this new countries of origin at multiple price points and therefore can tailor our offer to a
customer behaviour. We are launching small global retailer dependent on each individual outlet.
sizes with a lower retail price point. We are “I think ranges at airports may become narrower given the consolidation, but I
developing some ‘retail-tainment’ activities for think they can become more relevant and more targeted. With wine there should
the main new products to bring the customer always be a place for smaller and quirkier brands, as well as larger, more well-
into the brand’s DNA and we are offering some known ones, and it will be about striking a balance.”
gifts and tasting events.” “It’s definitely tough for the smaller brands,” says one veteran duty-free drinks
In the European travel-retail market the executive who wished to remain anonymous. “The big retailers are getting bigger
continuing conflict in Ukraine and the collapse and bigger and only want to deal with the larger suppliers. They do what they
of the Russian rouble have led to a marked always do and don’t want to seem to take chances.
decline in spend on liquor by Russian “It is a bit scary,” he adds. “Unless you’ve got a relationship [with a large
travellers. For instance, in its annual results in operator], you won’t get far at all. It’s tough enough to get people you know to
the year ending June 2015, Pernod Ricard respond. For smaller firms, it’s tough, very tough. The margins now are more
noted that its travel-retail sales in Europe had unreasonable than ever. I had a letter just today from one of the big retailers
suffered a “double-digit decline”, partly as a wanting 90-day [payment] terms; I’ve then got to transport the product around the
result of the “Russian situation”. world and they want a 65% margin. There’s no money there—why would you do it?”
“Two years ago we were seeing booming
sales in duty free,” notes Edouard de Boissieu, particularly strong. With the UK economy just a matter of accepting that this business is
export manager at Champagne Lanson. “Now, stronger and passenger traffic recovering at always cyclical and to hold firm. Nevertheless,
when you talk to a lot of the bigger operators, Spanish airports WDFG reported a 20.5% we continue to see some very good travel-
they are complaining of stagnating sales. Much increase in wine and spirits sales in the first six retail results. The UK, for example, is showing
of this is to do with the fewer number of months of the year. strong growth for Stoli, both domestically and
Russian travellers and those that are travelling Many suppliers are also sanguine, believing in travel retail.”
are spending 10 times less.” that the industry’s current difficulties are In summary, the high growth rates of recent
The picture is far from universally bleak, typical of a retail sector that has to endure years for the global travel-retail liquor
however. While not growing at the rate of more than its fair share of hard knocks. For business may be a receding memory. Yet with
recent years, Asia continues to perform well. instance, describing the current market as long-term international passenger forecasts
Diageo reported a 4% increase in net sales for “challenging”, Stoli Group global duty-free and looking positive, many in the industry believe
its GTME division in the first half of 2015, with travel-retail director Jean-Philippe Aucher, the business will turn a corner sooner rather
sales of higher-priced Johnnie Walker variants says: “In terms of managing/overcoming it is than later. ■

26 October 2015
 spirits review
Distinguished offer
DFS Group’s Brooke Supernaw explains the key factors in the firm’s travel-retail success to Sandra Newman
Hong Kong-based DFS Group, a subsidiary The second floor of the store also features a
of LVMH, is one of the world’s largest travel lounge that members of the DFS Loyal T loyalty
retailers. The company operates T Galleria programme can access. Supernaw says: “It’s
downtown tax-free stores and duty-free shops really making the duplex a destination in itself.
at airports in 12 countries in Asia-Pacific, the We have a very strong connection with our
US and the Middle East. customers through our loyalty programme, so if
One of this year’s most important customers know they are coming through and
developments for DFS has been the opening in they want to book a table or book the lounge,
May of an 11,400sq ft (1,060sq m) duplex we can reserve that for them and make sure
liquor store at Singapore Changi airport. The we have our dedicated staff upstairs to
new store is part of a major investment plan by welcome them. Often they’ll call ahead of time
DFS at Changi following the renewal of its duty- to say they want to look at X, Y and Z product
free liquor and tobacco concession at the and we’ll have it available for them.”
location for six years in 2013. DFS Group senior An exclusive tasting programme is one of
vice-president spirits, wines and tobacco several ways in which DFS differentiates the
Brooke Supernaw says: “We’ve been extremely store from existing outlets, says Supernaw.
pleased with the performance of our new wines “We do have a large range of exclusive
and spirits duplex at Singapore Changi T3. Our products that are available upstairs, but we
customers have been really responding to the also offer tastings that are unique to that
overall experience at the duplex.” space. It could be that, for example, we’re
An in-store bar is one of several new tasting Johnnie Walker Blue, which wouldn’t be
concepts DFS has introduced in the flagship T3 a traditional item that you’re tasting in the
outlet. Supernaw explains: “We’ve partnered other stores. The upstairs space also supports
with Raffles Long Bar, of Raffles Hotel, and a more high-end tasting experience. We also
we have an exclusive bar experience. “Customers can come have very well-trained brand ambassadors
Customers can come up and have a taste of directly from the brands, most of whom have
any of the products we currently sell in the
store. We have a cocktail list and we will soon
up and have a taste spent time at the distilleries or at the
châteaux, learning directly from the whisk(e)y-
be launching our Raffles Singapore Sling that
we’ve developed in collaboration with Raffles.”
of any of the products or winemakers about the products, because
the service is critical.”
The store’s second floor features nine shop-
in-shops – Johnnie Walker House, Martell,
we currently sell The addition of the new store has allowed
DFS to expand its assortment at Singapore
Hennessy, The Macallan, Glenfiddich, Dom
Pérignon, Penfolds, Hendrick’s and Absolut – in the store” Changi to more than 1,400 products from over
440 wines, spirits and tobacco brands. It now
which offer exclusive or limited-edition items. – Brooke Supernaw, senior vice-president claims to offer the largest range of single malt
Supernaw says: “It gives a nice balance, spirits, wines and tobacco, DFS Group (above) whisk(e)y at an airport in Asia-Pacific there.
because Singapore has a very wide range of In addition to the new T3 duplex store, DFS
nationalities that we cater to, and we needed
upstairs to be quite dynamic to drive the
penetration upstairs. So we did want to offer a
balance of our assortment and of brands to
attract a whole range of customer profiles and
nationalities. We also host interactive
masterclasses where we have brand
ambassadors, master blenders or winemakers to
help educate and tell the story of the brands.”
Part of the upper level houses a climate-
controlled wine area. Supernaw says: “Our
prestige wine room is anchored with shop-in-
shops from Dom Pérignon and Penfolds – two
critical brands to Singapore. It allows us to
display an absolutely stunning collection of
wines from all around the world, from France,
from California and Australia. A lot of them are
very high-end, gorgeous collections that are
developed for this location exclusively. We also
have oenomatic tasting, in which we welcome
customers to taste an array of wines.” DFS has partnered with Raffles Long Bar to bring the experience to Singapore Changi T3

October 2015 27
spirits review
DFS Group
is rolling out other new liquor and tobacco
outlets across Changi airport over the next
couple of years. Supernaw says: “We’re very
excited to open our second duplex store in
terminal two next year, in March 2016. So we’ll
have another duplex store. It’ll be a slightly
different design, just given that the space is
different. We’ll be moving locations and we’ll be
building a wine store on the ground floor, then
on the second floor of our duplex store we’ll
have a series of shop-in-shops again, but with a
slight twist and some innovation and some new
concepts.” Further ahead, she says: “We’re also
looking at terminal four, which is scheduled to
open in 2017, and this will also present us with
great opportunities to really take our wines and
spirits offering to the next level.”
Singapore Changi airport is one the most
important locations for wines and spirits sales
for DFS, but the company has also developed
its presence in the category at a number of
DFS’ flagship store at Singapore Changi T3
other key airport locations in recent years,
including Hong Kong International, where it stores and it’s something we’re looking to focusing on how we can bring Californian wines,
regained the duty-free liquor and tobacco develop in the years to come. So, launching in such as the best Napa Valley cabernets or Napa
concession in 2012. Supernaw says: “Changi is Siem Reap and Venice, we’ll look at other Valley chardonnays, to life and tell the story of
the home of our flagship wines and spirits opportunities to expand our footprint in our T Napa Valley. We have a very wide range of
business and it’s certainly a key part of our Galleria shops.” some of the best California wines – some very
business. That being said, Hong Kong, North In Siem Reap, she says: “The design of the exclusive and hard-to-get-your-hands-on
America, Abu Dhabi and India are also store is going to be inspired by the local products to deliver to our customers – and we
extremely important markets for us.” architecture and the history of Siem Reap. The want to deliver Napa Valley to the airport or the
She adds: “We’ve been in India now for spirits, wine and tobacco category will embrace California wine experience, north and south, to
seven years. India is a very exciting market; that look and feel. The product assortment will localise that assortment for customers, so that
it’s a very strong market in growth, particularly be selected based on the profile of the they can bring back a memento of their trip.”
driven in spirits, wine and tobacco by the quite customers who’ll be coming through, but it will Supernaw adds: “North America continues
heavy taxes in the domestic market. The be a larger collection than you see in Singapore to be a very strong market for us. Our airport
business has evolved over the years in [Scottswalk T Galleria].” Chinese, Koreans and stores in San Francisco, Los Angeles and New
customers becoming very discerning in their Japanese visit Siem Reap in large numbers and York are doing well. Our store redesigns that
product selection and very knowledgeable will be among the target customers for the new have rolled out over the past couple of years
about the products.” 8,000sq m (86,080sqft) store in Cambodia, have really allowed us to bring an enhanced
where new legislation will permit duty-free pre- experience in these locations to our customers
Downtown developments order sales for the first time. and we’ve seen quite positive responses. The
DFS is also building its liquor business in DFS’ Venice T Galleria will be a luxury duty- localisation of wines has really helped to
downtown stores, says Supernaw. “At DFS paid department store. Supernaw says: “Venice deliver a sense of place in these stores that we
we’re always looking for opportunities to will be a unique proposition because of the know our customers are enjoying.”
enhance our customers’ wines and spirits location of the city itself, because of the
experience. We’ve particularly decided to grow customer profile and what they’re looking for Focus on wine
our business in new channels for this category, and what they’re shopping for in Europe, Supernaw thinks the travel-retail wine sector is
with the opening of the T Galleria in Siem particularly in Italy. It’ll be predominantly a local developing well. “Wine is a category that has
Reap next year, as well as the T Galleria in wine assortment and a local spirits assortment, seen some very strong growth in the past
Venice next year. So those are new locations so you’ll see a beautiful selection of Italian couple of years and we are looking at what we
that are Galleria models where we will have a wines and sparkling wines, as well as Italian can do to expand that category in order to
spirits, wine and tobacco assortment present.” spirits and we’ll support it with international continue to deliver an exceptional range of
Supernaw says the new downtown stores brands of Cognacs, whiskies and Champagnes.” wines. The trends in wine typically are French
will feature a broader liquor offer than DFS’ DFS has already developed a localised Bordeaux, Australian reds, Champagnes –
existing T Galleria stores and the retailer is assortment at some of its airport outlets in the driven by new ways of drinking Champagne,
considering further expansion for the category US, which were upgraded in 2013. Supernaw and limited editions and seasonal [products]
in this channel. “We don’t really have that big says: “In North America, particularly Los and gifting.”
a presence of wines and spirits in our Galleria Angeles and San Francisco, we are really She adds: “We put quite a bit of attention on

28 October 2015
 spirits review

building our relationships directly with the spending habits. However, while shopping to this are quite substantial, because we do
châteaux. My team travel to Bordeaux twice a patterns have shifted, the Chinese consumer’s believe that customer service is definitely one
year, we go to California once or twice a year to desire for unique, exclusive experiences has of our biggest, if not our biggest, priorities.”
deal directly with the wineries, understand the not. So, more than ever, we’re tailoring our
wine brands, work with them on their product assortment to meet the growing trends Spreading the risk
understanding of the travel-retail industry, and of this exclusive, rare range, such as the rise in Supernaw says DFS’ diverse customer base
particularly DFS, and see what we can do to single malt whiskies, and also offering exclusive means the company is not overly affected by a
deliver differentiated and unique items for our products and experiences in the stores.” decline in spending by any particular
customers. There are quite a few wine collectors While the fallout from the Chinese nationality. “A global footprint across all four
in the world and we want to be able to help Government’s crackdown on extravagant continents really allows us to cope with shifting
them curate their assortment through an purchasing, including gifting, since 2013 can be travel patterns. In the case of the Russians, we
expanded and unique range of vintages, of seen wherever the Chinese are travelling, haven’t seen too significant an impact. We’ve
varietals, and really exceptional wine selections.” according to Supernaw, she says: “You see the seen a slight impact in Abu Dhabi, which
impact a bit more in Hong Kong and Macau and probably has our biggest mix of Russians, but
Single malt interest a slight impact in markets like Singapore and we have such a range of nationalities in our
In the spirits sector, Supernaw says: “Globally North America where we do have a high airports and across all of the countries we
we’re seeing a growing interest in single malts proportion of business coming from the operate in that we can really balance that and
and this is really across all nationalities, so it Chinese. It’s then about being extremely manage those downturns when one nationality
really resonates across all of our divisions. Single creative and innovative in the way that we do does decline due to economic circumstances.”
malt has been a category that has been growing our shop designs, our product assortment and She adds: “We’ve seen strong growth in
over the years and it continues to perform what differentiation and exclusive items we can Singaporean customers. We’ve done a lot in
extremely well. It’s organic growth through our offer, and what training we can do with the terms of product innovation and merchandising
key top brand references, but it’s also staff, so that they’re extremely knowledgeable. in Singapore, especially in arrivals: targeting
incremental growth, because there are quite a The Chinese are extremely interested in the the locals and making sure that we are
few single malt distilleries and boutique brands product stories. They want to know the history exceeding expectations in terms of our product
that we’ve introduced over the years that have and the heritage; they want to be able to go assortment. We’re also seeing growth in
really excited our customers. In particular, back and share with their friends and their Indonesian and Vietnamese [travellers], as well
Japanese whiskies, whether single malt or families the knowledge that they have gained as Indian customers, not just in Singapore and
blended, are extremely hot in the market today.” for the products that they’ve purchased, so we in Abu Dhabi, but obviously in India as well.”
Catering to growing demand among Chinese take that very seriously and really focus on that With exchange rate movements affecting the
travellers for single malts is one way DFS aims in our stores.” spending power of some nationalities Supernaw
to lessen the impact of the downturn in An extensive training programme for sales says retailers must work hard to ensure their
Chinese spending. Supernaw says: “The staff is a key component of DFS’ retail offer is attractive to travellers. “Retailers all
Chinese Government’s austerity measures have strategy, says Supernaw. “The commitment we over the world are feeling the impact of
certainly had an impact on Chinese consumer have to this and the resources that we allocate exchange rates and travellers are certainly
reacting to the shifts in the foreign exchange
markets. However, what we see time and time
again is that, in addition to value savings,
customers are also looking for a unique product
experience, a localised product offering,
differentiation, authenticity and product
exclusives, so there are quite a few other areas
that we focus in on to deliver value for our
customers.” Travel retail-exclusive products can
play an important role, says Supernaw.
“Customers are looking for differentiated
products when they come into travel retail,
whether it’s for themselves or for gifting – and
we know there’s a high percentage of gifting.
Offering something that is travel retail-exclusive
really creates a call to action and an
opportunity for customers to buy something
unique that isn’t available on high streets.”
Events are another way in which DFS
endeavours to offer something different to its
customers. “We host VIP events for our
customers year-round. We want to give them
DFS’ new Changi T3 store features a double-height atrium experiences money can’t buy.” ■

October 2015 29
spirits review
Exquisite taste
Sandra Newman visits SAR’s luxury wines and spirits store at Amsterdam Schiphol airport
Although branded luxury boutiques abound
in travel retail, high-end multi-brand liquor
stores are few and far between. When
Schiphol Airport Retail (SAR) launched a
specialist store offering an upmarket range of
wines, spirits and cigars in 2011, it was a
brave move, but one that seems to have paid
off for the retailer.
Having opened its Finest Spirits & Cigars
store at Amsterdam Schiphol airport, the
company relaunched the 120sq m (1,290sq ft)
outlet as Exquisite in January 2014. Prior to
the original launch, shopping at Schiphol had
been more focused on the lower end of the
market, and SAR director Peter-Jan Rozenberg

PHOTO: SANDRA NEWMAN

says moving upmarket presented a challenge
for the retailer. “We were really more or less
just a discount retailer in terms of logistics,
because it [the business] came from KLM
Inflight Service. We developed a strategy
together with Schiphol [Group] to improve the
retailing. For the large stores we said, ‘OK, we
will move from discount stores and more to a
Exquisite: the assortment is luxurious, but the design of the store is accessible
department store’. Liquor tells stories about got in contact with Whyte & Mackay about The and he negotiated in advance and we kept it
heritage and history, taste and the making of Dalmore 1962. The moment we had that, for him. That shows customers like to engage
products, and regions, but our stores were not Hennessy came in with Beauté du Siècle in that way. We put a lot of emphasis on
like that, they were just functional.” [Cognac], and from that point a lot of suppliers service and on the knowledge of the staff.”
SAR transformed an existing store into a were coming to us with their own
specialist outlet with an extensive assortment ‘masterpieces’ to be displayed here.” Chinese purchasing
based around Cognac, whisk(e)y, wine, On the philosophy behind Exquisite Rozenberg The Chinese represent the key nationality of
Champagne and Cuban cigars, including many says: “We made the design very accessible, so passengers visiting Exquisite, with SAR
rare and exclusive products. Rozenberg says: although the assortment is very luxurious we try benefiting from Schiphol operating 60 direct
“We had this location, which was a small to invite a lot of people to come in. We really like flights a week to mainland China. Rozenberg
combi-store. It was more like a service shop. If to attract people who love the product. We have says Chinese spending patterns have changed
you looked at the turnover, 50% of it was a lot of collectors. We have three types of target since the introduction of austerity measures in
tobacco, which was mostly cigarettes, 10% customer. We like to accommodate explorers, China in 2013. “Since March 2013 we’ve seen a
was confectionery and 40% was liquor. Of the who know certain brands, but like to explore decline in the crazy purchases. It’s still
liquor sold at this location, 80% was sold at other things. Then of course we have the happening, but with a lower frequency. Our
below €20 ($22.60), with special offers, etc. So connoisseurs and we have the collectors.” turnover from the Chinese has been really
it was not creating added value.” Gatoux adds: “We need to balance and not stable; in fact it is growing now. We saw a bit of
Marc Gatoux joined SAR as category just to be really expensive. We need to touch a a decline in the average spend last year, but this
manager liquor and tobacco just as the new wide range of passengers in travel retail.” year there’s been a slight recovery again. But it
store was being established. Gatoux’s direction Rozenberg elaborates: “In every category is not as crazy as before. Until March 2013 every
from Rozenberg was to build “something really what we try to do is to be connected to the week we had sales of €10,000-€50,000
exceptional” in terms of assortment. His initial connoisseurs or lovers of that category in ($11,300-$56,500) by customer. It’s rarer now.”
challenge was to convince brand owners to list every price range.” Dutch, American and British passengers also
rare and exclusive products with a retailer with Frequent visitors to the store are a key part form a key part of Exquisite’s customer base.
no real pedigree in the luxury liquor sector. of the client base, says Rozenberg. “We have Rozenberg says spending patterns vary by
“The main vendors were a bit scared to give us approximately 100 members who are regular category among the key nationalities. “In
this kind of product. So we did it step by step customers. We offer a membership programme Cognac it’s primarily the Chinese [buying], but
and, after four or five months, they started to loyal customers. We offer a VIP arrival foreigners travelling to China also buy it as a
coming to see us and proposing some [service] at the airport and also gift. Wine is really led by the Chinese and that’s
exclusive products. In between, in Singapore announcements of new products. We are also to do with their fanaticism for the luxury grands
[Changi] they sold one of the most expensive building up some private collections and limited crus, so we want to develop a duty-free offer
whiskies: The Dalmore 1962 at $145,000.” editions for them. We have regular customers on great wines that is also accessible for UK,
Rozenberg elaborates: “I thought, ‘That’s it, who are in contact with the staff. For instance, US and Dutch people. In malt whisky it’s more
we need to have the most expensive bottle The Dalmore Eos 59yo was sold to a regular balanced among all the main nationalities.”
here to work as PR for the store’. So then we customer. He announced that he was coming The recent decline in the value of the euro

30 October 2015
 spirits review

against several key currencies has boosted [Beam Suntory] only produced a few thousand and a 1969 Bollinger that featured in the
spending by passengers from the US, Norway, bottles for us. It’s really niche for us because it’s James Bond film Moonraker.
Switzerland and the UK this year. While only listed in this shop, not in the main shops. In As well as the wine cellar, SAR has created a
penetration and conversion rates are low terms of performance or turnover it is our bar within Exquisite. A change in Dutch
compared with those in SAR’s main liquor and number one product this year.” legislation has allowed SAR to conduct tastings
tobacco stores at Schiphol, average spend per He adds: “We were also one of the first among passengers since the beginning of this
head is four times higher in Exquisite. The most airports to list [Bruichladdich] Octomore at the year, provided customers request it. Visitors to
expensive item currently in the store is The end of 2013. We made a fantastic partnership the store can taste whiskies priced up to
Dalmore Constellation series number 8 of 21 with Rémy Cointreau to have this product in €6,000-€7,000 ($6,800-$7,900), as well as
bottles, priced at €200,000 ($226,300), with exclusivity for a couple of weeks. It was an Cognacs. Rozenberg says introducing tastings,
Barons de Rothschild Champagne the highest- amazing performance in terms of sales.” which SAR plans to extend to include wine, has
priced single bottle at €150,000 ($169,700). A climate-controlled wine cellar featuring proved successful. “It creates an additional
The iconic Hennessy Beauté du Siècle, also Champagne and still light wine was added in the customer experience. The brands really love it,
priced at €150,000 ($169,700), features in a store’s 2014 revamp to appeal to connoisseurs. because they are able to distinguish themselves
stand-alone display near the entrance to the Gatoux says of the wine offer: “Exquisite’s wine and show the philosophy of the master blender.
store, with Cognac the first category passengers business is really dominated by Bordeaux wines. Even the people buying a normal bottle have an
see. Gatoux says: “It was important for us to We have Bordeaux grands crus wines from exceptional experience and that makes being at
have the Cognac at the front of the store to regions like Pomerol, Pessac-Léognan and Saint- an airport different. The conversion of
catch the eye of our main passengers, the Émilion, really top high-end products. We try to [passengers] tasting [to purchasers] is about
Chinese.” Products such as Rémy Martin Louis balance them in terms of vintage and now we 60%, but this is not a high-traffic store. We are
XIII, one of the store’s biggest generators of have sold most of our old vintages.” doing 10 to 15 tastings a day.”
turnover, Hennessy Richard and Martell Premier Bordeaux wine Lafite Château Duhart-Milon Organising trips for customers to Scotch
Voyage are on show in a gold case in the middle is a best-seller and popular with Chinese whisky distilleries and wine-producing areas
of the Cognac display, placed at eye level, with passengers. The selection also features wines and an event focusing on ‘masterpieces’ are
XO and Extra Cognac displayed on the shelves from Burgundy, including a full case of also in the pipeline, but plans for these have
further down. Gatoux says: “The idea is to Romanée Conti 1998, and Côtes du Rhône, as taken a back seat for now while the integration
highlight some niche products and something well as Masseto Toscana IGT from Italy and of SAR within Gebr. Heinemann, which
really special for our customers to show them Penfold’s Bin 170 Kalimna shiraz from Australia. acquired the company in March 2015, takes
that this shop is really different compared to the Customers seeking rare Champagnes are place. Long-running renovation works at
commercial shops. Some of the products are also well catered for. Gatoux says: “Most of the Schiphol have also had an impact in recent
products you can only find in boutique shops.” Champagnes we have are only available at top months as passenger flows have been
Next to the Cognac section a selection of restaurants and not in airports. The offer disrupted. Once complete in 2016, the
other spirits includes Jose Cuervo 250 includes Salon from Laurent Perrier, Billecart revamped departures Lounge 2, which caters
Aniversario tequila, Chabot Extra Armagnac Salmon, Veuve Clicquot La Cave Privée, Amour to non-Schengen international passengers, will
and Lecomte calvados and Santiago de Cuba de Deutz, Pol Roger and Henri Abelé.” Iconic host the densest passenger footfall (14-15m
rum, plus a big range of baijiu, with Moutai the Champagnes in the store include a limited- passengers a year) in a European airport and
best-seller in this category. Gatoux says SAR edition 2005 vintage of Barons de Rothschild should mean extra traffic for Exquisite. As part
expanded the adjacent Japanese whisky Champagne with a diamond-encrusted musulet of the revamp SAR will open a new main tax-
section after interest in the category grew free store in November and a specialist
when Jim Murray voted Yamazaki Sherry Cask Champagne and chocolates store next year.
2013 as the best whisky in the world in 2014 Rozenberg says Schiphol Group is very
in his Whisky Bible 2015. “We really got a big happy with the performance of Exquisite. “The
uplift in Japanese whisky demand. That’s why airport loves it. A lot of airports look more or
we decided we needed to put one wall bay for less the same and for our industry it’s a real
Japanese whisky and get some exclusivity.” challenge as a retailer to create a distinguished
Exquisite’s whisk(e)y offer ranges through offer, which also makes sense to an airport.
Bourbon and Irish whiskey to blended Scotch, You could not have Exquisite at every airport.
then to the extensive assortment of malt You need to have the profile, you need to have
PHOTO: SANDRA NEWMAN

Scotch showcased at the back of the store. the density; otherwise it doesn’t make sense.”
The blended Scotch offer includes the limited- He adds: “It has also been good for our
edition Famous Grouse 40yo and one of the company culture, because we had to change
few remaining bottles of Royal Salute 62 Gun from a discount background to be more of an
Salute still available in travel retail. aspirational retailer.”
Gatoux says: “The brand owners are really
Niche products impressed, because they travel a lot all over
Exquisite’s broad malt Scotch offer regularly L to R: SAR director Peter-Jan Rozenberg the world and they are always exclaiming
features exclusive products, which currently and category manager liquor and ‘Wow, this is such a different shop’. This shop
includes Laphroaig 11yo. Rozenberg says: “They tobacco Marc Gatoux has really opened a lot of doors for us.” ■

October 2015 31
spirits review
Rising to the craft challenge
Premium spirits packaging in travel retail now faces the challenge of craft distilling, finds Joe Bates
Premiumisation remains the main driving stories in buckets. They need to look The packaging of Havana Club
force behind a lot of travel-retail spirits back at these brand stories: how the Selección de Maestros, designed
packaging. This well-established trend is now product got here and, of course, how to by Nude, aims to communicate
also evident in sub-categories playing catch- make it relevant now. the heritage and authenticity of
up, such as vodka, gin and rum, which have “Customers are also more willing to
the brand
some way to go to attain the same level of pay more for major brands that might
premium and super-premium sales as either have had a ‘luxury’ makeover for the
retail market,” he adds. “There is trust in neo-classicism and baroque – and used
Scotch whisky and Cognac. Exclusive gift
the big names, a trust that newer filigree alongside the main logo. We also
boxes and limited-edition bottles are also
brands have not yet earned.” subtly referenced two iconic Cuban
becoming much more common as the travel-
One of Nude’s recent case studies symbols – firstly La Giraldilla, who
retail channel looks to differentiate its offer
was the super-premium Havana Club represents Havana’s first female
from that available in domestic markets.
Selección de Maestros, a governor, who appears on the label
Luxury spirits packaging in travel retail is
repackaged version of an and influences the womanly
changing, however. The craft distilling
Havana Club Barrel Proof, curves of the bottle.
movement and the post-credit crunch move
initially launched in 2004 as a “Secondly there is also a nod
away from bling and ostentatious displays of
travel-retail exclusive. Says to the cigar in the bottle shape.
wealth have put more emphasis on
Gormley: “The original gold- The bottle incorporates a thick
provenance, heritage and small-batch artisanal
winning rum remains the same, base, debossed and embossed
craftsmanship. This shift from ‘show to know’
but Nude gave the packaging a luxury labelling and an authentic
presents the mass-produced international
major overhaul designed to cork stopper. A neck tag further
spirits brands that dominate travel retail with
communicate the premium highlights its rich Cuban roots,
something of a dilemma. How exactly should
aspects of the product alongside while the wood-effect outer box
they meet the rise of craft in a plausible way?
its unique heritage and references authentic Cuban
cigars, tradition and the
Capitalising on assets authenticity – which the newer
craft brands lack in their craftsmanship of the ‘roneros’.”
“Major brands need to capitalise on their
assets – the history of the product is essential proposition.
to this – its story, the look and feel of the “It was our aim at Nude to Craft codes
create authentic packaging that Hilary Boys, strategy planning
product,” argues Bernard Gormley, director at
would celebrate the brand story director at design agency Lewis
design agency Nude Brand Creation, whose
and drive desirability in the retail Moberly, whose recent clients
clients have included Havana Club, Ballantine’s,
environment. Havana Club is tied have included Johnnie Walker,
Longmorn and Scapa. “Smaller ‘craft’ brands
into the history and fabric of the Glenmorangie and Glenfiddich,
are having to create newer stories to inject
city. On the main label we called says major drinks brands are
personality and some are
upon these design cues – a city reacting by adopting the visual
doing this very well. But
made up of lots of arches, a mix of codes of smaller craft brands, such
the major brands have

Copper is
increasingly
used to reflect
the greater use
of copper pot
stills. Absolut
Elyx, Ledaig
40yo and Rémy
Martin XO
Excellence
Touzac all use
this as
reference in
their packaging

32 October 2015
“ To communicate via design the essence of a brand it
is essential to have a partner like Nude who over many
years have built up an impressive insight into our brand. ”
Nick Blacknell - International Marketing Director - Havana Club International S.A.

www.nudebrandcreation.com Tel: +44 (0)20 7253 2003

bernard@nudebrandcreation.com tony@nudebrandcreation.com
spirits review
Packaging innovation
as the increased use of copper to echo the such as wooden labels and more
use of traditional copper pot stills. Moberly visually impactful materials,
cites two recent examples: Absolut Elyx – a help brands compete in
small-batch vodka made in a 1929 copper the busy travel-retail
rectification still, which features a prominent environment,” she
copper-coloured cap and copper and platinum argues, citing the
pin-striped ellipses; and Rémy Martin XO example of bespoke
Touzac, an exclusive collaboration between foil used on
the Cognac house and DFS Group, which Taittinger’s
launched this spring.
“The gilt bottle is inspired by the copper
“Some big brands, like Champagne gift
cartons. “Shrink-
stills of Rémy’s Touzac distillery and the
distinctive coloured stone of its ageing Diageo’s Orphan Barrel, sleeving bottles with
specialist finishes
cellars,” says Boys. “Other big brands are
[above] are adopting a
are becoming more
adopting a more quirky approach to design widely used for
that would normally be associated with the limited-edition
individuality of craft brands, such as Diageo’s quirky approach that would Champagne
Orphan Barrel [Bourbon] range. And if you brands, as the
can’t beat them, then join them; large
companies are also backing smaller ones and
normally be associated latest print
technology
setting up joint ventures, such as Pernod
Ricard’s Our Vodka series with the packaging
with the individuality of delivers
tactile and
design looking appropriately small-time with
its ‘hand-written’-style brand name and local craft brands” surface
finishes,
distillery address.” – Hilary Boys, strategy planning director, elevating the perception
Another recent example of the on-trend Lewis Moberly from more mainstream shrink sleeves.”
use of copper in ultra-premium spirits
packaging was Distell’s launch in May this TFWA launches
year of Ledaig 42yo with Dubai airport fine Travel-retail exclusive or limited-edition
wine and spirits operator Le Clos. Priced at bottles and gift cartons are undoubtedly
£3,500, the whisky was the oldest-ever becoming more numerous in all sub-
expression to be released by the Isle of Mull’s categories as each year passes. For instance,
Tobermory Distillery. The bottle label and gift this month’s TFWA World Exhibition will see
box featured actual copper from the retired the launch of Russian Standard’s travel-
still used to make the spirit in 1972. In exclusive Cloisonné Edition bottle at the
addition, each box of Ledaig 42yo contains a show, the third year in a row the vodka
handcrafted copper card entitling the brand has released exclusive gift packaging
purchaser to a bottle of Ledaig 10yo, the last for the channel.
whisky produced by the old still, which won’t
be available until 2025.
Above: Russian Standard’s latest
edition is inspired by the Cloisonné
Innovative techniques artwork valued by the Russian tsars of
Boys believes the drive to premiumise in travel the 19th century. Left: Illva Saronno
retail is requiring brands and design agencies is unveiling a limited-edition bottle
to use more innovative, high-tech techniques in association with fashion
to stand out on shelf. “More crafted, designer Roberto Cavalli,
tactile effects, inspired by safari and
undersea influences
 spirits review

The Russian Standard Vodka Cloisonné in the international travel-retail environment

Edition is inspired by the Cloisonné artwork takes cleverness as much as flash. As
valued by the Imperial Russian tsars of the always, brands need to adapt to the distinct
19th century. The skilled ancient decorative needs of the consumers, which in this case
technique used intricate metalwork to create are people on a journey. In this arena,
patterns that incorporated gemstones and consumers are on the search for a last-
enamels. Predominantly used in jewellery- minute gift, for an irresistible deal, or for
making and for decorating small objects, many exclusive offerings and regional specialities
of the Fabergé eggs created for the Russian they can’t get anywhere else.
Imperial family were carefully crafted with fine “One packaging solution that fulfils these all
enamels and are the inspiration for this needs at the same time will win at shelf. For all
limited-edition design. travel consumers, less is more. Secondary
Meanwhile, Italian liqueur brand Disaronno packaging is a cumbersome burden that most
will be unveiling a new limited-edition bottle often is trashed prior to boarding. Therefore,
created by celebrated fashion designer focus on creating theatre directly on-pack
Roberto Cavalli in Cannes. The new animal- rather than putting too much emphasis on
print design draws inspiration from the safari multiple layers of packaging.”
and undersea influences of Cavalli’s latest
spring/summer fashion collection. Illva Eye candy
Saronno will run a programme of in-store Boys takes a different tack, arguing that,
merchandising at airport stores to support above all, duty-free drinks packaging has to
the new limited edition, which is priced at be “eye candy” in a highly competitive
$26 per bottle. environment. “Some brands opt for disruptive
This third limited-edition bottle follows
earlier releases by Franco Moschino and
“Stand-out in the colours like Bruichladdich’s turquoise
packaging, which stands out among the sober
Donatella Versace. “While not exclusive to
travel retail, the limited-edition Disaronno international travel-retail single malt category,” she notes. “Duty free is
becoming more and more of a luxury
Moschino and Versace bottles were both
environment takes
environment in which brands can showcase
heavily targeted to key airports worldwide,” their most expensive offerings to both sell
says Illva Saronno travel-retail director and create a halo effect on their more
Martin Howey. “The results of both [bottles] cleverness as much affordable ranges.
have been incredibly encouraging with “Packaging of such offerings know no
volume sales of the [most recent] Versace
limited edition up more than 20% over the
as flash” bounds in their elaborate use of luxury
materials and craftsman skills, such as Rémy
holiday period.” – Andrew Eyles, co-founder and CEO, Bluemarlin Martin Louis XIII Rare Cask with its beautiful
Meanwhile, Underberg will be launching its hand-blown crystal decanter bottle.”
2016 Gift Tin, which is aimed to coincide with Examples of such ultra-premium packaging
Brazil’s hosting of the Olympic Games next are no longer confined to the brown spirits
year. The tin features various panoramas of Rio categories. For instance, at last year’s
de Janeiro, its historical buildings, natural TFWA World Exhibition, SPI Group launched
landmarks, flora and fauna, and classic The Andes Edition of the elit Pristine Water
Brazilian dishes. The German company will also Series: a €3,000 vodka presented in a
showcase ultra-premium Asbach hand-cut Glencairn crystal decanter and
Freiheitsbrand, a vintage German brandy limited to 250 pieces. Says travel-retail
distilled in 1989, the year the Berlin Wall came director Jean-Paul Aucher: “Every exquisite
down. Produced to mark the 25th anniversary bottle was sealed with a silver medallion
of this historic occasion, the 1989 Vintage overlaid with gold and crowned with a ruby
Asbach Freiheitsbrand comes in a 70cl bottle depicting the elit by Stolichnaya flame. The
housed in a wooden gift box containing a real bottle was then nestled in a sustainable
piece of the Berlin Wall. Chilean black cherry wood case that is lined
with leather… This limited edition was one
Don’t overdo it of the most premium products we’ve
Not everybody is a fan of such elaborate ever released.”
outer gift packaging in travel retail, however. As vodka and other white spirits categories
Andrew Eyles is co-founder and CEO of look to close the premiumisation gap in travel-
design agency Bluemarlin, which has worked Top: Bruichladdich uses its signature retail opened up over decades by Scotch
on the packaging for craft gin brands Mile turquoise colour to stand out in the malt whisky and Cognac, luxury packaging of this
London Dry and Warner Edwards. “Stand-out category. Above: Asbach Freiheitsbrand type will become more routine. ■

October 2015 35
spirits review
Exciting the traveller
Diageo is riding the crest of the travel-retail wave. Diageo GTME’s Doug Bagley explains why to Alexander Smith
Diageo is far and away the leading spirits strategy of focusing on its deluxe premium
supplier in global travel retail, accounting for whisk(e)y portfolio is working. Importantly, it is
just under a quarter of all sales. The company a portfolio differentiated from what is available
also outpaced the market in 2014, with in the domestic market. “We are driving our
volumes rising 4.4% over 2013 to 5.4m nine- deluxe brands and the whisk(e)y category
litre cases, according to the IWSR. performance forward by focusing on innovation
Commenting on the recent trading and tapping into the consumer’s desire to try
performance, Doug Bagley, managing director something new. Twenty per cent of our portfolio
Diageo Global Travel and Middle East, says: sales are now from innovation. It just shows the
“We are outperforming our competitors in our important role that new, differentiated and
key segments. In whisk(e)y we have nearly premium brands play in travel retail.
achieved double category growth and we are
well and truly up in growth in vodka and rum. Exciting the consumer
Within those categories, super-deluxe is a key “What is also critical – and not just for the
segment that continues to grow at a double- Chinese shops, but Asia as a whole – is to really
digit rate. It has given us a lot of confidence get the focus around the shopping experience.

“What is critical is
that this travel-retail channel still has a lot of Where consumers have the opportunity to get
fabulously affluent people wanting to access excited as they interact with brands – which is
an amazing portfolio of quality brands such as different to the way that they interact with
Johnnie Walker, Smirnoff, Buchanan’s, Cîroc, to get the focus brands in the domestic market – we can drive
Tanqueray, and so on. It also gives us sales. It is about how they are able to engage
confidence that we are getting our luxury
activations right and engaging the consumer.”
around the shopping in the story and the history of the brand. This is
absolutely essential, particularly when 60% of
That is not to say that there aren’t
significant challenges – whether it is the
experience” the purchases are driven by gifting.”
This shopping experience is most evident in
ongoing austerity campaign in China, war in – Doug Bagley, managing director, the Johnnie Walker shops that opened in
the Middle East or the economic downturn in Diageo GTME (above) Mumbai and Taipei in 2014 and in Singapore in
Russia and Brazil. “The duty-free channel is 2015. The Johnnie Walker House in Mumbai is
like the domestic market in the way it has crackdown on conspicuous consumption, which in collaboration with DFS Group and Flemingo;
faced some real changes and some headwinds hit gifting in particular. “The encouraging news Taipei with Everrich Duty Free; and Singapore
last year. The geopolitical tensions have is that we are seeing that orientation by with DFS Group. Each Johnnie Walker House is
certainly affected our performance in Russia Chinese travellers back to our super-deluxe more than a simple store and is billed as an
and the Middle East, and we have very much portfolio driven around Johnnie Walker Gold exploration of the brand’s heritage, inviting
seen the evidence of the slowdown in China Label Reserve and Johnnie Walker Blue Label. guests to embark on a multisensory mentoring
and Thailand.” We are not only seeing that among the journey. Innovation is integral to the Houses –
He explains that those problem areas have Chinese travellers, but right across Asia.” unique, exclusive whisk(e)y collections are
more than been offset elsewhere. “It is a very He explains this indicates that Diageo’s available at each location.
buoyant industry. We still have over a billion
people travelling every year and many of them
are displaying an increasing orientation
towards the luxury category. While we have
felt the headwinds, the buoyancy of the
channel seems able to reflect the very strong
upside in other parts of the world to
compensate for those headwinds.”
Johnnie Walker’s sales in India, for instance,
are booming. “India continues to show positive
signs. The emergence of the middle class in
India and the sheer scale of the market
present a huge opportunity for Johnnie Walker,
which already has a strong footprint and
strong equity in the Indian market. Europe has
also been a region where we have seen very
strong growth, excluding, obviously, what has
been happening with Russia.”
There are even signs that Chinese
consumers are regaining their appetite for
high-end purchasing after the government-led The Striding Man at Taoyuan airport in Taiwan

36 October 2015
 spirits review

Bagley says: “The opening of these Johnnie fees in various ways. The value chain is
Walker Houses has been the pinnacle of effectively flowing upwards toward the airport
success for the brand. What we have hit on authorities. However, Bagley does not view this
here is the opportunity through partnerships as an insurmountable problem and, again, sees
with retailers and airport authorities to present more effective partnerships as a way to making
the brand in a very different and exciting way these concessions more economically viable.
and ultimately excite the consumer. All of these “Concession fees can absolutely be a challenge
Johnnie Walker Houses are performing for our retail customers and that is why it is
exceptionally well, particularly Mumbai and really critical for us to focus on where we add
Taipei. They will play a big part in the brand the most value. We need to ensure that we are
moving forward. There is a big opportunity to maximising the value in the stores in which we
extend the Johnnie Walker House concept operate, as well as work in really close
elsewhere.” partnership with our retailers and the airport
Johnnie Walker is one of the few liquor brands authorities to ensure we are collectively focusing
with the consumer recognition and pull to create behind the right products, and extracting the
a branded store as Johnnie Walker. It is by far right amount of value from them. We need to
the largest brand in travel retail, with sales of be asking ourselves ‘Are we making the right
2.25m nine-litre cases in the sector in 2014. investment choices? Are these [partners] smart,
Johnnie Walker’s growth has slowed recently in selective and focused on the right brands and
domestic markets, but in travel retail the famous the right customers and committed to improving
Striding Man continues to walk tall; the brand the overall performance of the liquor in travel
recorded a 2% increase last year over 2013. retail?’ Above all, our challenge is to execute all
Diageo recently introduced a new global of this brilliantly to ensure that the shopper
advertising campaign with the tagline ‘Joy will ultimately gets a great experience.”
take you further’ and it naturally features in Several years ago Diageo conducted some
the travel-retail channel (see also the panel in ground-breaking research into the travel-retail
Global Scotch feature on page 49). opportunity. The essential conclusion was that
While the Johnnie Walker brand will always that there was a big opportunity to increase
be central to Diageo’s efforts, the company is revenues just by converting more travellers into
also putting renewed focus on its extensive malt purchasers. Bagley says: “We haven’t made
whisky portfolio. Malt whisky is growing almost much headway. This is one of the biggest
Top: The Tasting Bar at The Johnnie
universally in domestic and travel-retail markets opportunities for brand owners and retailers.
Walker House in Singapore; above:
and Diageo looks set to get its share of the How do we convert the penetration to
travellers can immerse themselves in the
action. “Malt is a key priority for Diageo. In the company’s brands at Taoyuan purchases? It sits at about 12% and that is very
last year we have grown ahead of the market low. They don’t come down to any different
and that is very much driven by innovation, While some suppliers may bemoan the sets of growth drivers than the ones that are
particularly on Talisker and The Singleton. ongoing consolidation of the retailer tier with very much the cornerstones of our strategy. It
Beyond those brands, we plan to invest in our the potential pricing power they may exert, comes down to innovation, differentiation and
broader malt portfolio. We have a production Bagley also sees an opportunity to benefit from premiumisation. Ultimately it is about engaging
footprint that spans the four corners of Scotland. their extended reach. Diageo’s partnership with the consumer and bringing those brands alive.”
We have access to 28 operational distilleries and DFS in Mumbai and Singapore is just one The industry has made strides in terms of
this is just a massive opportunity to be able to example. He says: “We are very much moved premiumisation, however. The once-yawning
offer our customers something that no-one else into a model globally around strengthening our qualitative gap between liquor and other
can. We have lot of exciting innovations coming strategic partnerships. The essential thing for us luxury categories has closed to some extent.
in the malt category that will further extend the is acknowledging the important part that our There is also less of a fixation with very low
success that we have had in the year to date.” big strategic customers play in driving our pricing in travel retail. “Liquor has undoubtedly
growth. How we are able to partner better with closed the gap with other luxury goods
Embracing partnership our retail customers and, in turn, transform categories thanks to premiumisation and
The Johnnie Walker Houses are also an their growth and transform our growth at the activations. We are very much representative
example of how Diageo has sought to leverage same time is very much our focus. Any way that of a movement in the right direction towards
partnerships with the other elements of the so- our partners are further strengthened – even more premiumisation. The double-digit growth
called travel retail Trinity. More often than not, through consolidation – is good news for us and that we are seeing in super- and ultra-
the Trinity concept of closer partnership good news for the category.” premium now indicates that. Low pricing still
between suppliers, retail operators and airport A long-time bugbear for the supplier plays an important role, so you cannot ignore
authorities has been a tool to build community has been the overbidding by the role of price, particularly in the premium
conferences around rather than reality. Diageo operators in the retail tender process. These and standard portfolio, which is 70% of the
has proven that these collaborative activations operators, so the critique goes, then look to business. What is more important now than
can succeed in practice. suppliers to fund these excessive concession ever is to get the balance right.” ■

October 2015 37
spirits review
Vodka meets rising competition
How can vodka producers sustain category interest in a declining European market? Agata Andrzejczak reports
Total consumption of vodka in Europe
continues to decline. In 2014 the market lost
1.8m cases, almost entirely due to continued
decline in Poland, but also other important
vodka markets – Finland, Estonia, Latvia,
Bulgaria and Romania. Declines in traditional
vodka markets were partially offset by
sustained volume increases in Germany,
Hungary, France, Lithuania and Turkey – the
top growth markets for vodka in the region.
There are also pockets of growth for some
brands in some other markets.
Lars Vestbirk, global brand director
Stolichnaya Vodka, explains: “We’ve seen Lubelska’s innovative Shot Pots. Below right: Żołądkowa Gorzka’s new fig flavour
significant results in both volume and market
marketing director Stock Spirits, explains:
share in a very difficult climate in markets
such as Greece, Spain and Italy. Greece is “There are significant “After a poor Q1, we have seen an
improvement in Poland, returning to growth in
quite honestly knocking it out of the park.
opportunities to grow
Q2 as customers returned to more
The vodka market has declined for five
normal buying patterns following the
consecutive years and Stoli just keeps
duty increase of the previous year and
growing – even with an established, sizable
market share. This has been achieved
the vodka category aggressive competitor pricing. We
have restructured our sales force and
through cool, relevant and consistent
marketing efforts and not through mere price in Poland via flavour and installed a new management team in
Poland, which is contributing to the

packaging innovation”
reductions. Austria, Italy and the UK are also
gradual improvement.”
significant Stoli markets that continue to
He adds: “There are significant
perform well. I can see further opportunities – Richard Hayes, group sales and opportunities to grow vodka
in Turkey and Portugal.” marketing director, Stock Spirits category value in Poland, notably
John Grieveson, consumer marketing
in the premium sector and via
director Northern Europe for Grey Goose,
flavour and packaging
adds: “The market for vodka in Europe is and, paradoxically, tax revenues
innovation. We launched a new
performing well. Stronger growth has been subsequently declined. Many producers in
fig variant of Żołądkowa Gorzka
seen in value in the past year, which can be the long-suffering vodka industry will not
and the innovative Lubelska Shot
attributed to the ongoing trend towards be able to survive. Moreover, the grey
Pots, which have outperformed
premiumisation, particularly in Northern market is likely to grow.
expectations. We plan more
European key markets like the UK, Germany, Little suggests that local vodka market
innovation in vodka in 2015.”
Belgium and the Netherlands. Germany is our in Poland will return to any considerable
Despite faling volumes in
focus, where the category is smaller than in growth in the next few years. However,
Europe, there are a couple of
the UK, but developing further. France is the some positive developments are emerging
positive developments: the
largest vodka market in Southern Europe and in 2015. Richard Hayes, group sales and
premium and craft segment
remains a good opportunity with further room
to grow in the super-premium sector both in
the on- and off-trade.”
Top 10 vodka markets in Europe
Category Volume Volume Volume % CAGR % change
2010 2013 2014 2009-’14 2014 on ‘13
Long-term Polish decline
The long-term decline in Poland has been 1. Poland 31,598.5 28,000.0 26,180.0 -4.5 -6.5
caused by consumers’ changing drinking habits. 2. UK 9,167.5 9,321.3 9,550.5 1.8 2.5
On the one hand, mature drinkers who used to 3. Germany 7,926.0 8,220.8 8,235.5 1.1 0.2
drink local vodka have moved to other 4. France 2,718.0 3,130.5 3,196.0 5.0 2.1
categories. Younger Poles and first-time drinkers 5. Lithuania 2,274.3 2,359.0 2,425.0 -2.1 2.8
scarcely even enter the vodka category. They 6. Romania 2,089.5 2,274.0 2,230.8 0.3 -1.9
have a much wider range of alcohol available 7. Bulgaria 2,084.5 1,788.0 1,734.8 -3.4 -3.0
than their parents – flavoured low-strength 8. Czech Republic 1,801.1 1,668.8 1,680.8 -3.2 0.7
vodkas (for example, Lubelska), whisk(e)y, 9. Finland 1,910.6 1,630.5 1,494.5 -5.5 -8.3
radler beers and affordable wines. The decline 10. Turkey 1,240.5 1,448.8 1,486.5 5.4 2.6
accelerated in 2014 due to a large tax increase; Others 13,432.7 13,267.8 13,140.8 -1.1 -1.0
by increasing excise tax for spirits by a colossal Total 76,243.0 73,109.3 71,355.0 -1.7 -2.4
15%, the government shot itself in the foot All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

38 October 2015
TFWA CANNES · GREEN VILLAGE · H52
spirits review
Vodka in Europe
Sacred Spirits’ co-founder
Hilary Whitney says smaller
brands help to refresh
consumer interest in
the vodka category

creativity to the
category, such as
Vestal or Sacred,
Innovations from Grey Goose include its among others. Hilary
Interpreted by Ducasse version (left) and Whitney, co-founder
its Boulangerie François camionnette (top) of Sacred Spirits,
says: “It’s difficult
for smaller
continues to perform well and there is ongoing independent
innovation in the flavoured and even the aged brands, as the
vodka segments. bigger brands
protect their
Premium segment sustains growth market share
While the overall vodka market showed a with innovative
compound annual growth rate (CAGR) of packaging and
-1.8% between 2009 and 2014, the premium- keen pricing.
and-above segment has grown by +6.4% However, the
CAGR over the last five years. “We understand that smaller
brands help to
Grieveson says: “The driver in the European
market is certainly super-premium vodka, with
all Southern Europe markets in double-digit
these large corporate refresh consumers’ interest in the category and
give the on-trade something different to offer.”
growth in this segment. The growth of super-
premium vodka as a category is testament to
vodkas are trying to William Borrell, founder and owner of Vestal
Vodka, says: “We are personally trying to

find a way to have the

the fact that consumers around the world regain people’s trust in this once noble spirit
continue to trade up and indulge in more before outrageous marketing lose people’s
trust with claims of filtering through diamonds,
everyday luxuries. Now, more than ever, they
care deeply about where the spirits they enjoy ‘craft’ conversation etc. Do you need the same-tasting liquid each
come from and, increasingly, preferred brands year? Vestal is different depending on the
are those with real authenticity, craftsmanship with consumers” potato vintage and we are the only brand that
offers this. We can never make exactly the
and provenance. Consumers are also
– William Borrell, founder, Vestal Vodka same spirit in successive years. We now offer
becoming more knowledgeable and curious
about spirits and cocktails, looking for vodka aged in sherry casks and will experiment
inspiration on how to enjoy their favourite with Japanese whisky barrels.”
brands and cocktails at home.” Many larger players have also begun to
All of the top 10 premium-and-above vodka differentiate their offering, such as Grey Goose
markets are in growth. Over half of premium Interpreted by Ducasse, for example.
vodka in Europe sells in the top two markets – Grieveson says: “Grey Goose Interpreted by
the UK and Spain – but sales are growing in Ducasse toasted wheat vodka is made using
fairly undeveloped premium vodka markets, the finest French ingredients and can be
such as Austria, Turkey and France. enjoyed after dinner. Born out of a
Grieveson says: “In the UK super-premium collaborative process between Grey Goose
vodka may be an established category, but it is maître de chai François Thibault and Michelin-
still developing, hence there is still a strong starred chef Alain Ducasse, Grey Goose
opportunity for further growth, as our recent Interpreted by Ducasse gives rise to a new
experiential activation in the UK – the Grey trend aptly named ‘vodka gastronomique’.” It is
Goose Boulangerie François and artisan French available in France from September.
bakery camionnette delivery van – illustrates.” Borrell says: “We are very flattered to see
Although Grey Goose, Cîroc and Belvedere many large corporations bringing out vintages,
dominate the premium vodka segment, a with Cîroc 2013 Travel Retail and Grey Goose
number of credible craft brands are also Vestal says its vodka varies depending on Interpreted by Ducasse being two good
bringing some additional excitement and the potato harvest in any given year examples. We understand that these large

40 October 2015
spirits review
Vodka in Europe
The flavour game
continues: Keglevich
Top 10 premium-and-above markets in Europe
Raspberry & Coconut and Volume Volume Volume % CAGR % change
Category
Stoli Salted Karamel are 2010 2013 2014 2009-’14 2014 on ‘13
two of the latest launches
1. UK 159.1 338.0 376.2 15.4 11.3
2. Spain 381.8 284.4 281.3 -5.0 -1.
3. France 39.8 73.5 88.0 14.2 19.7
corporate vodkas are
4. Germany 50.5 80.8 88.0 9.7 9.0
trying to find a way to
5. Poland 49.2 68.1 70.1 6.1 2.9
have the ‘craft’
6. Italy 29.8 47.4 56.0 11.1 18.3
conversation with
7. Austria 8.8 23.5 27.3 20.8 16.0
consumers.”
8. Switzerland 16.3 23.5 25.2 7.5 7.2
Premium vodka
9. Turkey 9.8 19.8 24.8 16.8 25.3
brands perform well
10. Greece 19.8 16.6 23.8 3.2 43.1
in the top on-trade
Others 62.0 106.3 136.6 14.1 28.5
venues in France,
Total 826.5 1,081.8 1,197.2 6.4 10.7
Germany, Italy,
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
Portugal,
Switzerland and Producers have started to use smaller bottle
Spain. The super-
premium vodka
“Consumers are formats in Ireland to bring more consumers
into the category and entice them to try
segment is taking
off in top clubs in
going back to their different flavours. Meanwhile, consumers in
Denmark are making their own homemade
vodka infusions with herbs and fruits to create
Paris and the
French Riviera, roots – simple and their own unique products.
partly due to Philippe Biais, export director at Waldemar
tourist basic flavours after Behn, says: “Apple is a popular flavour for
consumption in Danzka. Consumers go back to the roots –
large formats. having experienced simple and basic flavours after having
experienced exotic flavours”
The super-
premium vodka market
grew again in the on-trade in
exotic flavours” Says Hayes: “The versatility of vodka as a
mixer enables category growth in a variety of
2014 and there is definitely – Philippe Biais, export director, Waldemar Behn usage occasions and
further space for growth. provides an endless
Spain is the second-largest of the super-premium opportunity to
premium vodka in Europe. It segment has led to innovate to
remains unclear, though, as to growth, even in maintain novelty
whether a genuine trend is Estonia, Norway and for consumers.
developing among the Canary Islands where This year we
Spaniards or if growth is vodka saw an overall have seen
entirely supported by decline. Brands like Cîroc and growth in interest
tourists in Spain’s Beluga are benefiting from the in three areas of
premium destinations in re-emergence of a ‘show-off’ flavour profile: exotic
the Balearics, Marbella, culture in Bulgaria, while in Austria flavours (for example,
Madrid and Barcelona. and Greece the segment is driven by Lubelska banana or coconut); new twists on
While at this stage the Belvedere’s strong performance. traditional flavours (for example, Żołądkowa
latter is more likely, Gorzka Fig); and combinations of flavours (for
super-premium vodka example, Keglevich
Flavoured and aged vodkas
can nonetheless lay claim Raspberry & Coconut).
While the flavoured vodka market has
to being one of the There is continued
been mostly quiet over the last year, there
market’s fastest-growing interest in lower-
have been pockets of activity in markets
segments. In any case, strength flavours,
like Italy, Ireland and Denmark.
good prospects for the notably among
tourist industry should females and
see to it that the super- Appletini from Danzka young adults.”
premium segment vodka; the brand says its Vestbirk of
continues to advance. apple flavour has been Stolichnaya says: “After
The aspirational status particularly popular an active period of new

42 October 2015
spirits review
Vodka in Europe
product development (NPD) over the past few
years, we had such a great reception for Stoli
Salted Karamel, that we will be adding it to our
assortment permanently. Our flavour strategy
is really to focus on the core variants that
work. We are not planning new traditional
flavour launches, but we have some really cool
Stoli NPD projects in the pipeline.”

Competition from other categories

The biggest challenge for brand owners
remains competition from other categories.
This trend is evident not just in Europe,
although different categories replace vodka
depending on a region. In Europe premium gin
is probably the principal beneficiary of vodka’s
decline. Many vodka brands have been
aggressively fighting to maintain their share in
the UK, Portugal or Switzerland as a result, but
are often failing to deliver the story that many
consumers are increasingly looking for.
Christian Rothe, director strategic business
development and planning at The Absolut
Company, admits: “The growing interest and
premiumisation of the gin category in Western In cocktail bars there is increased competition from gin and rum
Europe poses a potential future challenge for
in cocktails and commanding their own share
“The growing interest in
premium-and-above vodka.”
Vestbirk says: “It will be very interesting to of the market. Competition for super-premium
follow the trend of super-premium gins, which vodka in other environments, such as
I believe we have only just seen the start of. and premiumisation of nightclubs, is found in premium Champagnes.
However, depending on the market, you may
The category is still small and finally it has
started to innovate and catch on. We have not
felt it in our numbers or listings at all, but let’s
the gin category in also find tequila and whisk(e)y brands in a
competitor set.”
see what happens. White rum is a real
competitor within cocktail culture and as the
Western Europe poses In Bulgaria whisk(e)y is recognised as being
more premium and the very small price
main base spirit. This is an ongoing fight and
one we are very aware of. It seems
a potential future difference is making the switch easier, as is the
case in Latvia and Lithuania. In the latter two

challenge for premium-

consumers and bartenders are starting to get markets heavy discounting has helped
fed up with the very serious mixology era, encourage this trade across. There has been
where everything had to be based on brown remarkable progression in terms of flavour
spirits and made according to 1930s recipes. and-above vodka” profile, as people swap vodka mixed with juice
Some interesting trends are emerging in and energy drinks for whisk(e)y on the rocks.
– Christian Rothe, director strategic business In Germany the on-trade is suffering an
London, focusing more on bespoke serves and
development and planning, The Absolut Company onslaught from numerous more ‘cutting-edge’
consumer experiences. Vodka is more fun and
energetic and may have a good fit with some categories, with crafty gin and spiced rum
of these trends.” and continues to command a price premium. being just a couple of examples.
Lizzy Johnson of Quintessential Brands, There are sustainable growth opportunities in The IWSR estimates the market for vodka
owner of a premium range of gins, explains it vodka in numerous European markets.” will decline further in 2015, by 2.2m cases,
may be cyclical: “Millennials have been In Turkey and Belgium vodka cocktails are but with the premium-and-above segment
responsible for the recent growth in vodka. experiencing increasing pressure from the gin- showing double-digit growth across most
Their kids don’t want to drink what their and-tonic or gin cocktails. Meanwhile, other markets. Grieveson sums it up: “The
parents drank and that is one of the reasons categories also seem to be taking consumers challenge for vodka is to deliver experiences
gin has suddenly made a comeback.” away from vodka. Whisk(e)y is proving popular that meet the expectations of ever-more
Hayes adds: “The vodka category must with consumers in Latvia, Lithuania and demanding consumers. The demands of
continue to innovate and enhance product and Bulgaria, for example. consumers for premium and super-premium
packaging quality to address changing Grieveson says: “In cocktail bars there is products and experiences will continue to
consumer usage occasions and needs to certainly competition from gins and rums, with drive innovation within the category, as well
ensure it recruits new generations of drinkers each spirit acting as a very different ingredient as driving value.” ■

44 October 2015
spirits review
Scotch: half empty or half full?
Alexander Smith looks at whether the recent downturn in Scotch’s fortunes marks the start of a long-term trend
The Scotch whisky industry enjoyed a golden
period between 2002 and 2012, but much of the
lustre has come off the market in the past two
years as growth became more elusive. Global
Scotch consumption fell -0.7% between 2013
and 2014 to 95.3m cases, according to the
IWSR’s data. This follows another decrease of
-0.7% between 2012 and 2013. The big and
unanswerable question is whether this is a short-
term blip, or the beginnings of a longer-term
plateau or even decline?
The decrease is entirely attributable to the
performance of blended Scotch (-1.3% in
2014). Malt Scotch (+4.8%) is growing almost
universally. This provides some comfort, but
the reality is that the blended sector is the
locomotive that drives the category and still
accounts for more than 90% of total Scotch
volumes. What is concerning is that you
cannot point at one or two markets as the
source for the recent downturn. Last year
Suppliers are bullish about the long-term prospects for Scotch whisky
13 out of the top 20 largest blended Scotch
markets posted declines, including four out of stronger. We need to be able to manage base. We’re not at the point where there is
the top five markets. volatility and that means a diversified range of anything like the scale of mature markets,
There are a number of obvious explanations developing markets for each of our brands.” though, and of course there is huge volatility.
for the decrease. First was the economic Indeed, as Lacassagne suggests, one of the You need to be prepared for headwinds.”
slowdown in the emerging-market economies. strengths of the Scotch industry is its global Diageo, the largest player, unsurprisingly is
Scotch whisky growth is closely aligned with spread. This serves as a natural hedge. The also optimistic about the category’s prospects. At
GDP growth. As the economies in previously fact that 13 out of its top 20 blended markets the September launch of the new Johnnie Walker
rapidly growing markets, such as Russia and declined last year and the global market only campaign, Diageo CEO Ivan Menezes said: “The
Brazil, cooled, so has Scotch consumption. Just declined -1.3% can be construed as positive Scotch category is vibrant. Consumers are
as emerging-market consumers traded up from in one sense. Declines in those big markets rediscovering whisk(e)y in all parts of the world
local spirits into Scotch when times were good, were offset – at least partially – by substantial in all its forms and Scotch whisky has the
now we are seeing the reverse of that. The gains elsewhere, notably Mexico, India and greatest claim to craftsmanship and authenticity.
government crackdown on luxury consumption South Africa. Scotch is to whisk(e)y as Switzerland is to
in China has also affected sales there, although Glen Gribbon, brand director blended Scotch watches. Scotch is one of the most basic
Scotch sales had already slowed well in for Edrington, says: “The other grounds for categories in whisk(e)y. It is a category that has
advance of those government measures. measured optimism come from emerging enjoyed remarkable growth over the last decade.
The Scotch category is also challenged by markets like Sub-Saharan Africa and Turkey, Johnnie Walker global brand director Guy
adverse foreign exchange impacts, which where Scotch is growing strongly from a small Escolme added: “There is enormous headroom
contributed to a 7% decline in the value of
Scotch whisky exports (shipments as opposed
to consumption, which the IWSR measures) in
Scotch whisky: top 10 markets
2014, according to the SWA. There was also a Rank/Country Volume Volume Volume % change % CAGR
2010 2013 2014 2014 on ’13 2009-’14
degree of destocking in markets such as China
and Latin America. Exports to the major 1. France 13,775.3 13,452.8 13,568.8 0.9 0.2
regional hub of Singapore fell by 39% in value 2. USA 8,005.3 8,520.0 8,268.0 -3.0 0.4
to £200m, and direct exports to China fell by 3. UK 6,630.5 6,077.5 5,850.8 -3.7 -2.3
23% to £39m. 4. Brazil 3,591.3 4,860.3 4,837.3 -0.5 10.4
Chivas Bros chairman and CEO Laurent 5. Russia 2,000.0 4,001.0 4,006.0 0.1 24.4
Lacassagne remains bullish about Scotch’s 6. Mexico 2,242.3 3,431.3 3,762.3 9.7 14.9
prospects. “The long-term prospects for the 7. Spain 5,235.5 3,695.0 3,560.5 -3.6 -9.0
Scotch business remain very strong. We have to 8. India 1,677.8 2,800.0 3,290.0 17.5 17.3
accept that working in emerging markets comes 9. South Africa 2,383.0 2,873.8 2,945.5 2.5 6.8
with volatility. We are certainly seeing some of 10. Germany 1,730.0 1,824.8 1,822.0 -0.2 1.5
that short-term volatility, but over a longer five- Others 42,891.7 44,522.5 43,446.5 -2.4 0.8
or 10-year horizon the trends are still favourable Total 90,162.4 96,058.8 95,357.5 -0.7 1.8
and international Scotch brands are becoming All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

46 October 2015
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spirits review
Global Scotch
Scotch whisky: top 10 brands
Rank/Brand Owner Volume Volume Volume % change % CAGR
2010 2013 2014 2014 on ’13 2009-’14
1. Johnnie Walker Diageo 16,073.0 19,108.8 18,790.7 -1.7 4.8
2. Ballantine’s Pernod Ricard 6,073.5 5,925.1 5,961.0 0.6 0.3
3. Chivas Regal Pernod Ricard 4,574.3 4,754.9 4,658.4 -2.0 2.0
4. Grant’s Wm Grant & Sons 5,026.5 4,680.2 4,465.5 -4.6 -1.5
5. J&B Diageo 4,626.1 3,671.8 3,596.0 -2.1 -5.8
6. Famous Grouse Edrington 3,024.4 3,177.1 3,173.7 -0.1 2.0
7. William Lawson’s Bacardi 1,564.1 2,650.3 2,900.8 9.5 14.6
8. Dewar’s Bacardi 3,223.4 3,030.5 2,679.8 -11.6 -4.0
9. William Peel Belvédère 2,456.1 2,599.8 2,658.5 2.3 2.8
10. Label 5 La Martiniquaise 2,133.9 2,230.0 2,324.4 4.2 2.7
Others 41,387.3 44,230.4 44,148.7 -0.2 1.7
Total 90,162.4 96,058.8 95,357.5 -0.7 1.8
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

for growth in the emerging world. If you Blended Scotch, in markets such as the UK, of these have found any real commercial
compare international spirits penetration in the Spain and the US, is also struggling against success and there are some doubts as to
emerging markets against a developed market, generational cycles. This can cut two ways, but whether Scotch is really suitable for flavour
such as the US, then you will see how much in many of Scotch’s most important markets – infusion. US Bourbon is a naturally sweeter style
potential there is for growth. Scotch is the only for example, South Korea or Spain – it seems because of its use of newly charred American
spirits category that has shown an ability to that younger consumers have moved on and oak barrels and resultant vanilla notes.
recruit across a broad spectrum of price points view blended Scotch as their parents’ drink. Gribbon says: “Character and diversity are
in every single continent of the world. Scotch is also showing signs of losing out to definitely important to consumers, and we see
“It is not just about the emerging-market other international spirits, particularly US and an increased appreciation of the huge range of
opportunity. We see enormous opportunity in Irish whisk(e)y. In an interview on page 51, styles and flavours that are available in
the developed markets. There is a whisk(e)y Brown-Forman CEO Paul Varga says: “We traditionally produced Scotch. That’s why – in
renaissance and we truly believe that, within [Jack Daniel’s and US whiskey] are still going comparison to some other spirits – Scotch
that, we can grow Johnnie Walker and our up the development curve, whereas many of whisky producers have taken a more measured
other Scotch brands.” these Scotch brands had reached their approach to innovation in terms of adding
It is important to note that Scotch’s anaemic pinnacle maybe 10 years ago or so. We are flavour, and that’s appropriate in our view.
performance is by no means solely an also relatively fresh in consumers’ eyes… Some There is still room for innovation in the
emerging-market problem. Blended Scotch of Jack Daniel’s volume growth and category, however. Scotch has always been a
also declined in some of the largest developed consumption has to be associated with blend of consistency and innovation.”
markets such as the US, the UK, Spain and consumers trading up from standard Scotch.” Flavours is only one aspect of innovation.
South Korea. Moreover, the decline within Of course, Scotch whisky is far more Scotch whisky has been very successful,
these markets, with South Korea being the developed in international markets than US or certainly more successful than Irish or US
exception, is a long-term trend. Irish whiskey and thus some share erosion is whiskies, in extending their brand families
Scotch Whisky Association (SWA) CEO David understandable and probably inevitable. upwards toward higher price points. Gribbon
Frost adds a little perspective to the recent Gribbon of Edrington says: “The sheer scale says: ““Innovation can help drive a reappraisal
performance: “We are the classic long-term of blended Scotch means that you do see an of blended Scotch and even if they don’t have
industry and we expect twists and turns. We are effect from new whisk(e)y trends – such as the the scale of the standard Scotch brands,
used to that. The feeling is that the prospects current growth in Irish and US whiskies – and I premium expressions […] have the potential to
for future growth are good. We heard some of wouldn’t expect to see any significant change attract new consumers who are looking for
that in the recent results round, that Scotch will in the overall category performance over the craft and authenticity.”
come back to growth in the years to come. next few years. However, within that overall
landscape there are features and trends that Key markets
Competition have the potential to stimulate blended Scotch The performance of blended Scotch in the US,
It is probably unrealistic to completely attribute and add value in the longer term.” the second-largest global market, was highly
blended Scotch’s problems to economic woes US whiskey producers have also done a better disappointing, declining -5% to 6.5m cases.
or government policy in China. Blended Scotch job of innovating in recent years – particularly, This isn’t necessarily a new story. The blended
is struggling to recruit younger consumers in but not exclusively, in the flavour space. Scotch category has shed some 11.6m cases since
many key markets. In some European producers are more hemmed in by regulations. 1985, which is particularly depressing if you
markets, such as the UK, blended Scotch has Some producers have circumvented those by consider that the overall US distilled spirits
been commoditised to such an extent that it bringing out flavoured variants of their big market has been in the throes of expansion for
has lost much of its aspirational appeal. brands, but labelling them as spirit drinks. None almost two decades. Moreover, there is a brown

48 October 2015
 spirits review

spirits revival. Even market leader Johnnie the market had peaked and that may still be end as it remains aspirational among
Walker, which had managed to outperform the the case, but the near 1% increase in 2014 mainstream Mexicans.
blended sector in recent years, saw a reversal in helped to settle some nerves. La Martiniquaise The recent strong performance of Scotch in
2014, declining -1% to 1.8m cases. That was president Jean-Pierre Cayard comments: India also tends to belie the theory that
offset by the performance of stablemate “Scotch is at a very high level in France right Scotch’s problems are chiefly found in
Buchanan’s, up 31% to 440,000 cases. Other now, so a 1% rise in the middle of difficult emerging markets. Scotch added 17.7% in
leading blends – Bacardi’s Dewar’s (-12%) and economic circumstances represents a very 2014, despite exorbitant duties and state
Pernod Ricard’s Chivas Regal (-11.3%) – also good performance. There is no sign that the taxes. Although Scotch only accounts for a
had very difficult years. French are tiring of Scotch.” very small percentage of the overall whisk(e)y
The performance of Buchanan’s is worth One thing to watch, though, is the recent market, at 3.3m nine-litre cases, it is now the
considering. In the premium-and-above tiers performance of US whiskey, which posted eighth-largest global Scotch market. There is
there is growing demand for certain brands double-digit increases in France last year. US every reason to believe that Scotch will
among the carefully targeted Hispanic whiskey and whisk(e)y from exotic origins continue to grow in India as consumers trade
Americans. This has benefited two brands in (Japan, Taiwan or India) are making inroads up and can afford more expensive whiskies.
particular – Buchanan’s and Johnnie Walker. The and grabbing share from Scotch, especially at The IWSR’s figures include arrival sales in
standard-and-below segments house a more the top end. Indian duty free and carry-back ex-Gulf. It is
traditional consumer who has been moving Another market where optimism abounds is estimated that less than 10% of the Scotch
away from Scotch for many years. Attempts to Mexico, where premium and value blended consumed in India is actually duty paid.
borrow from other whiskies and introduce Scotch continued to drive the whisk(e)y The fortunes of Scotch could be transformed
flavours have had some success, but not enough category’s performance in 2015. The switch if India agrees to any meaningful duty
or among enough brands to encourage a new from other spirits (brandy, rum, tequila) to reduction. If anything, India is becoming an
generation to try Scotch. More may be tempted entry-level Scotch continues. The three brands increasingly difficult market to operate in, as
to try blended Scotch based on their experience benefiting the most are Wm Lawson’s, the slew of regulatory and fiscal measures
of malts, but this is far from certain. Passport and Black & White – all in the value taken both at federal and state level continue
If there is reason for optimism in 2014, it segment. Standard Scotch has benefited from to mount.
was the recovery of the Scotch market in this trend towards the category, but growth China is perhaps the greatest example of
France, which is easily the largest single was only in marginal single digits. how government intervention, suddenly and
market for the category with a 14.2% share of Premium Scotch (led by Buchanan’s, without warning, can disrupt a market. The
global sales, up from 13.4% a decade ago. Johnnie Walker Black and Chivas Regal) is also anti-corruption campaign launched in late 2012
The French market saw a rare decline in 2013, growing healthily in 2015. Even Johnnie continues to depress the import market.
attributable to excise tax increases and the Walker Red is showing better trends than in Scotch sales in China fell -19% in 2014 to
poor economy. There were some concerns that the past. Buchanan’s did well at the premium 1.2m cases. Pernod Ricard’s Chivas Regal, the

Diageo announces new campaign for Johnnie Walker

Johnnie Walker, the top-selling Scotch brand in the world, has
launched its largest-ever global marketing campaign. The
campaign will activate simultaneously in more than 50
countries and will reach nearly 270m consumers around the
world within the first weeks of launch. In late October the
campaign will be rolled into travel retail. By then the campaign
will be running in markets representing 90% of Johnnie
Walker’s business.
‘Joy Will Take You Further’ is an evolution of the brand’s
famous ‘Keep Walking’ campaign. The company explained
that, based on new insights into how success is viewed by
consumers today, it brings to life the concept that joy can
be a catalyst to the progress they seek, and aims to
generate a positive culture shift by promoting and
encouraging the idea that finding joy in the journey is part of
the recipe for success.
The campaign features stars from the worlds of sport and
entertainment – such as Formula One world champion and
McLaren Honda driver Jenson Button, Oscar-nominated actor Diageo CEO Ivan Menezes said: “In 1999 we launched the
Jude Law, Chinese actor Zhao Wei, US rock band OK Go and ‘Keep Walking’ campaign and it started the remarkable period
Mexican supermodel Montserrat Oliver – alongside a cast of of growth for Johnnie Walker and indeed the Scotch category.
extraordinary achievers who share the brand’s view of how Today, we are at another inflection point. It is the right time to
happiness in life is a fuel for success. define the next era for Johnnie Walker.”

October 2015 49
spirits review
Global Scotch
market leader, fell -15.5% to 450,000 cases; volumes in 2005, it had fallen to 71% in 2014.
second-ranked Johnnie Walker dropped Malt Scotch has assumed the mantle of
-24.2% to 260,000 cases; and third-ranked best-in-class in many Scotch markets, even
Ballantine’s -19.2% to 187,000 cases. non-traditional malt markets such as those in
Lacassagne says: “China has been a strong Asia. It seems likely that single malt Scotch is
driver of the global decline. Consumption of also taking some volume from blended Scotch
premium-and-above products has been in many markets. That is not a bad thing given
impacted by this anti-extravagance campaign that the malts are often owned by the same
and a little bit of an economic slowdown.” companies and it typically represents a trade-
The problems in China are not all of the up in terms of price. The downside is that
government’s doing. Scotch growth slowed most leading malt brands are heavily supply-
well in advance of the crackdown and actually constrained, something that is less of an issue
peaked in 2007 and then began to lose ground with blends.
to Cognac. That was the pattern last year as In the US demand for all things ‘craft’ and
volumes continued to contract and outlets perceived to have high production values is
switched from Scotch to Cognac brands. This stirring interest at the moment. Given the
tends to indicate that the Chinese consumer range of products on offer and the scope for
still understands little about either category. exploration, malt Scotch is the perfect fit.
The key 12yo blended Scotch segment saw Malt sales in the US rose 6% in 2014 to
another year of sharp declines in 2014 and 1.7m cases.
recovery is not expected before 2016. Some of More importantly for the longer term, the
the leading players are now focusing on the category has moved beyond being purely a gift
standard Scotch category, which could lead to item and is finding a new audience among
some development. Value Scotch is also consumers in their early- to mid-30s. Growth is
growing in retail and third-tier cities. Slowing across the board and almost all brands have
economic growth and a political climate that Dewar’s Fine Whisky Emporium at launched and focused much more on special
discourages extravagant spending will dampen Taoyuan International airport finishes and aged products. This has seen
prospects for the top end. value grow faster than volume.
Lacassagne says: “We have adapted our Malt surges
strategy in China. We have shifted our focus Global malt sales reached a new high Travel retail boost
from a premium-and-above focus to a broader watermark of 8.6m cases in 2014, a rise of Travel-retail Scotch sales outpaced domestic
focus with strong development plans for [the 4.8% over 2013. Pernod Ricard’s The Glenlivet markets in 2014, rising 3.1% to 7m nine-litre
standard-priced] Ballantine’s Finest. We are just overtook William Grant’s Glenfiddich for cases. Malt Scotch tends to over-index in travel
responding to the evolution of the Chinese global leadership (by 60,000 cases). Both now retail and accounts for 17% of total Scotch
market. In the medium- to long term we sell over 1m cases. sales compared with 8% in domestic markets.
remain very positive about China and, indeed, Historically, malt derived most of its sales Travel retail is very much about big brands
Asia’s growth prospects. The opportunity to from Western Europe and North America, but (see Travel Retail Top 100 on page 16). Johnnie
tap into the emerging middle-class consumer recently there has been growing acceptance in Walker, Chivas Regal, The Glenlivet and Passport
remains massive.” (For more on the Chinese other regions. Whereas Western Europe and each increased sales by more than 20,000 cases
market, see page 67.) the Americas accounted for 82% of global malt in 2014, while Buchanan’s, VAT 69, Laphroaig,
Cutty Sark and Scottish Leader each

Top 10 Scotch brands in global travel retail added more than 10,000 cases.
There are several factors that
Rank/Brand Owner Volume Volume Volume % change % CAGR are really spurring the
2010 2013 2014 2014 on ’13 2009-’14 development of Scotch in travel
1. Johnnie Walker Diageo 1,761.2 2,210.4 2,256.3 2.1 8.8 retail. Certainly the dramatic
2. Chivas Regal Pernod Ricard 790.4 855.3 887.4 3.8 8.2 growth of emerging-market
3. Ballantine’s Pernod Ricard 506.8 586.6 588.2 0.3 9.0 travellers has provided a
4. Famous Grouse Edrington 346.2 390.4 391.8 0.4 3.2 significant tailwind for the
5. Grant’s Wm Grant & Sons 336.9 312.1 315.8 1.2 -1.2 category. The vast expansion of
6. The Glenlivet Pernod Ricard 115.9 194.7 215.7 10.8 20.1 travel retail-exclusive products has
7. Glenfiddich Wm Grants 205.2 220.1 182.5 -17.1 2.3 given consumers a real rationale to
8. Dewar’s Bacardi 131.2 176.6 175.8 -0.5 8.7 purchase when travelling. The
9. J&B Diageo 150.0 152.0 138.6 -8.8 -3.5 other aspect is the growth of
10. The Macallan Edrington 97.0 132.6 119.4 -9.9 5.9 specialist whisk(e)y retailing
Others 1,343.6 1,575.6 1,745.1 10.8 9.1 concepts, which are helping to
Total 5,784.3 6,806.3 7,016.5 3.1 7.5 bring greater focus and consumer
interest to the category. ■
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

50 October 2015
 spirits review
Jumping Jack Flash
CEO Paul Varga explains the success of Brown-Forman’s flagship brand and reveals future plans to Alexander Smith
The IWSR Magazine: Rather than dwell getting their sales from just a couple of
on recent trading results, which have markets. So we are blessed by geographic
been very positive, let’s look at where diversification that really serves the
Brown-Forman is today. Where do you company well.
see the big growth opportunities ahead?
Paul Varga: They are not too different than IWSR: What is the split between the US
anything you might have heard on historical and your international business, and
strategy, given some of the momentum that where do you think it is going to go?
has arisen recently. That is a little bit of our Varga: Twenty years ago it was 86% US to
own making, but some things have come 14% international. Today it is roughly 40% US
nicely together to give US whiskey such nice and 60% international. You can split the non-US
momentum right now. So we are going to be in a bunch of different ways, but the
more focused on some of the things that have performance in the international developed
contributed to the company’s success. That markets, which includes a big chunk of Europe,
starts with the Jack Daniel’s trademark, then is the main reason why we have outperformed
extends to brands like Woodford Reserve or our competition. In the US over a 10-year period
little Old Forester. The resurgence of Old we have outpaced the market, but not by that
Forester has been the biggest surprise.
We will continue to focus on building on our “We are blessed by much. Emerging markets were the fastest-
growing, but off a very small base for us.
leadership in US whiskey. Many of the good Emerging markets are about 20% of our
things that have happened to the company geographic diversification business today, but where we have really
are because of Jack Daniel’s. It is clearly our differentiated and excelled is in the more mature
number one focus, because we see so much that really serves international markets – places like Australia,
remaining runway. If you look at the numbers Japan and Europe, where we have had very
on a global scale, the category is still in the
early stage of development in most countries.
the company well” significant performances with Jack Daniel’s.

– Paul Varga, chairman, Brown-Forman (above) IWSR: You can still see a lot of room for
IWSR: The IWSR’s data shows Jack growth in those international developed
Daniel’s is in growth almost everywhere markets if you consider the relative
and a lot of spirits. We chose to narrow our
you look. The underlying trends are penetration levels of US whiskey in Spain
focus with two premium spirits very much led
favourable and you have such a menu of and France, for example, versus more
by US whiskey. That has turned out to be a
growth opportunities. How do you established categories such as Scotch
good choice. It meant that we were a little
manage that? Are you prioritising and whisky.
more concentrated from the portfolio
going for more controlled growth? Varga: Well, they got started at
standpoint. But on the geographic side we
Varga: It is a conscious choice. Over the last international expansion more than 100
really wanted more diversification. Even
10 years we have debated internally – and years ago. We are still relative newcomers
while the US continued to grow, the
people outside may have speculated – as to to it. When you start with a small base,
company’s international business in many
whether we were making the correct you expect to grow a little faster than
markets has developed very well over the
geographic choices. You will recall the world’s everybody, but Jack Daniel’s is now the
last 20 years as the IWSR’s figures bear
preoccupation with BRIC markets. We love largest super-premium spirits brand in
out. We see that as fairly unique. In our
those markets, but we make a pretty conscious Europe. Jack Daniel’s has continued to
view only the trademarks of Jack
effort not to go chips-all-in in one or all of them. grow and part of that is the benefit
Daniel’s and Johnnie Walker are as
We felt like geographic diversification would be of not having started 100 years
broadly distributed and appealing
the right path for our company. We have a ago. We are still going up the
to those consumers in as many
brand that has the kind of breadth of appeal we development curve, whereas
countries as there are. Jack
felt it did, which has enabled us to go broader many of these Scotch brands
Daniel’s is now in 160-plus
than just China or India. Those markets could had reached their pinnacle
countries. Most of the big brands
be spectacular for the company in another 20 or maybe 10 years ago or so. We
of the industry derive their
30 years, and we have got some pretty sizeable are also relatively fresh in
volumes and profits from a more
businesses today because of the decisions we consumers’ eyes.
concentrated set – in some cases
have already made, particularly in Russia and
it is 50 countries. But if you take
Brazil. But then you add up the countries of the IWSR: You mentioned Johnnie
Cognac at the other end of the
CIS, or go into Latin America and see how Walker as being a peer to Jack
extreme, for example, they are
many of these countries have moved from Daniel’s. Last year we had Jack
10,000 to 50,000 cases. So you can have Daniel’s as number two in our
portfolio diversification and/or geographic Jack Daniel’s is broadly overall World Class Brands list,
diversification. If you go back to 2005, we had a distributed, now present in whereas Johnnie Walker was
consumer durables business, a bunch of wines 160-plus countries very much pegged back. Scotch,

October 2015 51
spirits review
Brown-Forman interview
on a global basis, hasn’t seen growth in 20% higher than JD Black Label, we felt this question how you participate in them and what
two years, according to the IWSR’s data. was a reasonable approach to seizing the your ambitions are. We typically have not been
Is that a concern for you, given that you vertical opportunity of Jack Daniel’s. a size-driven corporation. You will rarely hear
play in a not completely unrelated When Tennessee Honey eclipsed 1m cases, us say ‘we need to be number one or number
category or do you see yourselves as we made the point that there are fewer than two in some category’. Your presence or your
something very distinct? 20 brands in the world that have an size should be the result of your work, not the
Varga: We are quite separate. I would be average IWSR price point of $25 per requirement for it. I know we will do a very
interested to study some of those markets bottle and sell over 1m cases. That is a responsible job of taking the Jack Daniel’s
to see if we were the cause of the Scotch very small number of brands in the brand into flavoured whiskey and, so far, we
slowdown. The premium ends of Scotch entire world that would occupy that have. It is about being thoughtful, methodical,
are probably doing really well, as is malt. small categorisation. Jack Daniel’s is by testing and retesting.
In many cases the big blended Scotch far the number one expression in that Even if you have been successful with the
brands have stalled, particularly in their select group by having in excess of introductions and you have implemented them
historic markets of the UK and Spain. Yet 12m cases now at that price point. So to precision, there is still no guarantee [that it is
at the higher ends, where Jack Daniel’s the balancing act of keeping it high- not a fad]. All of us at Brown-Forman are still
tends to play, we still see good priced and special, while also going to worry that, in some way, shape or form
growth and they represent strong continuing to have the volume in 10 years from now, just the existence of this
competitors. Part of the Jack aspirations we do is rare. Our category participation could weaken the Jack
Daniel’s story is category, but the track record so far shows we Daniel’s Black Label brand. There is no way to
other part is that we are at the have done a pretty good job really know. All you can do is make reasoned
very premium end of the category, on it. judgements. So while we have been introducing
so as the world’s economies JD Tennessee Honey and JD Fire, we have
improve and GDP increases, some IWSR: Is flavoured whiskey a made sure the support behind JD Black Label
of Jack Daniel’s volume growth sustainable trend or is it a remains a priority. By continuing to sell, market
and consumption has to be fad? In this industry anything and prioritise JD Black Label, you can avoid
associated with consumers trading that goes up at such a sharp some of the displacement consumption. One
up from standard Scotch. trajectory often tends to example of displacement consumption in this
come down just as quickly. country 25 years ago was the introduction by
IWSR: Talking about Also, how aggressively are the large premium beer brands, such as
consumer trade-up, how much you going to move on new Budweiser and Miller, of their Light extensions.
scope is there to take Jack and flavours? Those Light beer brands grew, but the parent
your other whisk(e)y brands up Varga: It is comes down to how brands came down. There was such
vertically? we manage it. I don’t anticipate us replacement volume, one for the other, that the
Varga: We are largely at the premium end being ultra-aggressive on the [new cannibalisation was not attractive in the end.
and we have had a very consistent flavour] front, particularly with the Jack That is a cautionary tale for us. So far we
approach to Jack Daniel’s pricing. We are Daniel’s trademark. haven’t seen much cannibalisation, but it is
satisfied with its positioning. Our approach If you end up overdoing it and if it something we monitor closely.
to pricing has been more modest, but became like some of the vodka shelves,
more consistent. Another effective way of where there are maybe 57 flavours, then IWSR: What’s your reading of the US
getting the equivalent of price increases you might grow for a while, but you market today? The growth of craft liquor
while doing that is to introduce line would oversaturate the market. You is certainly changing the landscape. Do
extensions and fill out price points may not notice for 10 years, but it you view this as a threat or opportunity?
above the Jack Daniel’s level. We would eventually dilute the way Varga: A bit of both really. It is clearly one of
have done that with Gentleman the consumer views your brand the things driving our Old Forrester brand, for
Jack and Single Barrel and, in some and the category as a whole. instance, which has seen a resurgence in the
countries around the world, with Mostly because of the success last two years. Part of that is associated with
different expressions. As long as we of Fireball, but also because of the craft movement. You could say the same
treated the consumer and the trade Tennessee Honey, these brands holds true of Woodford Reserve and, on some
fairly as we took our price increases collectively are larger already level, we would call Woodford Reserve the
and, from time to time, introduced than categories like Irish whiskey original craft expression for the last 20 years –
expressions that might be 10% or or tequila and they are from when we started to renovate the distillery
approaching the size of Scotch [in to when we got the first bottles out to the
the US]. These latter categories marketplace. For Jack Daniel’s, it is both a
Despite the launch of new have been around in this country blessing as it is creating interest in premium
expressions, the company for decades. So it is impossible to US whiskey, but it is also a potential source of
claims there has been very little ignore the opportunity presented volume for the new competition. Nevertheless,
cannibalisation from the main by flavours, but you have to during fiscal year 2015 Jack Daniel’s just
Jack Daniel’s brand

52 October 2015
 spirits review

completed in the US its finest year in its 149- particularly all the large ones, are in Brown-Forman feels that
year history. That it was able to grow despite decline because of craft beer. A Woodford Reserve and Old
heightened competition is a real testimony to lot of the big food brands are Forester play in the ‘craft’
that particular trademark. Also, given that we under pressure. It is not just space in the market
have introduced these flavoured whiskies into spirits. It cuts across a lot of
the US market, the fact that the parent brand consumer categories.
can remain so healthy means there is very People are really
limited cannibalisation. The entries we are appreciating the upstart, can build your craft brands –
bringing in are sourcing in new consumers and the entrepreneur or the the way we think about it,
occasions, which is what you hope happens local phenomenon. You Woodford Reserve and Old
but it doesn’t always happen that way. would be nuts not to be Forester play in that space. Or
The US market remains very healthy, aware of that trend and you could start your own, but
particularly when you compare it to some other be thinking how to you must do it authentically.
countries like Greece or China. The US, with its capitalise on it. There are a bunch of pseudo-craft
characteristic consumerism, is starting to For Jack Daniel’s, brands in our business. These
become a safe haven for investors. The only what the consumer is brands lack any real authenticy.
real concern is this fundamental shift from the seeking has actually Some of them don’t even have
on-premise to the off-premise. This is making caught up with the way our distilleries. They are just sourcing
some of us think a bit differently to how we brand is. The brand was born in a tiny bulk Bourbon and putting it into a
might have done 10 years ago. It could be little county in south central Tennessee bottle and making it look authentic in some
pricing-related, economy-related or social and that has been the basis of the way. It is amazing that, in the days of
media-related, but this is contributing to the marketing communications and the reality social media, they are getting away with it.
different ways that people drink beverage of the brand for a long time. Jack But in the passage of time, brands like
alcohol than they may have done before. For Daniel’s shares many of the qualities and these will inevitably experience some
instance, there is this crowdsourcing attributes that consumers find appealing difficulty. It is OK to do this as long as you
phenomenon where somebody can in the upstart brands. We have had express clearly to the consumer what you
crowdsource [through Facebook or other social some trade issues though. Some in the are doing. The problem is that they are
media] around eight to 12 people at a trade just don’t want to stock deceiving the consumer to some
moment’s notice in someone’s apartment or established brands. Their degree. When you have to age your
house before they go out, so they can share positioning as restaurants and product in order to enter the
spirits or drinks. They may see it as a little bit bars is to only promote local business, it is hard for an
less expensive than paying the drink price at brands. Some of our distributors entrepreneur to age something
the bar, then they will go to the bar a little are reporting that. We then have four, five or six years and wait. It is
later. Those types of things are shifting the to let them know how important tough to understand how they are
balance a bit between the on- and off-premise Jack Daniel’s is to their bar coming out with products as soon
sectors. The only other thing that could be business and how it can help. as they get their licenses. They
contributing to the reduction in US bar traffic is Five or 10 years ago we would need to be more explicit that they
that there is less travel in the major tourist never have had to make those are selling bulk Bourbon. That will
destinations due to the strong dollar in the US. extra sales calls. be a challenge for the entire
Places like New York, which depend on the industry and could be a
tourism business, have seen a bit of a dip. IWSR: How do you counter contributing factor in how the
that? Do you launch more category grows. If the consumer
IWSR: Looking at the IWSR’s US figures, craft-style products or perhaps feels they have been fooled, then it
four out of five of the largest spirits acquire craft distillers? could devalue the entire category. All we
brands in the US declined in 2014, and Varga: You can acquire craft producers or you can do is present our brands in the correct and
five out of the top seven. The only authentic way, do what is right, and compete
exception within the top five was Jack in the marketplace.
Daniel’s. Do you think there is anything
to draw from that? Are Millennials
“It is a real challenge IWSR: In June you announced your entry
moving away from the big brands,
perhaps becoming more fickle, or was
for Jack Daniel’s to be into the Irish whiskey category with your
Slane Castle investment. Tell me about
2014 just an anomaly?
Varga: Yes, it is a real challenge for Jack
big and authentic your plans for Irish whiskey and why you
think you can succeed?

at the same time”

Daniel’s to be both big and authentic at the Varga: Well, we have not branched into a lot
same time. The reason we can manage it is of categories in this way, but the best
that we present it as authentic and I think example is what we did with Woodford
– Paul Varga, chairman, Brown-Forman
that is appealing to Millennials. That is why Reserve 20 years ago. We have looked
we are bucking the trend. Beer brands, around for the last several years to see if

October 2015 53
spirits review
Brown-Forman interview
there were any attractive Irish acquisitions or IWSR: You still have a few holes in your
possibilities and there just weren’t. But over portfolio, such as Scotch, rum and gin.
the last year what came to fruition was this Are you going to pick up the pace in
acquisition and a bit of innovation in Slane terms of M&A? Or do you even feel the
Castle Irish Whiskey and distillery. We don’t need to participate in these areas?
have specific brand plans yet, but the whole Varga: Well, we see the entry into Irish
idea is to participate in the growth of Irish whiskey as an opportunity versus a necessity.
whiskey around the world. In some ways If we think there is a wonderful consumer and
what Jameson has been doing with Irish financial opportunity that could be attractive
whiskey is similar to what Jack Daniel’s for the company for a very long time, then it
undertook in terms of globalisation of the almost doesn’t matter what category it is. We
category 25 years ago. We don’t have to be haven’t found many that are as attractive
number one in the Irish category, but we economically, or in terms of runway and
would like to participate in that growth and growth as US whiskey. We do not want to
there are some things that we can bring into detract from our focus and attention on that to
it uniquely. pursue something we would see as less
There are some very attractive aspects to attractive and maybe not as growth orientated.
Irish whiskey. The ageing horizons are more Using the Irish example, we think it has the
like the American style. We think we can
bring our knowledge and expertise around
“We are trying to get characteristics that are worth putting some
extra resources into. It won’t divert our
coopering to Irish whiskey-making to make
a product that is unique in terms of taste
Woodford Reserve and attention from our US whiskey. Many of the
categories you mentioned are less attractive,
and profile. We are the only company that
owns its own wood-making operation, so we Herradura to that in my view, in terms of category economics
and growth and their ability to be sizeable.

billion-dollar level”
think, where appropriate, we can take that Anything we focus on has to be able to create
in and make contributions to product some meaningful business. We would look at
differentiation. That would be an aspect of it and then there are two choices: do you buy
– Paul Varga, chairman, Brown-Forman
our longer-term plans. It is just a very it or do you create it from scratch? If it is a
exciting category and the product is very really attractive category then guess what?
mixable. It has a lot of the properties of few – have recently entered the Very few people want to get out of it and you
US whiskies. market. And now Brown-Forman. are not going to have a lot of acquisition
Having said that, we don’t think we will Varga: Yes, that is the unusual thing opportunities. So with Irish whiskey we
have an amazing early success. We have to about the Irish category. But all those decided to build our own operation. I don’t
go out and build it, much like we did with companies you named are pretty feel compelled to fill out the bar, and
Woodford Reserve. In its first decade there good brand-builders and they will do participate in all categories. I expect us to
will be a lot of competition, but a lot less a nice job. I think we will add to it. I remain highly focused on US whiskey, but
completion than, let’s say, premium malts, like the way we are approaching it then the things we do, we are looking to
because there are so many single malt from an authentic standpoint. We eventually do big. We call it building billion-
Scotch brands. The competition in Irish are making a very significant dollar brands. We are trying to get Woodford
whiskey is much more limited. Pernod investment to build a new and Herradura to that billion-dollar level and,
Ricard’s Jameson is the leader and we distillery and from that base it longer term, we have the same ambition for
respect what they have done with that will be an authentic story. It will Old Forester or Slane Castle... Maybe
over the last few years. They have built be new as a brand, but we hope Sonoma-Cutrer as well.
a nice foundation for the category that the way we are doing it will “We are going to be more selective in
companies like Brown-Forman can appeal to the home Irish market terms of what businesses we operate in. Part
enjoy some success with. and also to the US market, of our success was due to the fact that,
which is the largest export instead of worrying about selling luggage or
IWSR: As you note, for a long market for Irish whiskey. plates in China when we owned Lenox, I was
time it was just Irish Distillers Irish whiskey is also starting to focused on making Jack Daniel’s grow in
that was both category and brand sell in Africa, as well as Europe. A lot of people at Brown-Forman
building. Now a critical mass of throughout Europe. It has not were able to take their eyes off popular-
players – William Grant & Sons, penetrated Asia as yet, but priced wines when we sold the Fetzer
Beam Suntory, Cuervo, to name a Brown-Forman is a little stronger business and shift them over to the more
out there with Jack Daniel’s, so profitable Woodford Reserve business. That is
maybe we can do some things a resource reallocation of our creative
The company plans to participate over time to introduce things like energies and it has paid dividends. We will
in the growth of Irish whiskey via Woodford and the Slane brand continue to look for those opportunities to
its latest acquisition, Slane Castle as well. focus on the best things. ■

54 October 2015
 spirits review
Travel-retail momentum
Brown-Forman’s Farrer Marshall points to the big opportunity for the firm’s brands in travel retail to Alexander Smith
It wasn’t that long ago that US whiskey
was fighting for relevancy within the travel-
retail channel. US whiskey historically played
second-fiddle to other international categories,
such as Scotch whisky. That is now all
changing and, to a great extent, it is due to “Whisk(e)y comprises
half of the spirits sold in
the momentum generated by Brown-Forman’s
flagship Jack Daniel’s brand.
Jack Daniel’s is now the third-largest brand
in global travel retail (see related Top 100 travel retail and
story on page 16) with 2014 sales of 900,000
cases. The brand has displayed a very
impressive 15.6% compound annual growth
US whiskey has
rate (CAGR) between 2009 and 2014 – the
highest of any brand in the top 10. At current
traditionally been
growth rates, Jack Daniel’s seems destined to
take the number two spot as soon as this year.
underrepresented
As a sign of the brand’s progress, Jack Daniel’s
only broke into the top 10 in 2006. in that mix”
Brown-Forman managing director of global – Marshall Farrer, managing director
travel retail Marshall Farrer says: “US whiskey, global travel retail, Brown-Forman
and specifically Jack Daniel’s, is on the map of
every retail customer now. It is squarely in
their view and they are paying a lot of between ELR, Brown-Forman and Dubai as the Jack Daniel’s Sinatra Select, is helping it
attention to it. That in itself is creating a lot of International Airport, something the firm said to hit price points that previously proved
momentum and further possibilities for us.” embodies the essence of the Trinity (supplier, elusive for American whiskey makers. “The
Travel retail never operates in isolation and the operator and airport authority) partnership. introduction of Sinatra Select, at around $90,
growth of Jack Daniel’s in the channel to some Commenting on that particular Dubai really moves us up into higher price points that
extent mirrors what is occurring in domestic venture, Farrer says: “The Jack’s Bar & Grill we have historically played at.”
markets. There is a whisk(e)y renaissance in the has been received incredibly well and has That success has led Brown-Forman to
US market. Jack Daniel’s is also enjoying given enormous visibility to Jack Daniel’s. It introduce this year Sinatra Century,
explosive growth in international markets (see allows a lot of consumers, particularly from commemorating what would have been Frank
related interview with Brown-Forman CEO Paul emerging markets, to experience a little bit of Sinatra’s 100th birthday this year, and that is
Varga on page 51). The brand now derives 60% the Jack Daniel’s lifestyle, and that has really retailing at $499 per bottle. It also introduced
of its sales from international markets, compared helped them to have an experience with the Jack Daniel’s Gold at around the $90 price
with just 14% 20 years ago. brand that they can bring back to their home point. Gold is aimed chiefly at Chinese and
Travel retail, as the international shop window, country. It has been very positive from a Asian consumers. “Many Asian consumers are
is spearheading that global expansion. Farrer brand-building standpoint.” looking for more luxury offerings and Gold also
says: “Jack Daniel’s has had a really outstanding has many of the visual cues that they are
period of growth [in travel retail] and it is doing it Expanding the offer interested in,” says Marshall.
at many different price points as well. Don’t As US whiskey builds internationally, it also Brown-Forman is also looking to carve out a
forget that whisk(e)y comprises half of the spirits presents an opportunity for Brown-Forman to greater role for some of its other US whiskey
sold within travel retail and US whiskey has expand its offering in travel retail. It is doing brands, such as Woodford Reserve. Woodford
traditionally been underrepresented in that mix. this in number of different ways. It is extending also ties in with the burgeoning craft spirits
There is a huge pool for Jack Daniel’s and our its Jack Daniel’s family both through flavours movement. The jury is still out on whether
other US whiskey brands to grow in.” and more premium variants. Jack Daniel’s craft brands will ever play a significant role in
Travel-retail operators have come to recognise Tennessee Honey has been an enormous travel retail, but it does seem likely that, as
that Jack Daniel’s and the US whiskey category success in the US domestic market and the international consumers become more exposed
are hot. They are showing a willingness to company has been steadily rolling it out into to US whiskey, they will look for more variety.
provide the category with more space and focus travel retail to good effect. Importantly, Woodford Reserve is one of the real
within their shops, which represents a significant flavours are reaching new demographics and momentum brands in the US today and is
change in attitude. Brown-Forman has met that providing largely incremental growth for Jack showing signs of duplicating that success in
with a greater willingness to invest in the Daniel’s. “We have seen some very good travel retail. Farrer says: “Woodford Reserve is
channel and has even introduced branded Jack traction with Tennessee Honey. It has had simply exploding within global travel retail,
Daniel’s outlets in a small handful of locations. strong performances in all regions of the world, whether it be the original Distillers Select or
These include The Jack’s Bar & Grill, which but outside the US it has been particularly Double Oaked. It truly was the world’s first
opened in 2013, in Dubai International Airport. strong in Latin America and Europe.” small-batch Bourbon and has basically set the
The world’s first Jack’s Bar & Grill is a partnership The introduction of high-end variants, such benchmark for super-premium Bourbons.” ■

October 2015 55
spirits review
Cognac – back on track?
Humphrey Serjeantson examines the recovery in Cognac’s sales
Following a decline in 2013, strong China struggles in the short term
increases in travel retail and especially in the The key feature in the Chinese market
US led global consumption of Cognac to return remains the anti-corruption campaign which
to its historical upward trend in 2014. While started in late 2012, focusing particularly on
China is still a serious cause for concern entertainment in the on-trade by civil
among producers of Cognac (and not only servants. What this means is that staff of
Cognac), mainly as a result of the clampdown state-owned enterprises are no longer buying
on spending by government employees, at a luxury products and, simultaneously, private
global level the signs are more positive for the buyers are avoiding luxuries in order not to
category than they were a year ago. draw attention to themselves. While there are
rules on what is acceptable in terms of
US leads the charge corporate entertainment, they are deliberately
Global consumption of Cognac reached 12.5m left vague and the result of this is a high level
cases in 2014, an increase of just under 1%. of caution; gifting in particular is suffering.
While this is not a huge increase, it was a China’s share of global consumption had risen
boost to this key spirits category nonetheless. from 7.6% in 2005 to a high of 21.1% in 2012
The US, the leading Cognac market since 1996 before falling sharply back in 2013 (19.3%)
when it pushed duty free into second place, and 2014 (16.7%).
was the key driver of this growth. Economic Charles Armand de Belenet, marketing
growth in the US in 2014 was 2.4%, the director at Martell Mumm Perrier-Jouët, tells
highest in four years, and unemployment fell the IWSR Magazine: “Although the Chinese
to its lowest since 2008; these two combined market has been affected by the macro-
were key drivers of the US spirits market and economic slowdown and measures against
main forces behind the slight trading-up that Signs for Cognac consumption are more conspicuous consumption, the situation has
the market saw. As a result of all this, Cognac positive than they were a year ago now stabilised and since the Chinese New Year
consumption in the US not only exceeded the In fact only US whiskey, gin and bitters saw the market has been heading back to growth,
levels seen in 2007, just before the economic stronger growth in percentage terms in this particularly in the private sector.” He added,
crisis, but actually rose above 4m cases for the channel than Cognac/Armagnac last year. Total however: “Business gifting is unlikely to come
first time. volumes in travel retail in 2014 were 1.7m back as a significant driver.”
While not the most dynamic spirits category cases, equivalent to 13.6% of global sales. The How China will perform in the future is open
in the US at the moment – that accolade goes channel’s share of the global market has risen to question; it is unlikely to return to the levels
to whisk(e)y and especially US whiskey – from 10.1% in 2007 to 13.6% in 2014. of growth seen between 2003 and 2007, let
Cognac saw strong growth in 2014 as the The importance of the Asia-Pacific region to alone between 2009 and 2012. That said,
leading brand lines in all three quality Cognac sales in travel retail is highlighted by economic growth in China of 7% remains the
segments increased above the category the fact that three Cognac brands – Martell, envy of many Western markets, and the
average. Martell’s Cordon Bleu rose 21% to Hennessy and Rémy Martin – are in the top 10 population continues to grow. What has been
20,000 cases; Rémy Martin’s VSOP grew by wine and spirits brands by volume sales in the seen alongside the overall decline in Cognac is
44,000 cases to increase its dominance of the region. In Americas Duty Free, only Courvoisier downtrading: demand for XO-and-above has
segment; and Hennessy VS added a full and Hennessy make the top 10, while in slowed as consumption shifts to VSOP which
215,000 cases to reach 2.25m cases as the Europe (the largest region by a significant now dominates in the night on-trade; China’s
brand recovered among its core consumers. margin) no Cognac brand figures. In terms of traditional skew towards VSOP-and-above is
Hennessy VS accounts for over 50% of all brands, the four leading Cognac brands gradually shifting. Drinkers also reportedly
Cognac drunk in the US, so the fate of this one globally are also the top four in duty free, but prefer to switch brands rather than downtrade
brand line plays a key role in the development while Hennessy remained in the number one within the same brand (in order to make the
of the market as a whole. spot, Courvoisier moved from four to two, switch less obvious).
For Jim Clerkin, Moët Hennessy USA Martell from two to three, and Rémy Martin
president and CEO, much of the credit for the from three to four when it comes to travel Europe – a tired image
revival in Hennessy goes to the company’s retail. Hennessy saw the fastest growth of any One issue that Cognac has to face – and has
‘Never stop. Never settle’ campaign featuring top 10 spirits brand in travel retail, up 12.9%, been facing for some time – is the perception
boxer Manny Pacquiao, which “works because while Martell (10 places behind Hennessy in among younger consumers that it is an old-
it resonates with our core consumer, but it also the table of leading wine and spirits brands in fashioned drink. This is particularly the case in
resonated with new consumers”. travel retail) grew by fully 19.3%. Peter Sant, Europe, where Cognac has been in long-term
head of Asia travel retail at Rémy Cointreau, gradual decline for many years. In the UK
Travel retail performs well said 2014 “has been a challenging year to say Cognac continues to lose out to more
Cognac (combined with Armagnac) represents the least”, but despite that “the first few fashionable brown spirits like flavoured whiskies,
the fourth largest-selling spirits category in months of this year have been quite US whiskies and spiced rum when competing for
global travel retail and, in 2014, it grew faster promising… We have certainly seen some the attention of Millennial consumers. Germany
than any of the other categories in the top five. shoots of optimism”. recovered slightly in 2014, but volumes were

56 October 2015
 spirits review

boosted by own-label product, prompting a shift

down from branded Cognac. Cognac: top brands and their leading markets
Russia’s difficulties in 2014 are well Volume Volume Volume % CAGR % change
Brand/Market
documented as the complex geopolitical 2010 2013 2014 2009-’14 2014 on ‘13
situation, sanctions and the rise in major
Hennessy
currencies against the rouble all had an effect
1. USA 2,104.8 2,265.5 2,484.0 3.3 9.6
on most categories and particularly imports.
2. China 742.9 955.9 756.9 3.2 -20.8
Russia’s strong growth in consumption
3. Duty Free 358.5 482.8 545.2 15.1 12.9
between 2004 and 2012 (the country grew
4. Taiwan 168.7 175.4 178.1 1.0 1.5
from a 200,000-case market to a 350,000-case
5. Russia 102.7 120.0 117.9 4.0 -1.8
market over this period) has stagnated in the
6. Others 995.6 1,184.2 1,256.9 6.0 6.2
last two years, with growth of just 0.2% in
Total 4,473.1 5,183.7 5,339.0 4.7 3.0
2014. But in contrast to several other markets,
the split across the quality segments remained
Martell
broadly stable here, with VS accounting for
1. China 712.1 953.4 918.2 9.2 -3.7
around 50% of the market, a much lower
2. Duty Free 195.4 250.1 298.3 16.0 19.3
proportion than in other leading markets such
3. UK 210.9 147.0 153.9 -7.0 4.7
as the US, the UK and Germany.
4. Malaysia 88.5 98.8 95.5 2.2 -3.4
5. USA 77.2 63.9 74.1 -2.5 16.0
VS rules the roost Others 324.4 355.7 347.9 3.0 -2.2
Looking at the leading brands from a value Total 1,608.5 1,868.9 1,887.8 5.8 1.0
perspective at a global level shows remarkably
strong progress over the last five years. Rémy Martin
Hennessy is by far the leader of the pack, 1. USA 562.0 621.8 704.0 4.7 13.2
reaching a global retail value of $4.2bn in 2014, 2. China 375.7 349.5 327.0 0.7 -6.4
a fractional decline on 2013, but a full $1.6bn up 3. Duty Free 289.7 215.7 217.9 -3.2 1.0
on 2009. Martell comes in second at $2.4bn in 4. Russia 28.4 47.8 50.1 21.3 4.7
2014 and the brand has increased by $1bn over 5. UK 50.6 47.0 39.4 -0.9 -16.2
the last five years. Rémy Martin was worth Others 334.2 305.3 275.6 -2.8 -9.7
$1.5bn in 2014, up from $1.2bn, and Courvoisier Total 1,640.5 1,587.0 1,613.8 1.4 1.7
was worth $0.8bn, up from $0.5bn. The slowest
of the four in this context, Rémy Martin, saw Courvoisier
value increase by 30% over five years, while the 1. USA 401.2 378.4 411.9 2.0 8.9
other three all increased by over 60%. Cognac 2. UK 355.0 371.6 382.3 3.5 2.9
emerges very favourably from a comparison 3. Duty Free 231.3 345.3 329.3 17.9 -4.6
with Scotch whisky in this context: of the 4. Russia 18.3 37.1 51.9 36.4 40.0
leading five Scotch brands only four saw any 5. Italy 22.1 18.3 18.6 -3.4 1.9
growth in value over the last five years and only Others 155.8 169.0 156.9 1.3 -7.1
Johnnie Walker (+45%) came close to the levels Total 1,183.8 1,319.6 1,351.0 5.8 2.4
seen by the leading Cognac brands.
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
Martell’s relatively high value compared to
volume is due to the fact that sales are more with VS progressively losing share to VSOP and cases to 154,000. Here a highly aspirational and
skewed towards higher-value lines: XO XO in particular, since 2012 this trend has brand-aware middle class with an eye for status
accounted for 28% of the brand’s volumes in reversed. In 2004 VS accounted for 59.1% of all is driving growth in imported spirits, and
2014; for Hennessy the figure was just 7% and Cognac and XO just 6.3%. Eight years later in Cognac’s ageing is seen as marking it out as a
both Rémy Martin and Courvoisier were lower 2012 VS was down to 45.5% and XO up to high-quality product among Nigerian consumers.
still. Over the last five years Martell has seen 11.3%; since then XO has declined to 9.7% in South Africa saw even stronger growth in
VSOP significantly increase its share of the 2014 and VS has risen back to 48.1%. The two percentage terms, adding 34,000 cases to reach
brand’s total sales, while XXX/VS has reduced key drivers of this are the growth in VS in the US a total of 101,000. While economic difficulties
its share the most. Hennessy, by contrast, has in 2014 and the simultaneous collapse of XO in grew for the population as a whole, wealthier
seen VSOP’s share of the brand total decline China. VS accounted for 200,000 of the 350,000 South Africans continued to thrive. In brand
slightly, while VS has increased over the same case growth in the US while XO accounted for terms, Hennessy rules the roost here; overall
period. Rémy Martin is the biggest player in the 175,000 of the 300,000-case decline in China. Cognac is increasingly coming into the sights of
intermediate segment, which has grown its Looking further afield and further ahead in time, premium Scotch drinkers. According to recent
share of the brand’s total, while XO’s share has African markets represent a great potential IWSR forecasts, Africa/Middle East will increase
declined over the last five years. customer base for Cognac. Some already are: in its share of global Cognac to 4% by 2020, up
While the overall trend in Cognac to 2012 had 2014 Nigeria, which accounted for 45% of from just 1% in 2009, another reason for Cognac
been a progression up the quality segments, consumption in the region, grew from 130,000 producers to have confidence for the future. ■

October 2015 57
spirits review
Quality players
Different strategies are helping premium liqueurs thrive in an overall declining market, finds Agata Andrzejczak
At 33.2m cases Europe is the largest region
for liqueurs, representing almost 40% of global
consumption. Overall consumption has been
slowly declining, but some interesting trends
have emerged recently.
The premium segment has been growing in
several markets as more brands enter top-end
bars and seek to differentiate themselves from
their mainstream competitors by using
increasingly premium and exclusive products.
Alexine Prunier, export director at Lejay
Lagoute, explains: “Premium liquor is definitely
a growing segment, with an increasing
demand among bartenders, especially in the
UK. France, too, is still a very big market in
terms of volume, yet very competitive with a
large private-label market share. We see most
opportunities in countries where the cocktail A dynamic cocktail trend has boosted quality liqueurs
scene is performing well.”
particularly across Western Europe, moving honey-flavoured products. They have been
In Switzerland there is a nascent interest in
away from price discounts and by refreshing launched in Germany, Switzerland and Ireland.
premium and craft liqueurs, though this has yet
the packaging to be more stylish. Baileys German producer Berentzen recently launched
to have an impact on the wider liqueurs
Chocolat Luxe has certainly brought many Scharfer GranatApfel, a spicy pomegranate
category. Another positive sign for the category
people back to Baileys.” liqueur, while local brands in Switzerland have
has been the arrival and success of Baileys
Tom van Lambaart, CEO of Grand Marnier, launched their own hot cinnamon or peppermint
Chocolat Luxe in markets like Italy and the
adds: “The premiumisation strategy is liqueurs, such as Trojka Greench, to compete
Czech Republic. The parent brand and most of
functioning extremely well for us. The Grand directly with Fireball.
its flavour lines declined, but consumers have
Marnier Cuvée range, with Louis-Alexandre, German producer Hardenberg-Wilthener has
proved willing to trade up for special occasions.
Centenaire, Cent-Cinquantenaire and relaunched a range of miniature bottles under
Matthew Turner, global brand director spirits
Quintessence – which sell in a price range from the Kleiner Keiler brand with spicy cherry, spicy
at Zamora International, says: “More and more
€50 to €800 ($56.25 to $900) – was recently woodruff and spicy pomegranate flavours.
line extensions will probably enter the market
completely revamped and is showing Some bitter brands, such as Jägermeister,
in order to curb the decline of some of the
exponential growth.” also entered the spice arena. Michael Eichel,
category’s leading brands. Is that the
director corporate communications at Mast-
right strategy for a declining
Spicing up the offer Jägermeister, says: “As a seasonal drink,
brand? It’s difficult to judge.
Another new trend has been the Jägermeister Spice is only available in limited
Other innovations may enter
emergence of sweet and spicy, quantities in selected countries and during the
the market to boost growing cold season in Europe. With its cinnamon and
as well as coffee- and
brands with the objective of vanilla blend, Jägermeister Spice is closely
driving premiumness.” linked to Christmas. So, there are positive
Rosalind Healy, global reactions for Jägermeister Spice in mixed
consumer marketing director Christmas drinks (grog, hot apple, glühwein
Baileys, says: “We and spiced coffee) and we are having success
premiumised Baileys’ in Christmas markets across the region.” ➤
trademark overall,

Baileys premiumised
its trademark with
Chocolat Luxe;
Berentzen launched
spicy pomegranate
liqueur Scharfer
GranatApfel;
Jägermeister Spice
aims for seasonal
popularity; Harden-
berg Wilthener
relaunched the
Kleiner Keiler
miniature bottles

58 October 2015
spirits review
Liqueurs in Europe

Grand Marnier’s iconic bubble is claimed to be popular at events around the world; Galliano’s Hot Shot, a mix of Galliano with coffee and
cream, is popular in Sweden; Lejay Lagoute claims its ‘historical’ cocktails Le Kir and Le Kir Royal are doing well

Coffee flavours are making a big impact in Champagne or when you come home with a Turkey and Poland, the cocktail culture is
Sweden and Denmark. As more coffee shops male friend you would mix Alizé with Cognac.” growing from a smaller base with whisk(e)y
open and younger consumers drink more coffee, Prunier adds: “The European market is cocktails (so-called ‘Scotchtails’) driving growth.
the flavour has found its way into the alcoholic performing well for qualitative liqueurs, surfing
drinks market and coffee liqueurs and coffee- on a very dynamic cocktail trend which offers Leading markets
flavoured cocktails are outperforming the a new scene and visibility for forgotten liqueur Germany, the UK and France are by far the most
market. In Sweden one of the most popular brands. Our historical key cocktails, Le Kir and important markets for liqueurs, accounting for
drinks at present is the Galliano Hot Shot, a mix Le Kir Royal, are doing extremely well.” nearly half of European sales in 2014.
of Galliano with coffee and cream. Van Lambaart says: “In the past the main Giles Gough, the IWSR’s analyst for Germany,
consumption moment of liqueurs was after says: “The category’s performance is difficult to
Cocktail boost dinner. However, we have seen a clear shift summarise. Some FIFA World Cup-related
Another positive development is the recovery from after-dinner consumption towards long- activation led to growth for the Berentzen
in the on-premise sector, driven partly by a drink and cocktail occasions. Our iconic Grand portfolio, notably its low-strength flavoured korn
buzzing cocktail scene. Classic cocktails using Marnier bubble and premium facetted glasses and Puschkin ranges. Generally, however,
ingredients with high production values have are extremely popular at events all over the market conditions are difficult. The category
become extremely trendy throughout many of world. A cocktail culture is expanding in most remains regional and is very fragmented. There
the more mature key European markets. markets and new cocktail bars are opening is no single target consumer group, with volume
Innovative and experimental cocktails are also every week all over Europe, including Eastern development largely dependent on promotion or
rising as a result of broadening consumer Europe, even in medium-sized cities.” brand activation. A large part of the category
tastes, a fascination with niche and unique Meanwhile, in markets such as Italy, France, remains highly seasonal too.” ➤
products, and bartenders looking to give
customers more of an experience. This trend
has become most notable in the UK, Ireland,
Liqueurs in Europe: top 10 markets
Rank/Country Volume Volume Volume % change % CAGR
Switzerland, Sweden and Denmark.
2010 2013 2014 2014 on ’13 2009-’14
Jay Orlean-Taub, brand manager at Alizé,
says: “The overall liqueurs market is in decline, 1. Germany 6,978.1 6,583.9 6,612.0 0.4 -1.3
but there are two growth areas: flavours and 2. UK 5,047.5 4,668.8 4,556.0 -2.4 -1.9
rituals. People are more openminded about 3. France 3,765.8 3,441.8 3,333.0 -3.2 -2.9
trying new things and this trend will drive 4. Poland 2,675.8 3,520.0 2,801.0 -20.4 11.6
liqueurs growth. We are trying to encourage 5. Italy 3,262.5 2,776.5 2,638.5 -5.0 -4.5
versatility around consumption; we promote 6. Spain 3,574.0 2,760.0 2,535.3 -8.1 -7.4
Alizé Gold with lemonade, Blue with ginger ale 7. Netherlands 2,034.0 1,956.8 1,836.0 -6.2 -2.3
or Red Bull and Red with cranberry, but Alizé 8. Czech Republic 1,260.8 1,035.3 995.3 -3.9 -6.7
can also be served on the rocks. We also look at 9. Belgium/Luxembourg 1,123.0 1,032.0 968.8 -6.1 -2.5
extending drinking occasions. We work closely 10. Romania 905.0 924.8 911.0 -1.5 -3.8
with rappers, DJs and other music influencers, Others 6,718.5 6,136.5 5,997.6 -2.3 -2.8
and their songs indicate you could come home Total Europe 37,344.8 34,836.2 33,184.4 -4.7 -2.3
with your girlfriend and drink Alizé with All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

60 October 2015
MIX IT UP
There at the beginning, rapped about
by the greats. Now re-stepping to the
global stage. Alize Louder.

WITH ALIZÉ TURN IT UP, STAND OUT & STOCK UP.

 spirits review
Liqueurs in Europe
Germany is the only country out of the top after-dinner drinks, but this drinking occasion is to continue to push the premium brands in
10 liqueur markets in Europe to show growth, now declining. The super-premium end of the order to maintain interest in the segment. The
albeit minimal. The main drivers for growth market is slowly developing, but this could launch of Disaronno Riserva, a combination of
were low-strength flavoured (LSF) korn and accelerate over the coming years as more bars blended Scotch whisky and Disaronno, should
advocaat; the former was driven by innovation look to differentiate themselves from their local help to do this (see New Products, page 14 for
and some FIFA World Cup-related activity. competition by using niche products. more details).
Advocaat is more of a seasonal product. One school of thought is that some liqueur Saramien Dekker, global marketing manager
For all the work done to continuously brands might be losing out because other spirits – Amarula, says: “We see great opportunity for
rejuvenate the LSF korn category, the wider categories are launching flavoured spirits – for Amarula to sell our African brand story in
liqueur category is difficult as consumers opt example, US whiskies. Conversely, it is also Europe; as Amarula is the number two cream
for full-strength spirits. Most sub-categories are possible that flavoured vodkas are suffering as liqueur worldwide we want to continue to grow
either in terminal decline or trending negatively. consumers are looking for lower-abv products in this market.”
While there are pockets of growth to be and are therefore switching to liqueurs. Liqueurs’ decline continued to accelerate in
captured, given the current vogue for full- After the largest international brands – France. Baileys and Malibu suffered further
strength and classic spirits, it is likely the Baileys, Malibu and Southern Comfort – the losses, while market leader Get 27 held up well
liqueurs category will continue to decline. market is pretty fragmented and becoming in this tough category. Peppermint Get has no
The growing presence of cocktail lists in increasingly so as more brands enter the competitor of major size in its category –
mainstream bars and pubs is helping to drive the arena. Brands like Fireball, St Germain and regional Menthe Pastille (Giffard) and own-
liqueurs category in the UK. Local premium high- Domaine de Canton have the potential to label brands are the closest competitors – and
strength liqueurs grew in 2014, on the back of replicate the stellar rise they saw in the US, in its substitution among its loyal consumers is
a strong performance from Drambuie. Premium the UK. Limoncello is growing well and this proving difficult. The brand also appeals to a
imports are struggling to find a consumption should continue, albeit from a small base. wide age range of French consumers. Some
occasion – most were originally positioned as Amaretto has been performing well, but needs traditional categories, such as crème de cassis,

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 spirits review

are in long-term decline, but still

large in volume (27% of liqueurs). Travel-retail performance
Suppliers are cutting back on
Travel retail is an important channel for European liqueur sales, followed by
innovation investment as retailers
liqueurs in Europe at 1.1m cases and with a Amarula, which doubled sales within the
are now very quick to react and
compound annual growth rate of 2.2% over last five years to reach 60,000 cases in
offer a copycat of any new
the last five years. 2014, followed closely by Cointreau (see
successful development at a cut
Baileys accounts for over a quarter of table below).
price, not allowing originators to
recover innovation costs. Most
investment has been directed to the
Top 10 liqueur brands in Europe travel retail
pre-mix category recently. Rank/Brand Owner Volume Volume Volume % change % CAGR
The IWSR estimates that the 2010 2013 2014 2014 on ‘13 2009-’14
European liqueurs market will 1. Baileys Diageo 348.4 318.4 309.6 -2.8 -2.8
decline to 31m cases by 2020, with 2. Amarula Distell 33.9 58.5 60.1 2.8 17.4
the premium-and-above segment 3. Cointreau Rémy Cointreau 54.8 58.8 58.2 -0.9 4.2
the only sector showing growth. 4. Malibu Pernod Ricard 56.9 55.7 49.5 -11.2 0.7
Prunier summarises: “Getting 5. Disaronno Illva Saronno 49.7 50.5 49.2 -2.6 0.5
back the recognition for quality 6. Sheridan’s Diageo 47.6 54.8 46.9 -14.4 3.0
products and building real brands 7. Dooleys Behn 24.7 29.9 33.8 13.1 8.7
in the liqueurs category is key in 8. Grand Marnier Marnier-Lapostolle 26.2 28.0 31.6 13.2 3.4
Europe. Then, it will offer many 9. Minttu Liqueur Pernod Ricard 23.8 31.3 30.5 -2.5 11.6
opportunities as the trade and 10. Licor 43 Diego Zamora 16.3 23.4 30.5 30.4 17.6
consumers are looking for Others 387.2 425.1 416.0 -2.1 3.2
authentic and simple brands they Total 1,069.5 1,134.3 1,116.0 -1.6 2.2
want to feel close to.” ■ All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
 spirits review
Greece adapts to a new reality
Sophia Holliday reports on how economic turmoil and other challenges have taken their toll on Greece and Turkey
Political upheaval, economic uncertainty
and social unrest all helped to contribute to the
downturn in both the Turkish and Greek spirits
markets in 2014. Overall spirits consumption
dropped -1.6% and -1.5% respectively over
the year, alongside stagnant wine sales in both
markets. And with more uncertain times ahead,
the direction for the industry’s path to recovery
in the region is far from clear.

Greek struggles
Greece’s well-documented economic woes and
the looming threat of a ‘Grexit’ from the EU threw
a long shadow over the market in 2014. While the
year got off to a positive start, the arrival of new
tax legislation, combined with a drop in consumer
confidence in light of the planned general election,
plagued the second half of the year. Meanwhile,
the country’s floundering GDP has led to a
prolonged decline in living standards, an uptick in
unemployment – particularly among the younger
generation – and dwindling household incomes.
With the on-trade accounting for the majority of
alcohol consumption in Greece, the mounting
pressure on consumer purses has created a
difficult working environment for many on-
premise licensees; as a result many of the larger
Skinos, a mastiha-based spirit, is one of the fastest-growing brands in Greece
restaurants and bouzouki venues (traditional
Greek clubs) have been forced to shut. of reducing expenditure; this has resulted in a first positive growth for Johnnie Walker Black
In 2015 fraught negotiations with Greece’s large increase in ‘café bars’ which serve coffee Label in five years.
creditors over access to a bailout loan and the in the day and transform into bars at night. Furthermore, many of the leading malt
closure of Greek banks, as well as the The local aniseed-based ouzo category has Scotch brands were able to maintain their
resignation of the Prime Minister Alexis Tsipras, been one of the biggest casualties of the sales throughout 2014 despite the negative
added further fuel to the market’s rising tension economic downturn. Traditional consumers environment, thanks to the category’s appeal
levels. For a while imports ground to a halt, have been opting for more affordable beer or to Greece’s wealthier, and least financially
disrupting supply for the major importers and wine for at-home consumption, while strained, consumer groups.
affecting local producers reliant on shipments unbranded tsipouro, a similar aniseed- Despite the difficult environment, some
of bottles and other materials from abroad. flavoured grape skin distillate, is taking share brands have been able to buck the overall
Managing partner of Concepts, a local producer of the market as a result of vastly disparate tax negative trend. Skinos, a mastiha-based spirit,
and distributor in Greece, Demetre Steinhauer rates. Compounding the category’s difficulties continues to be one of the fastest-growing
says: “After the capital controls, the Greek is the fact that younger consumers are now spirits brands in the Greek market. Steinhauer
spirits industry was effectively frozen for a favouring spirits, such as rum or vodka, above remarks: “The overall market is definitely
couple of months, especially in the domestic ouzo’s old-fashioned image. shrinking; it is already down -10% this year and
market. Nevertheless, the good tourist season Scotch whisky, once the dominant spirits whisk(e)y has been hit severely. Obviously
in the summer months helped to offset some of category in Greece, has suffered a similar fate within this situation there are brands that are
the impact on the market.” and volumes have plummeted in recent years. an exception to this. Skinos is certainly one of
Unsurprisingly, consumer behaviour in Overall consumption shrank to a record-low them and the brand has been growing in double
Greece is changing along with the new 950,000 cases in 2014, having fallen from digits. This has been partly supported by
economic realities of the market. Smaller, more 2.3m cases just five years ago. Johnnie Walker tourists, but the brand has also been building
informal bars and cafés, where consumers can alone has shed more than 500,000 cases over on its positive momentum in the market.”
nurse a couple of drinks over the course of an this time, with volumes reaching 260,000 In general, white spirits have been faring
evening, are picking up trade from the closure cases last year, down from 810,000 in 2009. better than dark spirits in the Greek market.
of the larger-scale venues. Locality has But there are signs the decline could be 2014 figures show that emerging white spirits
become an important feature in the market as slowing. Key players, including Diageo, categories, such as vodka, white rum and
consumers cut back on excess expenses such Edrington and Pernod Ricard, are once again super-premium gin, all gained market share
as petrol costs. Furthermore, there has been a focusing their efforts on the category; market against the more traditional dark categories
strong shift towards beer or coffee as opposed leaders Johnnie Walker and Haig launched new over the year. The mixability of these spirits
to spirits or cocktails in the on-trade as a way advertising campaigns in 2014, resulting in the has played a key part in their success;

October 2015 65
spirits review
Greece and Turkey
Scotch whisky remains an important
category in the Turkish market. Its heritage
and quality bestow a special status and many
consumers are willing to pay the small
premium to make the perceived trade-up from
raki to the standard Scotch segment. Price
promotions by category leaders Johnnie
Walker Black Label and Chivas Regal 12yo are
also helping to make premium brands more
accessible to the wider population.
As general interest and understanding of the
whisk(e)y category grows, US whiskey brands,
including Jack Daniel’s and Jim Beam, are
developing a strong following among
consumers aged 35 and under. Furthermore,
flavoured whisk(e)y variants are beginning to
appear in the market and their broad appeal is
helping the category build on this momentum.
Similarly, following the category’s
phenomenal global rise, the small imported
gin category is beginning to make waves in
the Turkish market. Premiumisation plays a
key role in the category, especially in the on-
trade where an increasingly wide range of
premium and super-premium brands are now
available, and the gin-and-tonic has become
one of the most fashionable mixes. However,
Turkey’s spirits decline was fuelled by a large drop in sales of raki it remains the case that most of these brands,
although cocktails lie beyond the reach of segments has encouraged Turkey’s including Hendrick’s, Bombay Sapphire and
many consumers for day-to-day aspirational consumers to trade up to imports Tanqueray, are selling very small volumes.
consumption, the cocktail culture is growing where possible. Categories like whisk(e)y, Consumption of imported premium-and-above
increasingly fashionable and there is an vodka and gin have all benefited as a result. gin reached 13,000 cases in 2014, yet many
element of reducing quantity in favour of The country’s uncertain political future has new entrants are fighting for a share of the
quality at play. The rise of the super- also affected the market. Elections held in growing market. Local gin brands have also
premium gin-and-tonic is one example of June 2015 resulted in a hung Parliament, received a boost off the back of the renewed
consumer defiance against the country’s and subsequent negotiations to form a interest in the category, performing well in
growing economic austerity. coalition between the largest parties have the off-trade and in many of the resort hotels
Steinhauer says: “While most other broken down. Operators in the market are along the coast.
companies are downsizing and becoming more becoming concerned about the short-term The tourist industry plays a substantial role
cost-efficient, we are investing in HR and future for the industry as consumer in Turkey’s drinks market. Aperol’s arrival in
marketing efforts as we still see opportunities confidence drops. the market and its growing success is largely
in this market. We are not only interested in President Diageo Europe, Russia and Turkey attributable to the brand’s immense
keeping our heads above the water; we’re John Kennedy says: “Trading conditions are popularity among holidaymakers in the form
interested in going the extra mile and we tough right now, with a higher-than-expected of the Aperol Spritz. This trend is slowly
believe this will yield results – perhaps not duty increase in January, a slowdown in GDP, creeping into the domestic Turkish market,
right now, but in the next few years when significant currency devaluation and high with spirit aperitifs becoming an increasingly
things get better.” inflation and a lot of political uncertainty. Also, dynamic category.
we’re in a highly regulated sector where Faced with increasing competition from gin,
Turkish market reliant on tourists certain marketing restrictions have been whisk(e)y and even wine, vodka’s previous
Turkey is another market in turmoil. Overall introduced just in the last couple of years.” strong growth is slowing. The category grew
spirits consumption declined by 120,000 cases Nonetheless, the outlook for many of the just by just 38,000 cases in 2014 compared to
in 2014, fuelled by a large drop (-270,000 key imported categories remains positive. growth of 190,000 cases in 2012. Increasing
cases) in raki sales. Local brands are being Kennedy says: “Turkey is a large and cocktail culture may help to revive the
impacted by the ongoing tax harmonisation attractive market. Every year there is over 1m category, but while uncertainty over the
process between local and imported spirits as new legal drinking age consumers and, with country’s future looms, vodka, along with
part of the country’s hopes for EU accession at 50% of the servings still in beer, there is a many other spirits categories, can expect to
some point in the future. The subsequent significant opportunity for further spirits see much more sedate growth over the
narrowing of the price gap between the two penetration increases.” coming years. ■

66 October 2015
 spirits review
Uncertain times in China
Tommy Keeling looks at a market still reeling from the government crackdown on extravagance
After two years of sharp declines following
the sudden crackdown on corruption and
extravagant spending in the State sector,
which began in 2013, it looked as though the
outlook for imported spirits in China could not
get worse. Then came the recent stock market
crash and news of China’s slowing economy,
which have only added to the uncertainty.
GDP growth for 2015 is likely to be around
5% – a far cry from the high single- or double-
digit rates recorded for much of the previous
decade. Moreover, these lower growth rates
seem set to stay, although the news is not all
bad; due to the much larger size of the economy,
7% growth in 2015 would still create more
wealth than the 14% expansion seen in 2007.
Employment growth remains strong, thanks
to an expanding service sector, and the middle
class is increasing. Roughly defined as those
wealthy enough to purchase a car, it could
reach 400m by 2020. Although the total
population is ageing and currently growing
slowly, the number of legal-drinking-age adults
in the country should increase by 32m by
2020. Recent scares about a potential
devaluation of the yuan are overblown and the
3% devaluation seen in August is not enough Employment growth in China remains strong and the middle class is increasing
to seriously affect imports.
greatest pain so far, although it remains the by purchases from the State Owned
China remains poor overall and its now
most significant imported spirit, both in terms Enterprises – which used to account for 25%
world-class manufacturing industry and
of volume and value. Volumes were down to 30% of volumes and up to 50% of values –
emerging service economy should provide
-12.8% in 2014 to 2.09m cases. BNIC numbers has virtually disappeared. The Extra and XO
plenty of room for future growth. Much
to China in the first half of 2015 were up 92%, segments were down the most as
depends on what reforms the government
but this is because a late Chinese New Year consumption, now dependent on private
implements, but despite its visceral distrust of
(causing a surge of shipments in January 2015 consumers who must pick up the tab
free markets, it seems determined to give
rather than December 2014) and does not themselves, shifts towards VSOP (see table on
them a greater role in organising the economy.
reflect consumption patterns. Shipments to page 68). The gifting market is also in a bad
Nevertheless, even though the long-term
Singapore, the other key route-to-market, state, partly due to a reduced need to offer
fundamentals remain solid, the pain being felt
were down -16.3%. bribes. The previously almost non-existent VS
by premium spirits is likely to continue for the
A whole segment of the market, dominated segment is now beginning to expand, led by
foreseeable future. Cognac has seen the

China: leading imported spirits brands

Rank/Brand Owner Volume Volume Volume % change % CAGR
2010 2013 2014 2014 on ’13 2009-’14
1. Martell Pernod Ricard 712.1 953.4 918.2 -3.7 9.2
2. Hennessy LVMH 742.9 955.9 756.9 -20.8 3.2
3. Chivas Regal Pernod Ricard 584.0 531.7 449.5 -15.5 -4.5
4. Rémy Martin Rémy Cointreau 375.7 349.5 327.0 -6.4 0.7
5. Johnnie Walker Diageo 429.1 342.0 259.1 -24.3 -8.8
6. Ballantine’s Pernod Ricard 299.6 231.3 186.8 -19.2 -8.1
7. Bacardi Bacardi 24.6 103.7 144.6 39.5 32.7
8. Absolut Pernod Ricard 74.0 111.5 111.6 0.1 6.9
9. Baileys Diageo 51.5 102.0 100.3 -1.7 14.9
10. Jack Daniel’s Brown-Forman 105.9 89.8 95.8 6.7 -2.6
Others 953.3 1,256.4 1,185.9 -5.6 4.7
Total 4,352.5 5,027.0 4,535.5 -9.8 2.4
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

October 2015 67
spirits review
Greater China
China: Cognac sales by quality
Hennessy Classium, although status-conscious
consumers prefer to avoid the VS label and
some distributors resist it, preferring to Volume Volume Volume % change % CAGR
Quality
concentrate on value rather than volume. 2010 2013 2014 2014 on ’13 2009-’14
Cognac is increasingly seen as dated by
1. VSOP 1,174.5 1,545.0 1,418.0 -8.2 6.9
younger consumers who are more willing to try
2. XO 503.0 600.0 422.0 -29.7 -0.8
other categories and are increasingly going for
3. Intermediate 197.5 151.0 150.0 -0.7 1.9
younger Cognacs and mixing them. In general,
4. XXX/VS 1.0 76.0 82.0 7.9 177.3
private consumers prefer to switch brand
5. Extra 19.0 23.0 18.0 -21.7 3.4
rather than trade down within the same brand
Total 1,895.0 2,395.0 2,090.0 -12.7 5.4
in an effort to make the switch less obvious.
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
It is not all doom and gloom, however.
Cognac still enjoys greater recognition than Although they were flat in 2014 at 100,000 the Beam brand in China is likely to be
any other imported spirit and its relatively cases, single malts have been growing strongly expensive, given its late arrival to the market.
straightforward age statement nomenclature in recent years as the category draws interest US whiskey should continue grow as the
makes it more accessible to less sophisticated from more mature and sophisticated Chinese who go to the US to work or study
consumers. There seems to be a genuine consumers. They were largely unaffected by bring back knowledge of the category,
preference for Cognac’s flavour profile, the anti-corruption crackdown as most although some of the more recent US trends
particularly in the wealthy southern provinces consumption is for private enjoyment rather such as the craft movement and flavoured
of Guangdong and Fujian. The category than status. It is one of the few spirits whiskey are in their infancy.
remains by far the most profitable imported categories also seeing growth in value. Growth Japanese whisky is one of the hottest
spirit and the market disruption has created is concentrated in the first-tier cities of Beijing, categories at the moment, mainly at the
opportunities for new brands to gain a Shanghai and Shenzhen where consumers are premium end, though a lack of aged stocks
foothold. While anything above VSOP will more mature. The on-trade drivers are smaller has limited growth and driven up prices.
probably continue to struggle, VSOP and the independent bars rather large club chains. Distributors are now promoting the highball
previously ignored VS segment should fare In the new single grain category, Haig Club (whisky and soda) with the use of dispensers
better as aspirational new middle-class had a good first year on the market, driven by in an attempt to grow the standard segment.
consumers seek access to the category. brand and marketing; its categorisation as a Of course, it remains hostage to political
single grain whisky appears to be of little tensions between China and Japan, which can
Whisk(e)y takes a hit relevance. The brand’s promotion by David flare up at any time.
Whisk(e)y, over 90% of which is Scotch, Beckham could be highly beneficial as he Compared to Cognac and whisk(e)y, all
performed even worse than Cognac, down remains a huge star in China, with almost other imported spirits categories remain
-14.9% to 1.38m cases (blended Scotch, the universal recognition among younger niche concerns in China, whose future
main sub-category, was down -19% to 1.12m consumers. prospects are mostly dependent on younger,
cases). Although all quality segments other US whiskey has bucked the negative trend more adventurous consumers and an
than standard declined, the brunt was borne and grew 6.2% to 111,000 cases in 2014 in expanding modern on-trade (MOT). Vodka
by the 12yo segment, which has now become spite of category leader Jack Daniel’s was nearly flat in 2014 at 335,000 cases. A
largely unprofitable and is in need of a new remaining some way off the peak it reached good performance by relative newcomer in
strategy. It relies excessively on volume five years ago. The company claims to have the market, Skyy, was the main driver in
contracts with big club chains, which impose ditched all unprofitable contracts, some of maintaining volumes. As a white spirit it
excessive costs on distributors, and has not which have gone to Scotch competitors. Jim suffers somewhat from a similarity to China’s
been able to develop a premium-enough Beam (distributed by Asia Euro) should benefit national spirit, baijiu and an association with
image to support the necessary price rises. from Suntory’s strong operation in China Russia and cheap alcohol from the
There has been widespread downtrading from following the merger of its parent company Communist era, which harms development of
12yo Scotch to standard brands at many with the Japanese distiller, although building the category. Super-premium vodka sells
outlets and the value proposition (and local
bottling) is growing in some secondary venues,
in retail and in third-tier cities. The future lies
China: Scotch sales by quality
in more contracts with smaller independent Quality Volume Volume Volume % change % CAGR
2010 2013 2014 2014 on ’13 2009-’14
bars and clubs, though this is likely to translate
into smaller volumes in the short term; the 1. Premium 1,366.7 1,059.0 844.0 -20.3 -9.1
segment is likely to continue to shrink as the 2. Standard 159.5 147.5 156.5 6.1 4.9
market adjusts to genuine consumer demand. 3. Super-premium 117.3 181.5 150.8 -16.9 8.6
In the off-trade sector, blended Scotch sales 4. Value 12.0 48.5 43.3 -10.8 28.2
have been hit by reduced gifting. In the long 5. Ultra-premium 46.2 45.2 36.8 -18.6 -2.9
term, there is room for growth at the lower 6. Prestige 0.3 1.9 1.8 -5.4 Nil
end, but much depends on finding the correct Total 1,702.0 1,483.5 1,233.0 -16.9 -5.6
distribution model and educating consumers. All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

68 October 2015
 spirits review

mostly in clubs – a challenging market as Hong Kong suppliers. Overall, on-trade volumes are
listing costs can be very high. Gin, rum and Compared to China, Hong Kong is a much more thought to have declined by as much as -10%
tequila are similarly dependent on more developed and international market. Cognac is in 2014, with the night market particularly
sophisticated drinkers in the MOT. China’s far less relevant among local consumers, with badly affected and more consolidation is
cocktail culture remains relatively an ageing and shrinking consumer base; Scotch expected. Gin is premiumising, led by
underdeveloped, although this is slowly is now the main imported spirit aside from Hendrick’s, while some new ultra-premium
changing. Shanghai and Beijing already boast (mostly low-priced) baijiu from China. Scotch tequilas such as Casamigos (partly owned by
a number of decent cocktail bars and the was stable overall in 2014 at 173,500 cases, George Clooney) have entered the market.
fashion is spreading to lower-tier cities as with losses in blended malts being balanced by The anti-corruption crackdown in China has
bartenders who learned their trade in bars strong gains in single malts. The market affected Hong Kong as well, mostly through a
and hotels in these two cities return to their appears to have reached a plateau and has not reduced number of high-spending tourists.
home cities and set up their own bars. grown since 2011. Single malts have good They mainly patronise the traditional on-trade
A discussion of spirits in China would be momentum and continue to expand, led by The (TOT) and Cognac is their drink of choice –
incomplete without a mention of baijiu, which, Macallan – the category was up 47% in 2014 to hence this is the category most affected.
with an estimated 99.6% of the national spirits 25,000 cases, though the big blended brands Volumes in 2014 were 77,000 cases, down
market, is the elephant in the room. Precise are fighting back. Scotch Whisky Association from a peak of 82,500 cases in 2012.
consumption is impossible to gauge with any (SWA) shipment figures for April 2014 MAT
degree of accuracy as only production figures (moving annual total) to Hong Kong show single Macau hit by reduced gifting
are available, but it seems to have increased malt Scotch at -53.7% and blended Scotch at - Neighbouring Macau has been more strongly
modestly in 2014, mainly at the lower end. The 43.9% (these figures are to be taken with affected, with a nearly -50% fall in gambling
top end, like Cognac, has been severely hit by caution as they include duty free and re- revenues in 2014, driving a sharp contraction
the anti-corruption campaign as government exports). Much of the decline is probably due to in the overall economy. Although most wealthy
officials cut down at the lavish banquets at reduced re-exports to mainland China. Chinese tourists who visit the territory come
which much ultra-premium baijiu is consumed. Certain white spirits are on the rise in Hong primary to gamble rather than wine and dine,
Generally, baijiu does not compete directly with Kong, though vodka has struggled over the the fall in number has still affected the top end
Western spirits as the two occupy very last two years and remains stuck at the of the market through reduced gifting by
different consumption occasions, baijiu being a 65,000-case mark. A struggling on-trade, hit casinos to high-rollers and a decline in
meal-time drink and Western spirits mostly by a triple whammy of rising rents, wages and purchases in the large number of small shops
associated with bars and clubs. music royalties, led customers to squeeze their that line the border with China.
The Taiwanese market is completely different
again. Excluding the large and poorly
documented kaoliang (baijiu) category, which,
like its mainland counterpart is mostly consumed
at mealtimes, the spirits market is dominated by
Scotch whisky. Uniquely, single malts account for
over half of Scotch consumption, making
Taiwan, with a population of just 23m, the
world’s third-largest single malt market, behind
the US and almost level with France (it ranked
just ahead of France in 2013). Scotch volumes in
2014 were up 2.2% on 2013 at 1.59m cases, of
which single malts made up 862,000 cases.
Consumers have been transferring to single
malts thanks to the perceived greater variety
and depth the category offers when compared
to blended Scotch. Single malts’ success is tied
to the rise of the MOT and concomitant decline
of the TOT, where blended Scotch prevails. This
is due to a cultural shift, which has seen reduced
spend on corporate entertainment and a greater
emphasis on personal consumption. There has
been an explosion in whisk(e)y lounges, which
are the primary outlets for single malts.
Although the shift from blended to malt Scotch
appears to be slowing, the market continues to
develop and the last two years have seen
increased interest in single casks, cask strength
Scotch is now the main imported spirit in Hong Kong aside from baijiu and other special editions. ■

October 2015 69
spirits review
Catching up in the Caribbean
Premiumisation begins to take hold in the Caribbean as tourism recovers. Adam Zdan-Michajlowicz reports

The return of tourism has re-energised sales in the spirits industry in the Caribbean

The Caribbean drinks market is often

overlooked as attention is drawn to the Caribbean: leading spirits categories
lucrative US and Canadian markets to the Category Volume Volume Volume % change % CAGR
north or to the opportunities in South America. 2010 2013 2014 2014 on ’13 2009-’14
But while these island markets are comparably 1. Rum 13,633.7 14,235.8 14,234.5 0.0 1.3
insignificant when taken singularly, collectively 2. Other spirits 4,313.3 5,313.3 5,412.8 1.9 1.6
they form a region which consumed at least a 3. Scotch whisky 1,453.6 1,312.4 1,343.2 2.4 -1.3
250m cases of spirits in 2014 and one which 4. Vodka 969.9 975.5 970.3 -0.5 -0.1
has seen the total value of the spirits industry 5. Liqueurs 967.5 971.5 956.4 -1.6 -0.6
rise by nearly $500m since 2009. 6. Other whisk(e)y 262.9 226.4 337.6 49.2 4.7
As this impressive increase in the value of 7. Gin 215.5 210.4 213.9 1.7 0.4
the industry highlights, premiumisation has 8. Other brandy 146.2 156.4 155.2 -0.8 0.5
been the stand-out trend across the 9. Cognac/Armagnac 92.7 108.7 122.5 12.7 5.0
Caribbean. Economic growth in the key tourist 10. Bitters/Spirit aperitifs 86.1 94.7 109.9 16.1 4.6
markets of North America and Western Europe Others 264.6 289.5 332.0 14.7 5.0
following the global recession has seen tourists Total 22,405.9 23,894.3 24,188.2 1.2 1.1
flock back to the region. In a number of All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
islands the growth of lower-priced products
has been occurring alongside this
premiumisation, reflecting the continuing
Caribbean: leading import markets
disparity of wealth between different elements Category Volume Volume Volume % change % CAGR
of Caribbean society. 2010 2013 2014 2014 on ’13 2009-’14
1. Puerto Rico 15,460.0 15,705.7 15,536.0 -1.1 0.0
Tourism returns 2. Dominican Republic 2,123.2 2,295.8 2,520.2 9.8 4.3
The tourist industry remains a key factor in the 3. Guadeloupe 2,262.0 2,075.9 2,254.9 8.6 2.4
performance of the spirits trade. This 4. Trinidad & Tobago 1,029.8 1,559.6 1,964.4 26.0 12.4
interdependence is clearly seen in the aftermath 5. Cuba 855.4 1,130.0 1,592.6 40.9 15.8
of the global downturn and subsequent recovery. 6. Curaçao 1,810.9 1,548.2 1,569.4 1.4 -2.3
Tourism accounts for the bulk of the 7. St Martin/St Maarten 1,566.9 1,557.8 1,566.1 0.5 -0.5
consumption of imported brands and therefore 8. US Virgin Islands 1,682.1 1,551.8 1,536.6 -1.0 -2.3
their sales fell by 93,600 nine-litre cases 9. Martinique 1,422.6 1,571.5 1,515.9 -3.5 1.4
between 2011 and 2013. This occurred as 10. Haiti 913.6 1,130.0 1,169.0 3.4 6.8
holidaymakers either cut back on their Others 6,153.0 5,779.4 5,553.4 -3.9 -2.6
spending or were forced to abandon foreign Total 35,279.3 35,905.6 36,778.4 2.4 0.9
holidays. In turn there were implications for All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©

70 October 2015
 spirits review

local consumption as the islands’ economies and an increase in the Special Consumption Tax environment. For some Jamaicans they remain
are linked to tourism. The tourist industry and (SCT) of spirits by $1.38 per litre. Value-driven an affordable luxury.
all related ones account for as much as 80% of behaviour is observable in most categories –
GDP and 87% of all job opportunities on the not least cheap overproof rum, which has seen Whisk(e)y gains
island of St Martin, for example. sales grow by 17.2% since 2011. Total whisk(e)y volumes in the Caribbean rose
As Neil Morris of the West Indian Rum and However Jamaica, along with Barbados, the by 9.2% to just over 1.75m cases. The best
Spirits Producer’s Association (WIRSPA) notes: Dominican Republic and St Lucia, is one of the category performances were seen in Cuba –
“Poor visitor numbers obviously have a negative best examples of an image-conscious society where private sector expansion instigated a
impact on total volumes, but they also mean a in the Caribbean. It also explains why, even in rise of 43.4% – as well as St Lucia, the
reduced share for more premium lines.” Last times of widespread low consumer confidence, Cayman Islands and the Dominican Republic,
year saw the culmination of a gradual recovery aspirational brands and categories continue to while the category underperformed in Grenada
of the region’s tourist industry as a record perform well. The willingness to sacrifice and and St Vincent. Scotch is dominant within all of
26.3m tourists visited the Caribbean. The cut back on necessities in order to be seen in a the islands, though last year did see US
effects were immediate on the spirits trade as bar with a bottle of Grey Goose or Hennessy is whiskies grow from a small base in Aruba,
total regional volumes grew by 1.2% and evident. This may be partly supported by a Antigua and Puerto Rico, driven by sales of
market value grew by 3.6% on 2013. healthy flow of remittances finding their way Jack Daniel’s.
back onto the island as the US economy Aruba and the Bahamas saw movement at
Polarisation in the key regional markets rebounds. The net result is that the continuing the premium end of Scotch, though in the case
The return of tourist numbers has been one of strong performance of expensive brands of the latter volumes remained small. The
the most important factors in the growth of continues, despite the difficult economic aspirational status of higher-priced Scotch saw
higher-quality segments seen within the it survive any trading-down in Jamaica,
Caribbean. However, the rising fortunes and whereas in Haiti premium brands saw growth
improving purchasing power of foreign visitors, even while the whisk(e)y category as a whole
as well as local professionals on some islands, suffered a slump as it fell -3.1%. The rise in
have not necessarily been carried over to the the premium segment in the Dominican
less affluent who form the bulk of consumers Republic was driven almost single-handedly by
in the Caribbean. An expanding gulf between the surge in volumes experienced by
the better-off and the poorer majority has Buchanan’s as its perceived smooth taste went
resulted in the growth of lower-priced products down well with the average consumer.
simultaneously with premiumisation. Further down the scale, Dominican value
The Cuban spirits market was one of the whiskies saw some recovery as consumption
most successful in the last year as it expanded was up 39% on 2013, driven by the renewed
by over 348,000 cases and saw its total value popularity of brands, such as King’s Price and
rise by 10%; Raul Castro’s development of the MacAlbert, in rural areas and are seen as more
private sector and the recent warming in
relations with the US seemed to be having a
positive effect. A relaxation of tourist
restrictions as part of the reconciliation process
with its northern neighbour may lead to a
potentially lucrative nearby source market
opening up for the Cuban tourist sector, which
could even encourage present trends to
develop at an even faster pace. These factors,
as well as the gradual expansion of some
semblance of a Cuban middle class, have
resulted in increased consumer purchasing
power, with a consequent rise in the volumes
of premium and super-premium brands.
Nevertheless, simultaneous rises in lower-
priced brands reflect this polarisation trend as
‘low-priced’ category products rose by 100,000
cases. Despite the upbeat fortunes of the
upper section of Cuban society, the average
wage is still said to be $20 a month.
Similarly, Jamaica has seen the value of its
spirits market grow by 11.1% between 2013
and 2014, even though IMF debt and economy
restructuring policies have meant wage freezes The return of tourist numbers has been a factor in the growth of higher-quality segments

October 2015 71
spirits review
Caribbean
aspirational than rum. This is occurring also in economic situation in Jamaica prompted more
Cuba, where the local brand Chancellor, people to turn back to overproof rums in the
though not strictly a whisk(e)y despite looking last few years, local producers have launched
and tasting like one, is attracting more and more high-strength brands such as Rum Bar
more people, even though superior rums with and Hampden Park.
a similar price point exist in the market.
The cream rises
Vodka sees mixed fortunes Many of the bigger developments within the
Overall, the vodka category saw a negligible liqueurs category were confined to individual
decline of -0.5%, taking the regional total to markets as the regional total remained flat at
970,300 cases. However, some individual 1.1m cases in 2014. Within Grenada that total
islands registered solid growth in addition to went up 27.7%, with demand for cream liqueurs
premiumisation, whereas in other markets driving this trend. In most Caribbean markets
vodka suffered as volumes went to white rum. cream liqueurs saw growth in 2014, with total
Key brands like Grey Goose and Stolichnaya volumes increasing by 21,000 on the year before
were the drivers in those islands that did to bring the total to just under 250,000 cases.
experience growth, while in Curaçao it was the Slightly over 84% of this increase came from
perceived mixability of the spirit that appealed Jamaica alone, with Sangster’s Cream, Baileys
most to the consumer. Super-premium sales and other key brands registering impressive
jumped 42.9% in Antigua & Barbuda as growth. The biggest success story, however,
consumers traded up to more expensive brands came from the value category, with Wray &
in behaviour that reflected the year-on-year something that was as cheap, but also Nephew Cream being the biggest driver, at a
increases in tourist numbers. Trinidad & Tobago authentically local and strong. CAGR of 25.5% between 2010 and 2014.
saw the vodka market grow by 7,000 cases,
with the lion’s share of these volumes going Flavours and white rums reign supreme Beer market recovers
towards the high-end brands. At the same In spite of vodka taking share from white rum Last year saw beer recover slightly from its
time, the association between Cîroc and rapper in some markets, the regional category total 2013 slump as volumes grew by 294,000
P Diddy enabled the brand to steal attention remained flat overall at 14.2m cases, unable to hectolitres (hl) to reach just over 10.8m hl,
away from Grey Goose. Vodka also saw a continue the 1.5% compound annual growth though this was still some distance away from
revival of interest in St Kitts as consumers rate (CAGR) it had managed between 2010 the 11.6m hl peak seen eight years ago.
crossed over from white rum, motivated by a and 2013. Nevertheless, rum was still able to Craft beers were seeing some progress at a
desire to try something new. see some brands stand out, as a combination gradual pace with some Belgian and German
Things were not as promising for vodka of innovation and image proved to be the key brands appearing in the Dominican Republic. At
throughout the Caribbean, though. Jamaica had to success. present these products have a small base among
previously been the second-biggest vodka- Macorix, a flavoured rum brand from the university-educated consumers with disposable
consuming island in the region behind Puerto Dominican Republic, grew by 150,000 cases on incomes and have not achieved the same level of
Rico, but last year it shrank by 16,000 cases; it the previous year. Alex Baez, general manager demand seen in other global markets. Equally,
was then overtaken by Cuba. Standard and low- of Vinicola del Norte, puts the brand’s craft brands currently have a small presence in
priced vodka had been popular with Jamaicans, newfound popularity down to “focusing our both Puerto Rico and Trinidad & Tobago.
but with the various negative effects of the IMF- actions on innovation and a premium image”. Considering the success of craft beers in North
imposed economic measures, these consumers He says: “Our company purchased the brand America and the role that region has in setting
were instead being driven back to cheap local recently and did a complete overhaul on trends in a number of Caribbean islands, there is
overproof rum. The poor economy seems to packaging and positioning.” some surprise that the craft trend has not taken
have had more of a negative impact on the Cruzan rum, also strongly supported by its off to the same extent. The heat of the
mass-market end of the vodka category. As flavour range, remains a key regional brand Caribbean has proved to be an obstacle to
noted, the super-premium end remained and the duty-free purchase of choice for proper draught facilities which has prevented the
buoyant, rising by 18% in Jamaica. tourists who are keen to take home a local segment from mirroring the positive results
Over 1,000 miles to the south in Grenada it product with a tropical image. yielded in the US. As increasing numbers of craft
was the same story, although for different White rums continue to dominate over beers are sold in bottles, this setback is predicted
reasons. Until 2014 the value brand Barton’s had darker rums, with over 140% more volumes to be circumvented in the near future, with craft
gained a considerable following among students being sold. A movement from darker rums to beers subsequently taking off as a result.
and other young consumers to the point that it white has emerged in a few markets over the With regards to the region as a whole, the
was the most popular vodka product. When the last few years. In Trinidad & Tobago white rum drinks market certainly seems to have regained
distributor ceased its involvement in the alcohol is increasingly seen as healthier with the ground lost in the wake of the downturn.
trade, this created a vacuum and while some perception that the appearance of dark rum However, as Morris of WIRSPA remarks: “A
other value brands were able to benefit, the results from impurities. This is also true of the recent reversal of the downward trend is most
majority of these volumes went to local white Bahamas, where white rum is preferred for the welcome, but there is still a lot of catching-up
rums as young people decided to turn to small but growing trend of mojitos. As the to be done.” ■

72 October 2015
 wine news
in brief
UK New World wine producer Accolade Wines World wines will continue to be available in the Diageo to divest wines?
has entered into an agreement to sell its 50% on-trade. UK Diageo is reported to be
shareholding in Matthew Clark, the UK’s largest ● In other news, Accolade Wines has acquired exploring the option of selling off
independent drinks distributor, to Conviviality Chilean wine producer Viña Anakena. In so its wine division, which includes
Retail, one of the UK’s largest franchised off- doing, it has become the first company to have brands Blossom Hill, Piat d’Or and
licence and convenience chains, for £100m. a footprint in all major New World wine- Rosenblum. Australia’s Treasury
Matthew Clark is a 50-50 joint venture producing regions. Wine Estates has been suggested
between Accolade Wines and Punch Taverns. Anakena was founded in the late 1990s in as a potential suitor.
As part of the transaction Punch will sell its Alto Cachapoal, south of Santiago in the foothills This would not be the first
shareholdings to Conviviality. The agreement is of the Andes Mountains. divestment of CEO Ivan Menezes’
subject to certain conditions including the The acquisition includes all brands, inventory tenure; in summer 2015 the
approval by shareholders of both Conviviality and a 3,000-tonne winery, along with vineyard, company announced the sale of its
and Punch, and is expected to be finalised cellar door and tasting facilities. Accolade will Gleneagles hotel, and in July he
in October. retain the services of Anakena’s current said the company would be
As part of the agreement Accolade has management team and has welcomed the “active” in managing its portfolio.
secured a 10-year contract with Matthew Clark, Chilean winery’s 80 employees to the business. So far, Diageo has not
which will ensure that Accolade Wines and Anakena is known the world over as a confirmed these reports.
Conviviality remain long-term partners in the producer of high-quality and distinctly Chilean
drinks trade, and that Accolade’s portfolio wine, and is present across 50 export markets.
Champagne promises
of premium, commercial and value New Financial details were not disclosed.
exceptional 2015 vintage
France Unprecedented high
temperatures in Champagne
during 2015 were offset by much-
needed rains in the second half of
Spain China’s largest wine producer, Yantai looks to establish itself on the world stage. Zhou August, leading to berries swelling
Changyu Pioneer Wine Co has acquired Rioja Hongjiang, Changyu general manager, said: nicely and in perfect condition,
producer Marqués del Atrio. “Excellent grape-growing regions are not easily according to Duval-Leroy. It added
The Spanish company sells to over 40 markets, available in the world right now… Only by having that the 10,000 kg/ha maximum
with exports accounting for 55% of total a well-stocked global wine portfolio can the yield, as agreed by Champagne
revenue. The move follows the 2013 acquisition company effectively compete with its peers.” growers, is expected to be reached
of Cognac producer Roullet-Fransac, as Changyu Financial details were not disclosed. across all of the house’s vineyards.
Julien Duval-Leroy commented:
“The quality of the grapes is
exceptional for all three varieties
and the musts, which are superbly
balanced, are already showing
Chile Chile’s largest exporter of bottled wines, The winemaker attributed much of this
impressive concentration. It
Concha y Toro, saw consolidated volume sales growth to premiumisation, reporting over 10%
augurs a very great wine indeed.”
growth of 2% to reach 15.4m cases in the first in volume growth in this premium segment.
six months of 2015. Value was up even more Sales in its domestic market were also
Gallo to launch premium
(+6.5%) to reach CH$273.92bn ($390.3m). buoyant, up 5.5% in volume and 6.5% in value.
Exports accounted for much of this value Here the premiumisation trend was even more brand in the UK
growth, up 4.2% to CH$192.29bn ($274m); marked, with Concha y Toro’s premium range UK E&J Gallo Winery (Gallo) is to
volumes were up a more modest 1.6% to reach increasing almost 20% in volume terms. launch premium wine Canyon
10.9m cases. Europe accounted for over 50% of While the company posted EBITDA growth of Road in the UK on-trade, having
shipments, followed by the US at just below 2% for the period to CH$35.8bn ($51m), net profit already stocked it at exclusive
15%, Asia 12.3% and South America at 8.8%. was down -11.7% to CH$15.88bn ($22.6m). venues in the US.
Olga Senkina, marketing director
EMEA for Gallo, said: “Canyon
Bordeaux exports rebound 2014-2015 Figures released by Bordeaux’s wine body,
Road wines reflect contemporary
Conseil Interprofessionnel du Vin de Bordeaux (CIVB), show a rebound in export
lifestyles and will appeal to image-
value in the 12 months to end June 2015 to reach €1.83bn ($2.05bn) – up 1% on the
conscious consumers who seek
year before. Volume shipments were down -4% to 23.1m cases. This comes after a
premium wine at an affordable
couple of poor years for the wine-growing region, with the turnaround attributed to
price.” She added that its launch
improved performance in China. Shipments to the country (excluding Hong Kong)
has been a collaborative process
rebounded strongly in the second quarter of the year, with volume growing over
with on-trade clients.
40% and value over 25%.

October 2015 73
wine review
Champagne sees travel retail fizz
Despite falling sales among Russian travellers, Champagne and sparkling wine are in good shape, finds Joe Bates
Champagne and sparkling wine enjoyed a
strong year of growth in travel retail in 2014,
according to the IWSR. The category saw its sales
in the channel rise 6.6% to reach around 1.25m
cases – a robust performance that easily eclipsed
those of both still light wine (+0.4%) and the
overall liquor business (+1.8%).
The top-selling brands continue to dominate.
The number one and two Champagne brands in
travel retail – LVMH-owned Moët & Chandon
and Veuve Clicquot – boasted strong growth in
2014 of 9.2% and 7.7% respectively. Together,
they accounted for over a quarter of travel-retail
Champagne and sparkling wine sales.
The other high-flier among the top-selling
brands last year was Taittinger. Its sales volumes
rocketed by nearly 45% after new distributor
Diverse Flavours secured a string of high-profile
listings in Asian duty-free outlets.

Decline in Russian spend

Despite its growth last year, the Champagne
business in travel retail is not without its
challenges. The biggest headache is reduced Source: The IWSR Database 2015 ©
spending by Russian travellers, who are
traditionally enthusiastic purchasers of the to be used in cocktails; Lanson Pink Label, and features the house’s Maltese cross logo and
drink. The collapse in the value of the rouble the Laurent-Perrier Cage Edition. various travel-themed illustrations.
has hit them hard. In what is a broader challenge for the Lanson is also keen to gain further
Philippe Lanusse is category manager alcohol, industry, Champagne houses continue to seek distribution of higher-priced lines, such as the
Champagne and cigars for French travel ways to persuade travellers to trade up to gift €40 ($44.80) Rosé Label and the Extra Age
retailer Aelia. It operates stores at both packs and higher-priced wines in an effort to range – a trio of older brut, rosé and blanc de
Paris Charles De Gaulle (CDG) and Orly boost their paper-thin margins. Travel retail is blancs wines announced in 2010 to mark the
airports, as well as at other European an increasingly expensive place to do business. house’s 250th anniversary, which are priced
hubs such as Warsaw Chopin and Rome Sources inside the Champagne industry have from about €50 ($56) per bottle.
Fiumicino. Lanusse reveals the collapse of told the IWSR Magazine that profits per bottle 2016 will also see the release of two higher-
the Russian rouble has seen Russian in duty free can be as low as €1 ($1.11). priced Lanson wines into selected travel-retail
travellers drop from the retailer’s second Travel retail is Champagne Lanson’s fourth outlets – a Noble Cuvée Vintage 2002, priced at
most important Champagne purchasers to most important market after the UK, France €120 ($135), and the prestige cuvée Clos
the fourth most significant this year. and Germany. The 255-year-old Lanson, a vintage 2006 blanc de blancs,
Champagne sales to Russian travellers at Champagne house has been investing produced from a small, one-hectare plot at
the two Parisian airports fell -35% in value more effort into raising its profile in Lanson’s Reims headquarters.
during August, Lanusse adds. The travel retail, acknowledging it is an Nicolas Feuillatte, the sixth best-selling
nationality accounted for just 4% of important shop window for the Champagne brand in travel retail in 2014, also
Champagne sales in the same month, he brand. As part of that strategy, wants to develop value as well as volume in the
says, down from 7% the previous year. the company launched its first sector. Sales director Juliette Allain notes the
“Despite the negative impact of travel retail-exclusive gift box bulk of the house’s sales in duty free are still
Russian travellers the [Champagne] for its core Black Label non- non-vintage wines, the best-selling reference
category has performed quite well [this vintage wine with Aelia at being its Brut Réserve. However, the company is
year] with a 5% increase in turnover,” Paris CDG airport last month. keen to develop the vintage side of its business
he notes. “Promotions were the key Priced at the same level as with high-end wines such as the Grand Cru
factor behind this trend.” the normal Lanson Black Blanc de Blancs 2006 and the Palmes d’Or
Aelia has been running price Label (around €30/$33.40), Cuvées (Blanc Brut and Rosé Brut).
promotions on selected Champagnes, the new black gift box “Historically, we were more present in the
offering reductions of 15-20%, as well as European duty-free market as it was the most
promoting limited-edition wines such as important,” she adds. “Of course, we want to
Moët & Chandon’s Ice Impérial, a One of Pommery’s continue our development in Europe, but we
Champagne created to be served over ice; latest releases, Cuvée also want to extend our worldwide duty-free
Veuve Clicquot Rich, a sweeter wine intended Louise 2002 distribution in America, but also in Asia where

74 October 2015
 Photo: Laurent Rodriguez

Champagne Nicolas Feuillatte at TFWA 2015 - Red village - stand J18

T R EAT ALCOHOL RE SPO N S IBLY - T HINK OF YOUR HEALTH - DR INK S ENSI BLY
wine review
Champagne and sparkling wine
this sector is experiencing significant growth.
“The duty-free market is a showcase for all Retailer spotlight: Le Clos
the Grande Marques [of Champagne]. This is
Le Clos, Dubai airport’s fine wine and spirits retailer, has reported a very healthy 48%
why it’s very important to Nicolas Feuillatte to
revenue growth for its Champagne business in 2015. Over the past year the retailer,
be a strong actor in this sector. It offers us
which is owned by Maritime & Mercantile International (MMI), has expanded its range
contact points in extremely high-quality
of Champagnes by 30% at its five outlets at the UAE airport and now stocks 50
environment with our consumers, who have
different wines with prices starting at $28 per bottle.
made us the third [best-selling] Champagne
The operator’s range features Grand Marque houses such as Krug, Billecarte-Salmon
brand worldwide.”
and Ruinart, but also an increasingly popular selection of grower Champagnes such as
At the TFWA World Exhibition this month
Pierre Peters, Bonnaire and Pouillon.
Nicolas Feuillatte will unveil several gift
Commenting on this trend, Le Clos general manager Ben Odgers says: “As a retailer,
packaging innovations. The new Brut Reserve
our customers are of the utmost importance, so we spend much of our time listening to
Compass Edition features a gold sleeve and tin
them and adapting our offer accordingly, this has driven us to develop a broad range
box, as well as UV inks, which glow in the dark.
with a strong focus on grower Champagne, which is fast becoming a new trend, to
The house’s Brut Rosé and Vintage Brut
complement some of the more popular brands.
Chardonnay will be offered inside a protective
“Pierre Peters Cuvée Reserve Brut Grand Cru at $45 is an example of handcrafted
duffle bag made of soft, oilcloth fabric. Also new
and lovingly made Champagne at an affordable price point. Our customers have the
is a branded black Champagne ice bucket, made
opportunity to try something different aside from the usual duty-free selection and
in the same distinctive, indented style as the
experience a product usually reserved for the privileged few.”
Palmes d’Or Brut Vintage 2006 it accompanies.
Le Clos also stocks a range of ultra-premium vintages at its stores, including Laurent
Perrier Grand Siècle La Reserve, a global travel-retail exclusive for the operator. “We have
Experiential activity
this available in jeroboam and magnum sizes for those collectors looking for something
Meanwhile, Vranken Pommery Monopole is busy
truly unique,” says Odgers. “We also have the very rare Krug Clos D’Ambonnay and Krug
developing more experiential airport activations.
Clos du Mesnil.”
For instance, in August Champagne Pommery
Asked which nationalities are currently driving the Champagne category, Odgers says
ran a major promotion at Paris CDG airport with
the category has a broad appeal. However, he notes: “We have always seen strong
Aelia. The focus was one of the house’s latest
demand from consumers of all origins, but it is our Indian and Asian customer bases that
vintage releases, Cuvée Louis 2002, which
are driving growth within this category as their exposure to Champagne and fine wines
features a gift box designed by French artist
increases.”
Pascale Montenay.
The Cuvée Louise Pommery 2002 Experience working with UK-based travel-retail Hong Kong airport, which is fantastic, and
gave travellers the chance to visit the house’s distributor Red Zero 7. The brand recently now the company is exhibiting in Cannes, so
Pommery Estate, tour its famous cellars and made a breakthrough listing with DFS we’re getting some traction.
art exhibitions, and be given a private VIP Group at Hong Kong airport. “Champagne and sparkling wine in duty
tasting experience. In Cannes, Champagne Drappier will free are dominated by the big brands,” he
Vranken Pommery Monopole deputy export present a wide range of styles and quality of adds. “To get someone to take a risk on
director Myriam Renard says the activation gave Champagne including the house’s flagship something is a big challenge, but
the company the chance to talk to target Carte d’Or, a blanc de blanc containing 5% Champagne Drappier is different. They
customers in a more in-depth way about the of the highly unusual blanc vrai grape produce some great older wines and are
world of Pommery rather than focus solely on varietal, as well as higher-priced wines expecting an outstanding harvest this
the product. The promotion will be extended to such as Cuvée Charles de Gaulle, year; they use some unusual grape
other European airports by the end of the year, Quattuor, which contains three rare varieties and are also planning to
she adds. Champagne grape varietals (blanc vrai, bring out some new gift boxes in time
“We are developing several additional arbane and petit meslie), and 2006 for Christmas.”
‘experiences’, which will be presented at the Millésime Exception, a blend of 60% In Cannes, Champagne Drappier will
end of the year,” Renard reveals. “One of them pinot noir and 40% chardonnay. not only be fighting for buyers’
will be the ‘Demoiselle Parisienne Experience’, “Champagne Drappier produces attention with other Champagne
which will give our customers at Paris [CDG] some great wines and duty free is houses. New exhibitor Freixenet,
airport the opportunity to have a unique now on their radar,” says Red Zero Italian procecco producers Zonin and
oenological and meal-pairing experience with 7 managing director Andy Butcher. Bottega, as well as Accolade Wines
Demoiselle Parisienne [Champagne] in our “It is a lesser-known brand, but it with its Italian prosecco brand Da
Lucas Carton Paris Restaurant, a masterpiece of still sold in over 90 countries Luca, will all be presenting new
Art Nouveau: [it’s] another way for us to worldwide. We have it in DFS at sparkling wines. As it reaches out to
connect the consumers, to our product, history markets old and new, it’s clear that
and to make them live the experience.” the increasingly competitive
Among the first-time exhibitors at the TFWA Champagne Drappier’s Champagne and sparkling wine
World Exhibition later this month is the family- flagship Carte d’Or contains category is growing in breadth and
owned house Champagne Drappier, which is the unusual vrai grape varietal diversity. ■

76 October 2015
 THE ART OF CHAMPAGNE SINCE 1836

TFWA CANNES, 19-23 OCTOBER, RED VILLAGE – BOOTH H22

wine review
Progress… of sorts
Wine in travel retail is edging forwards... just, believes James Clarke
If travel retail’s ability to bounce back from sophisticated bottles. Given the limitations on
most forms of adversity – whether terrorist shelf space, especially at airports, what kind of
attack, political upheaval, pandemic or economic consumer is currently best served by the
meltdown – has earned it a reputation for channel? “It depends how you position yourself
resilience, the wine category within it is in danger in the market,” remarks Gebr Heinemann’s Vinay
of becoming a byword for immobility. Over the Lamba, purchasing director for the travel
last five years, the volume of still light wine sold retailer’s Asia-Pacific business. He points to the
to travellers has hardly moved, rising a barely Vine & Leaf shop in Singapore Changi airport as
perceptible 0.13% per annum on average, a successful example of catering for the wine
according to the IWSR’s data. Little wonder, then, connoisseur (although the concession ended in
that some retailers’ and landlords’ expressions August), but cites the company’s newly opened
glaze over when the category is mentioned. Sydney Duty Free multi-category store as the
solution for “in-between” consumers: “They
Relatively racy tend to have a preference for at least a certain
Although wine’s performance in travel retail is less colour, grape variety, price point or brand.”
than spectacular, the direction of travel is forwards At Dubai Duty Free, Saba Tahir, VP for
at least. The picture on domestic markets is purchasing, paints a similar picture, describing
bleaker, with aggregate volumes dipping her shoppers as a mix with ”most between
marginally since 2010. If it were a country, the novice and limited experience who like guidance
travel-retail still light wine category would rank from our team of wine advisors”.
slightly above Finland in size, with around 5.9m Randy Dufour, VP travel retail at the channel’s
cases, placing it just outside the top 40 markets. number-two supplier Constellation Brands,
Among the 10 largest brand owners, Accolade highlights some broad geographical consumer
is the only one to achieve double-digit growth in trends: “Travellers in Asia typically are looking
recent years, with its American Echo Falls label for an iconic gift or special keepsake of their
enjoying an almost fourfold uplift between “Demand is trending travels, whereas travellers in Europe are looking
2010 and 2014. By contrast, Pernod Ricard has as much for a special bottle to consume.” And
seen its travel-retail volumes shrink noticeably
due to the repositioning of Jacob’s Creek. The
fairly flat, but we’re while France has long been the preferred
country of origin for many, the growth in travel
IWSR’s data suggests the Australian brand lost
an average 8% annually over
seeing good growth from and to emerging markets has broadened
people’s repertoires, he believes.
the same timeframe.
Further down the rankings,
on our long-term listings The rise in wine tourism is also whetting
traveller appetites for products from a wider
LVMH has developed its travel-
retail still light wine business and new products” range of places. With so many permutations
possible, the ability to focus assumes even
impressively from almost a – Isabelle Lejean, business development greater importance in wine than other categories.
standing start in 2010. As you manager, Advini Tom King, general manager global travel retail at
would expect of such a luxury- Treasury Wine Estates, observes: “Understanding
oriented group, its portfolio of passenger mix in all locations and tailoring the
non-sparkling wines is resolutely offer to them is vital.” He adapts price and
development manager at Advini, agrees the
upmarket, with Cloudy Bay from activation based on the profile of travellers
market is largely static apart from signs of life at
New Zealand and the Argentine passing through a specific store – a strategy
upper end: “Generally speaking, demand is
Terrazas de los Andes providing more easily implemented by larger groups like
trending fairly flat, but we’re seeing good
most of the momentum. Treasury, the leading wine company by volume in
growth on our long-term listings as well as our
Indeed, what little movement duty free and travel retail, and Constellation,
new products, especially at the top of the
there is overall for wine in which have a range of brands and price levels.
range.” Advini’s Laroche brand from Chablis
travel retail seems to be Russian and Chinese travellers have acquired
in Burgundy has comfortably outperformed
coming from the premium and reputations as high spenders in recent years,
the market volume-wise in the last five
premium-plus segments, but with the crisis in Ukraine on the one hand
years, and is now standing on the
although both remain tiny in and the government-led campaign against
threshold of travel retail’s top 30 wines.
volume terms as a proportion conspicuous consumption on the other,
of the total category. spending patterns have changed. How has this
Best served
Isabelle Lejean, business affected wine in travel retail, and its premium
The sheer breadth and diversity of
segment in particular? “We are still seeing
wine on offer today means the
traction from Chinese passengers in Australia,
category has something for
Advini’s Laroche brand now especially given the current devaluation of the
everyone, from the novice taking
stands on the threshold of Australian dollar,” says Lamba of Heinemann.
travel retail’s top 30 wines their first steps through to
In Dubai, Tahir reports that Chinese nationals
connoisseurs and collectors looking for more

78 October 2015
 wine review

Constellation has reportedly “Travel retail-exclusive can deepen the consumer’s relationship with the
enjoyed success with Inniskillin products can work if they brand, such as by customised packaging, but
Icewine and Robert Mondavi represent value for the they represent a risk if they become the norm.”
exclusive products consumer,” says Dufour at Meanwhile, the retailer perspective is even
Constellation. People spend more nuanced. Dubai Duty Free's Tahir reckons
more when they travel, but exclusives are not ”useful”, pointing to specialist
are buying high-end wine at the are still looking for value, store staff as more effective: “For us the main
airport's departure stores. “though that doesn’t always key in up-trading shoppers are the wine advisors
Constellation’s Dufour believes mean less who offer a well-informed and friendly service.”
Chinese travellers are expensive”, he Lamba thinks some established brands
“increasingly knowledgeable and asserts. execute exclusives well, but there’s little logic in
sophisticated and are now looking Constellation has smaller brands using them. He says: “I do not
for quality and value rather than reportedly enjoyed believe that consumers see a clear benefit from
just famous or trophy wines, as in success with travel-retail exclusives, therefore they tend to
the past”, suggesting wider Inniskillin be less willing to trade up.”
changes are at work. Icewine and So what of the future? As wine struggles to
While acknowledging the Robert progress in travel retail, which of the many
continued importance of Chinese Mondavi challenges facing it will loom largest over the
and Russian travellers as exclusive next five years? Innovation is Lejean’s prime
“benchmark buyers”, Advini’s Lejean products, as concern; she cites the need for wine to follow
reminds us that other nationalities well as some the trail blazed by spirits and cosmetics in
are also influential in the category: small-batch attracting new consumers through product or
“The British, Scandinavians and UAE offerings. packaging development.
residents spend on wine in travel Yet Lejean King sees “buying into the category
retail too.” Although based on the sounds a note opportunity” as the main test for the industry.
place of sale rather than the of caution: Growth has traditionally been hard in wine, he
nationality of the buyer, the IWSR’s “Exclusive wines notes, but he thinks his research has identified
data backs up Lejean’s analysis with the drivers to propel the category forwards.
over three-quarters of the market volume
located in Europe. There is a slow shift towards “Margins will continue Lamba highlights limited space in-store and
competitive domestic pricing as obstacles. He
Asia-Pacific (around 13% of volume in 2014)
to be a challenge.
thinks keeping the category “exciting and
and the other regions, with Africa and the Middle profitable simultaneously” will be the toughest
East recording the fastest progress at over 6% task. Tahir cites product shortages due to
per annum on average since 2010.
Wine is an agricultural increasing demand for certain wines, and
echoes Lamba's concerns over pricing and cost.
Exclusive motivation
However, growing the whole pie matters more
product with And Dufour agrees that “margins will continue to
be a challenge… Wine is an agricultural product
than the size of the individual slices, and views
differ over the best way to develop wine sales to high costs” with high costs”. He also worries that the
regulation faced by tobacco might affect wines
travellers. Purchase motivation is an area that – Randy Dufour, VP travel retail, and spirits in future, but he thinks rising global
Treasury Wine Estates has researched in detail. Constellation Brands wine consumption will outweigh such difficulties.
A study last year sounded out 2,000 airport Perhaps it is unreasonable to expect rapid
shoppers at 15 locations worldwide, with gifting progress from such a broad category as wine in
opportunities and exclusivity emerging as a distribution channel that thrives on strong
important factors in the decision to purchase. branding, clear product propositions and
The travel retail-exclusive, a channel-specific substantial margins. But the truth is that every
offering not available on domestic markets, has product group must work to earn its shelf
worked well in other product categories space, and unless wine can deliver the
including spirits, so might this be the way to combination of growth and profitability that
stimulate passenger interest? Treasury clearly travel retailers seek, it will lose facings and
thinks so, with King describing exclusives as “a relevance. The involvement of large
key motivating factor towards purchase for wine international groups with their resources and
shoppers”. Wolf Blass-branded exclusive wines marketing expertise, as well as nimble, creative
have sold well, he says, and a range of five independents, gives grounds for optimism that
single-varietal Penfolds wines aimed specifically suppliers will find a way forwards. If not,
at travellers will be launched under the Cellar Penfolds single varietal wines under
another five years of low average annual
Reserve name at the Tax Free World Exhibition the Cellar Reserve label will be
growth will surely lead to smaller wine sections
in Cannes. launched at TFWA World Exhibition
and less choice for travellers. ■

October 2015 79
wine review
One door closes, another opens...
China stutters, but other opportunities present themselves, as Giles Gough reports

Source: The IWSR Database 2015 ©

Overall consumption of still light and sparkling most valuable market for super-premium- and- loss of over 26m cases. As in previous years,
wine fell for the second consecutive year in 2014. above products, albeit now losing ground to its the heaviest losses were seen in producer
Having contracted 18m cases in 2013, it was dynamic neighbour Japan. However, from being countries Italy, France, Germany and Spain.
down a further 30m last year. The single biggest the powerhouse of the global wine market over Here, issues surrounding the market are long
factor behind this was the 2012 move by the the past few years, China has quickly become established, such as generational lifestyle
Chinese Government to curb extravagant one of its sick men. changes, health consciousness and changes to
spending. This led to a drying-up of the local Sick man it may be, but commentators are drink-driving enforcement, as well as a number
banqueting sector amid a wider fall in bullish over China’s prospects – for, although this of other, more localised shifts in the market
institutional spending on wine. China – now the thirst for high-end wines seems to have been from one year to the next. Even the US, the
fifth-largest global consumer of still light wine – satiated for the time being, it is expected that world’s largest market, saw volume growth slow
has consequently shed upwards of 20m cases market correction will lead to more sustainable to just 0.2%, compared to a five-year
over the past two years. growth in the future. With, among other things, compound annual growth rate (CAGR) of 2.2%
In 2014, Chinese consumption of still light population growth of over 200m by 2020, a – the slowdown here caused by declining
wine fell -4.6% – a marked improvement on the continuously expanding middle class and volumes at the lower end, due in part to
previous year. Government policy is the extremely low per capita consumption (1.3 litres trading-up while cider and other categories took
overriding factor determining market of the legal-drinking-age population in 2014) the share of social consumption occasions.
developments, with the disappearance of large potential for longer-term market growth at the In a market recently dominated by China, the
volumes post-2012 as State-owned enterprises mainstream end remains significant. US and Europe’s decline, it is perhaps surprising
(SOEs) stopped purchasing luxury products. that South Africa enjoyed the most growth in
Private middle-class buyers – now the new Established markets fall – again 2014, increasing 3m cases. However, as an
hotspot of the market – have also been While China’s development sharpened the rate emerging economy – last year it saw further
affected, not wanting to be seen to be spending of decline, it was by no means the only market GDP growth of 1.5%, according to the IMF, and
excessively on wine. This is not to say that the to suffer volume losses last year – in fact, eight with strong population growth – this should not
high end of the market has fallen away of the 10 leading still light wine markets be surprising at all. The market has expanded
completely – indeed, China remains the fifth- contracted and, combined, contributed a net steadily over the past decade with a CAGR of

80 October 2015
 wine review

1.8%, though this has accelerated since 2009 keenly felt in Hong Kong and, with the softening have experienced strong growth, compared to
(to 3.8%). This volume surge has come as key economy and the Beijing Government’s those below $10. But they are also partly
players were able to tap into the emerging crackdown on lavish spending, consumers have consumer-driven as well; as the shadow of the
middle class in urban townships, making South reined in spending on luxury products – a trend recession fades in many consumers’ minds, prices
Africa not just one of the fastest-growing exacerbated by declining bonuses in the rise and discounting becomes less frequent.
suppliers of wine, but now also one of the financial sector. By contrast, the ultra-premium Growth in standard brands was driven by
fastest-growing consumers too. The bad news, segment grew 0.7%, while the super-premium the UK, with notable increases also for Spain,
however – for exporters looking to South market grew just 0.1%. Combined, global Argentina and Germany – notable because of
Africa – is that the market consists almost purchases of super-premium-and-above brands the recent (and ongoing) economic situation
exclusively of local wines. And the bad news for amounted to $13.17bn – around 7.5% of the in Spain and Argentina, while in Germany
local players is that much of this growth has total category. such developments are beginning to dispel
come through aggressive promotional activity However, the biggest value increase was seen the myth that all German consumers are
with a flurry of UK-style bundle deals entering across premium brands. Here the market bargain-hungry and only willing to buy on
the market. So while volume development was expanded over $1.3bn to reach $38.15bn in total. hard discount. The contribution of the US,
dynamic, value development was less Unsurprisingly given recent trends, this was however, is markedly less significant here
impressive. Added to this, smaller wineries have driven by the US, followed by Japan and the UK. than in the premium segment, reflecting that
found it increasingly difficult to compete in this All notched up value increases of over $100m different markets are seeing different
discount environment, with supermarket each – the US alone saw value growth in this hotspots. Value-and-below losses were driven
retailers favouring the largest brands and segment of over $500m. Developments here are by China – a symptom of a struggling local
streamlining their ranges. part structural as suppliers emphasise higher- industry, beset by image and quality issues
Japan increased over 1.6m cases to reach margin wines – bottles above $10, $15 and $20 and generally suffering from a slowdown in
36.5m overall. Often overlooked, as the world’s banqueting. The UK, Italy and France are also

Global sales of still light wine by origin

eyes were drawn to headline-making China,
Asia’s most mature wine market has enjoyed
strong gains in recent years. Low-priced wines Volume Volume Volume % change % CAGR
Country
from Spain and Chile are largely responsible for 2010 2013 2014 2014 on ’13 2010-‘14
growth, but expensive wines are also
1. Italian 437,777.8 427,711.0 419,381.3 -1.9 -0.6
performing well – or have at least stopped the
2. French 395,732.8 399,379.7 393,110.6 -1.6 -0.3
decline of recent times. France is the leading
3. US 247,462.5 272,701.6 276,201.0 1.3 2.7
supplier to the market by volume, although it
4. Spanish 169,017.5 174,992.4 174,228.4 -0.4 1.0
could well cede the top spot to Chile as early as 5. Argentinian 132,323.3 133,778.1 130,855.5 -2.2 -1.0
2017 as it fails to compete on price – the latter 6. Chinese 108,920.5 127,538.5 119,200.0 -6.5 7.5
benefiting from a free trade agreement (FTA). 7. Australian 121,707.2 115,569.9 114,068.1 -1.3 -1.3
The weak yen has hurt certain suppliers, 8. German 125,887.4 115,718.9 112,239.3 -3.0 -2.6
notably Australia, although it is hoped that 9. Chilean 86,662.7 89,017.5 91,859.0 3.2 2.0
following a FTA between the two, Australia will 10. South African 73,074.6 78,314.2 79,953.4 2.1 1.7
start to see gains here as the dollar weakens Others 520,383.1 505,719.0 500,785.5 -1.0 -0.7
and as the burden of import tariffs is removed. Total 2,418,949.3 2,440,440.8 2,411,882.0 -1.2 0.2
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
Value grows
While global consumption of still light wine
declined, the value of the market increased Global sales of sparkling wine by origin
1.1% to reach $175.96bn – although this
Country Volume Volume Volume % change % CAGR
development can partly be explained by taxation 2010 2013 2014 2014 on ’13 2010-‘14
and other inflationary factors. Nonetheless, the
1. French 48,090.1 47,428.3 47,189.8 -0.5 0.2
standard and premium segments saw the
2. Italian 29,167.6 35,488.5 37,750.8 6.4 6.6
strongest gains. Value-and-below labels lost
3. German 33,895.6 35,387.1 36,194.2 2.3 1.4
market share, while the super-premium-and-
4. Spanish 21,372.8 22,197.7 21,829.5 -1.7 2.1
above segments saw modest progress. All of this
5. Russian 24,534.4 22,024.9 20,796.8 -5.6 -0.2
reflects the global shift up the value scale, most
6. US 9,819.3 10,869.7 11,147.7 2.6 3.5
notably at the moment from lower-priced
7. Australian 5,951.2 5,315.5 4,995.4 -6.0 -3.9
products to mid-range, but with development at
8. Argentinian 3,656.1 4,433.0 4,317.8 -2.6 7.0
the highest end fairly buoyant too. 9. Ukrainian 7,130.8 5,875.5 3,242.0 -44.8 -13.4
The UK, the world’s largest market for prestige 10. Polish 3,819.5 3,335.4 3,202.0 -4.0 -4.1
products, returned to growth last year, but was Others 20,601.5 21,623.5 21,426.3 -0.9 1.1
unable to offset substantial declines in Hong Total 208,038.8 213,979.1 212,092.3 -0.9 1.4
Kong and mainland China. The ripples of political
All volumes in ’000s of 9-litre cases Source: The IWSR Database 2015 ©
and economic changes on the mainland are

October 2015 81
wine review
Wine trends
the second most-consumed sparkling wine
country of origin, behind France – it is the
biggest excluding Champagne. The UK, Italy’s
second-largest export destination, drove much
of this growth as the category grew an
astonishing 51.1% to reach in excess of 5.3m
cases. The prosecco ‘brand’ is so popular it is
sourcing consumers from still light wine and
other alcoholic drinks – not least from
Champagne and other sparkling types. Reasons
for growth are numerous. The most compelling
perhaps is that, unlike cava, it has established
itself as something more positive than the
‘cheaper version of Champagne’. Attractive
pricing and its easy-drinking style have led it to
become the affordable weekday luxury, allowing
for a less formal occasion, with the occasion
The problem facing prosecco suppliers is likely to be one of supply itself the centrepiece rather than the wine. One
potential obstacle to future growth could be
key contributors to global losses in this space, The same cannot be said for the world’s supply. In northern Italy voices decrying a
reflecting on the one hand the shift away from biggest consumer of sparkling wine, Germany. potential shortage are multiplying. Of course,
aggressive promotional activity, particularly Last year the country’s economy expanded a prosecco is a delimited region and, with the
bundle deals in the UK off-trade, and on the further 1.6%, according to the IMF, and, price wars in many markets and rising grape
other the symptom of longer-running factors interestingly, it was consumer spending that prices at home, many producers now find
in two of the world’s leading producer- boosted economic performance in the face of themselves in a bit of a bind. Regulatory
consumer markets. softening international trade with key export authorities in the prosecco region have already
partners. Yet the market stuttered as price responded by allowing heavier yields, from 155
Sparkling wine sales slide hikes on cava severely impacted development tonnes per hectare to 180 tonnes. This should
Global sales of sparkling wine declined for the of dry sparkling wines, while a slowdown in ease immediate concerns, but what impact will
first time since the recession last year – the sweet, flavoured sparkling wine growth failed this have on quality?
overall market falling -0.9% to 212.1m cases to take up the slack. An integral part of
(compared to a five-year average of over 1.3% German drinking culture, sparkling wines are 2014: A year of change?
per year). The much smaller Champagne sub- less celebratory and more everyday fare with In many ways 2014 represents a continuation of
category continued to lose volumes as the market developments largely influenced by many of the themes already present in 2013.
leading two consumers, France and the UK, price sensitivity and promotion. It is precisely The emerging middle class is as important as
continued to see losses. Given their dominance this price sensitivity which has helped to boost ever, particularly in developing economies.
of the category, France in particular, they more flavoured sparkling wines over recent years, as ‘Premiumisation’ is very tangible and seems to be
than offset continued gains in the US, Japan the market is dominated by sub-€2 ($2.25) a key theme moving forward. In volume terms at
and Australia. More surprising, however, was own-label brands. The headline is that growth least, old Europe continues to be a burden on
that 2014 marked a decline in non-Champagne is slowing as a consequence of the sheer mass suppliers. Prosecco’s growth continues.
sparkling wines – the category having expanded of the market – the IWSR estimates this Yet at the same time it has taught us that
healthily post-recession. segment to be around 10m cases (although there are other markets outside China and the
Key to this development were losses in given it is dominated by own-label, concrete US. Even notoriously difficult export
Germany, Russia and Ukraine – the latter alone figures are hard to come by) – but in reality destinations, such as the UK and Germany, are
shed over 2m cases as political instability and there are a number of factors at play. The presenting positive opportunities – if the price
shrinking disposable income dampened the elderflower-flavoured Hugo is losing its pull is right. While there is a gradual trading-up
celebratory mood, as celebration is a key driver over consumers, with reported concerns over occurring across a number of established
of consumption. Russia has seen a reversal to consistency and quality, while a new flavour is markets, the nature of this varies depending
the recent trend of growing imports and yet to emerge to continue momentum; some on the market. Meanwhile in emerging
declining local products. There may not yet be even claim there is some transfer back to dry markets, it is ever-more likely that the value-
any European Union (EU) sanctions on sparkling sparklers – in other words, the beginnings of for-money, ‘social’ end of the scale has a lot
wine – in light of Russia’s alleged involvement in ‘normalisation’ of the sparkling wine category. more legs. With global consumption down –
Ukraine’s separatist movement – but Russian Yet despite the overarching influence of these thanks largely to China – the question is no
consumers have reverted to cheaper local three, other opportunities have opened up. The longer can supply keep up with demand, but
products amid price increases and patriotic prosecco boom continues. Last year increasingly, as highlighted recently by
sentiment. Overall, the market has declined, consumption of Italian sparkling wines Rabobank, is the world’s supply balanced
however, due to the depressed consumer mood (including non-prosecco types) increased a enough to keep up with the different hotspots
and poor economic environment. further 6.4% overall and, globally, Italy is now of the global market? ■

82 October 2015
beer, cider and pre-mix news By Simon Molony

in brief
International The leading multinational brewer arrangement with Pepsi and SABMiller’s Pernod Ricard launches low-
Anheuser-Busch InBev has approached SABMiller Coca-Cola agreement that will need to be alcohol RTDs for Absolut
about a possible takeover, the companies resolved. The deal will almost certainly face Australia A lower-alcohol and
announced on 16 September. On 30 September regulatory issues in US – there is no way a 70% lower-sugar ready-to-drink (RTD)
it was reported that a $70bn debt package would market share will be allowed. This will mean variant of the Absolut vodka brand
be required to fund the takeover, which could disposals and an opportunity for a third party to has launched in Australia. Pernod
cost upwards of $100bn. pick up assets. It would almost certainly see Ricard is attempting to revive the
The deal would further consolidate AB InBev’s other mergers by the second-tier players just to struggling RTD sector in the market,
position at the head of the global beer industry, keep up. It would also mean massive distribution which remains the largest in the
combining the portfolios of two of the four largest clout for ABI, which could impact wine and spirits world for mixed drinks, by
brewing companies in the world. SABMiller has a producers. Under UK takeover rules, ABI has until consumption per capita.
strong presence in the key growth markets of 15 October to come up with a definitive offer to Absolut Botanik is available in three
Sub-Saharan Africa and Latin America the SABMiller board. berry flavours: Berry Pear, Berry
However, any deal proposed by ABI will need In anticipation of the possible takeover from Apple and Berry Lime. The new
to be agreed by the SABMiller board in order for AB InBev, SABMiller has announced changes to products are a response to the
the transaction to proceed, given some of the the make-up of certain board committees at the growing trend towards light and
hurdles that will need to be overcome. There will end of September. Chairman Jan du Plessis and fresh-flavoured drinks, with the aim
be political concerns to assuage in South Africa. an independent director, Trevor Maniel, were that it will encourage growth in the
SABMiller has a number of important joint appointed to the board’s corporate accountability lower-alcohol sector through bigger
ventures with CRE in China, Coors in the US and and risk assurances committee. Independent alcohol retailers.
Castel in Africa that will all require sensitive director Lesley Knox was also appointed to the
handling in the event of a takeover. There is also nomination committee, while Javier Ferran was Samuel Adams rolls out
a direct conflict of interest between ABI’s bottling appointed to the remuneration committee.
nitro beer
USA The Boston Beer Company,
owner of craft beer Samuel Adams, is
expanding its focus with a new range
of nitrogen-carbonated variants of the
USA The US beer market reached a new has brought about a rapid expansion in the brand. It will begin distributing in the
milestone in September when the number of number of beer producers. Watson sees this US in February 2016. Jim Koch,
active breweries operating in the country passed growth as representative of “the continued founder of Boston Beer Co, said: “I
4,000, according to the Brewers Association. return to a localisation of beer production and want to keep shocking people a bit.”
Bart Watson, chief economist at the Brewers the potential for future growth balanced by ever
Association, said: “This is almost certainly the increasing competition and future challenges for New radler launches
first time the United States has crossed the breweries to differentiate themselves”. in Australia
4,000 brewery barrier since the 1870s.” Most of the new entrants are small and local, Australia The Hahn Brewers’ Project
It is a huge landmark for the industry, given often with their reach limited to neighbourhoods has launched a Hahn Radler in
that the number of American breweries fell or towns. “What it means to be a brewery is Australia. Hahn’s new brand line is a
below 100 in the 1970s; a resurgence in shifting, back toward an era when breweries take on the traditional European radler
small-scale craft brewing in the decades since were largely local,” Watson said. style of 50% beer and 50% lemon,
adapting to suit the tastes if Australian
consumers with higher beer content
at 70%.
Flavoured beers, radlers and
low-alcohol variants are becoming an
Africa Heineken has announced the formation of The new site will brew Heineken beer and increasingly common feature in the
a joint venture with Compagnie Française de other brands for the domestic market, with global beer market. Hahn Radler is
l'Afrique Occidentale (CFAO) to produce and production expected to begin early 2017. The aimed towards younger adults who are
market beer in the Ivory Coast. The new entity, expansion is expected to create 700 direct jobs looking for these sweeter beer options.
operating under the name of Brassivoire is 51% in the Ivory Coast, while Brassivoire is exploring Tanya Marler, brand director at
owned by Heineken, with the remaining 49% the potential development of a project for local Hahn’s brand owner Lion, said: “Hahn
owned by CFAO. sourcing of the raw materials required to produce Radler is not your typical beer. We
The new brewing facility will be built north of its beer. hope that Aussies who may not choose
Abidjan, and will have a production capacity of “Brassivoire is the result of combining beer that often, will be intrigued by
1.6m hectolitres per year; both Heineken a strong global brand with the historical Hahn Radler and enjoy the beer-and-
and CFAO are investing ($168m) CF100bn in expertise in CFAO’s distribution networks in lemon mix, with the added benefit of
the project. Africa,” he added. a lower abv.”

October 2015 83