global drinks

COCKTAILS EMBRACE THE LOW/NO-ALCOHOL TREND

intel.Market intelligence for the global drinks executive. Aug/Sep 2019 TOP SPIRITS & BEER BRANDS ASDA’S EVOLVING WINE AND SPIRITS OFFER BOURBON IS BOOMING BU T T H E

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M EXCLUSIVE E INTERVIEWS BEAM SUNTORY PRESIDENT ALBERT BALADI & HEAVEN HILL BRANDS PRESIDENT

MAX SHAPIRA Image: DenPotisev /iStock.com GLOBAL DRINKS INTEL/ISSUE 5

04 Albert Baladi on how the 35 UP FRONT company is gearing up for MARKET Editor’s comment its next phase of growth. INTELLIGENCE China wine Brand marketers Volumes may be down, have one purpose: 17 but the market for to build sales, not be US whiskey imported wine in China social warriors. The US whiskey industry remains highly positive. has displayed impressive 05 growth in recent years, New products but the best is to come. Moët Hennessy partners with Janelle 22 Monáe on limited-edition Heaven Hill

Belvedere vodka. Heaven Hill Brands Image: XiXinXing/iStocl.com on the David and Goliath president Max Shapira effect in craft drinks. 04 says the independent News review producer helped kickstart CONTENTS 09 the craft movement. Global beer looks set to return to growth. Marketing news Johnnie Walker aims to 24 08 fully leverage the whisky Cocktail trends Marketing column highball trend. The latest trend to Intel’s marketing guru be embraced by the 37 Michael Scantlebury 10 mainstream on-trade is Top beer and Travel-retail news low/no-alcohol cocktails. spirits brands EC report clears Brand Finance’s latest airports of abuse of 28 rankings confirm market power. Pink drinks Asia’s rising power. Instagram-happy 12 millennial consumers 39 Industry disruptors have embraced pink- BrewDog How is e-commerce hued drinks – from blush BrewDog has raised impacting on beverage gin to rosé prosecco. £72.6m in investment alcohol trading? through crowdfunding. 32 13 RETAIL REVIEW 41 SPIRITS SPOTLIGHT UK off-trade WINE FOCUS Beam Suntory How British retailer Sherry Exclusive: Beam Asda is upping its beer, Can the fortified wine president and CEO wine and spirits game. fino-lly reinvent itself?

Meet our editorial team

Alexander Smith Doug Newhouse Joe Bates Kate Wake-Walker Alex, previously the long-term Retail editor Joe has been a business journalist Kate is a editor of IWSR Magazine, heads Doug was for over 20 years, specialising in marketing expert up the editorial team. With over previously the the drinks, aviation and duty-free who worked in 25 years’ experience covering the founder and sectors. His writing has appeared advertising for drinks sector, editor of Travel in a wide range 30 years. She Alex is highly Retail Business of trade and now specialises connected and and founder of consumer in writing within draws upon Duty Free News titles, including the wine and these contacts International. Duty-Free News spirits sectors on to provide Renowned for International, marketing and a stream of his prowess IWSR Magazine, new products. cutting-edge in breaking big stories, Doug has Jane’s Airport Her work has appeared in Epicurean interviews with long been considered a highly Review and Life and IWSR Magazine. Kate is also leading industry influential commentator on Whisky Magazine, Global Drinks Intel's marketing and movers. the travel-retail industry. among others. subscriptions manager.

AUGUST/SEPTEMBER 2019 global drinks intel. 03 UP FRONT/EDITOR’S COMMENT UP FRONT/NEW PRODUCTS with Kate Wake-Walker intel.global drinks Teeling Whiskey Explorers EDITOR-IN-CHIEF Belvedere Vodka Limited Edition Monáe Bottle Edition 12yo Alexander Smith Alexander T Smith [email protected] Moët Hennessy has released a Belvedere provides backing Bacardi Global Travel Brand marketers have one purpose: limited-edition bottle of super- for Monáe’s ‘Fem the Future’ Retail has launched PRODUCTION premium Belvedere vodka through movement, set up to promote Teeling Whiskey to build sales, not be social warriors EDITOR & DESIGN Kylie Martin its partnership with actor, musician awareness, inclusion and Explorers Edition [email protected] and activist Janelle Monáe. opportunities for women and those 12yo. The limited The bottle’s metallic collage design who identify as women through release of only ore than ever, consumers are disconnected with the more conservative RETAIL EDITOR signifies peeling back layers to reveal music, arts and education. 6,000 bottles Doug Newhouse RRP $29.99/75cl; $37.99/1L seeking out brands with a social hinterlands? Without taking a view on the [email protected] the beauty within and features is exclusively Mpurpose. It is a relatively new cause itself, it seems to reason that any the phrase ‘A Beautiful Future’ to available at development and for brand owners it campaign that is prepared to alienate a CONTRIBUTORS highlight what Moët Hennessy World Duty Free represents both an opportunity and a certain number of consumers isn’t optimal. Joe Bates called “Monáe and Belvedere’s airport stores in Alex Oldroyd potential minefield. Brand marketers really have one purpose Jaq Bayles shared vision of a future where the UK. The opportunity is greater consumer and that is to build sales, not necessarily to Kate Wake-Walker diversity, self-expression and Bacardi engagement. It goes to follow that if a be social warriors. In some cases it is possible Tim Simmons inclusion are celebrated”. entered into a consumer identifies a brand with a specific to do both. Hennessy has certainly managed Michael Scantlebury partnership with Teeling Whiskey cause it can create an emotional bond. A good it through its association with African- in June 2017 and this is the first example is when Budweiser renamed its brand American civil rights and opportunity. This ADVERTISING exclusive created for global travel ‘America’ for a limited period over 4 July 2016 is a case where this specific cause dovetails Rina Maiden retail. Bacardi is now accelerating [email protected] in a bid to link the brand with patriotism. with the interests of the brand’s core the brand’s distribution in key In another example, craft brand Tito’s African-American consumer base. The brand MARKETING & markets. Outside of the US successfully adopted the cause of dog welfare. has benefited though, as evidenced by its SUBSCRIPTIONS domestic market, it is the global Both examples are building brands with social explosive sales performance in the US. Kate Wake-Walker travel-retail sector which is Teeling [email protected] purpose but with relatively little risk. Love Whiskey’s biggest market today. of country and dogs is fairly universal. Even sustainability, something that many RRP £81.50 ($102)/70cl It becomes a little riskier when brands consumers agree upon, can be potentially CONTACT US take on more contentious social issues problematic. There is little doubt that the Global Drinks such as Smirnoff vodka’s promotion of issue, from both a regulatory and consumer Intelligence, Ltd. Smokehead Rum Riot 91 Coombe Lane, LGBT rights. Sure, it brought the brand standpoint, is gathering momentum. It London SW20 0BD Smokehead Rum Riot will be Ian goodwill with socially liberal consumers, has been a relatively easy cause for drinks Macleod Distillers’ next +44 (0)208 946 8691 but at the same time it risked turning off companies to exploit. They regularly issue Islay single malt global more conservative consumers. Does a brand press releases about their environmentally [email protected] travel-retail exclusive. ever want to be that polarising? I presume friendly production facilities and processes, The launch follows that Diageo has done the calculations and these generate a certain amount of PUBLISHER what it described and determined that the potential upside goodwill. Even the latest movement toward Alexander T Smith as “huge interest” outweighs the negatives. Or is it a case of reduced-plastic packaging has benefits as shown in the Diageo’s marketers mostly hailing from retailers create plastic-free sections and All details contained line at last May's socially liberal metropolitan environments environmentally conscious consumers seek out in this publication are Singapore Tax Free like New York and London and being these products, potentially enhancing sales. believed to be correct at Asia Pacific show. It may eventually force the drinks industry time of going to press. Bottling will take All rights reserved. into some tough choices though. Go through Nothing may be reprinted place in September any duty-free store and you will see that or reproduced in whole for an official many packages remain laden with wood and or in part without the launch at TFWA plastic and frankly are way over the top. This written permission of DeadEye Napa Valley Red Blend Cannes in October. the publisher. elaborate packaging is part of how brands A dramatic package featuring only to appeal to consumers of popular Smokehead Rum Riot has been justify the associated premium pricing. If Published by Global a hand-drawn crosshair symbol luxury red blends and is “expressive crafted by finishing award-winning Drinks Intelligence, these companies really want to walk the on the front is the hallmark of and opulent, deliciously round and Smokehead Islay whisky, which Ltd 2019 © walk, much of this packaging may have to go. a bold Napa Valley cabernet plush, dominated by ripe dark fruits”. delivers a “rich, peaty, salty flavour The whole export model may come under ISSN 2632-7236 (print) focused red blend called DeadEye Select lots from key Napa growing punch”, in Caribbean rum casks. “The scrutiny. Shipping a bottle of beer from ISSN 2632-7244 (online) from Treasury Wine Estates’ districts including St Helena (45%), result is a hit of immense smoke and Amsterdam to California, or Scotch to India Registration Number: Provenance Vineyards. Howell Mountain (23%), Oakville spice, followed by citrus, banana, pear certainly isn’t carbon neutral. Having brands 11672026 (England) While predominately cabernet (12%) and Spring Mountain (12%), drops and hints of honey.” with a social purpose is relatively easy Printed in the UK sauvignon, the blend includes petite with contributions from Atlas Peak Smokehead single malt is growing when it doesn’t interfere with business. The by Rapidity. sirah, merlot, petit verdot and and Sonoma’s Alexander Valley at 50% year on year and Ian Macleod Transgender actress and activist Laverne Cox question is what happens when they do? malbec. Provenance winemaker form the blend. DeadEye is a limited Distillers says the brand has starred in Smirnoff’s Pride campaign this year We may soon find out. David Galzignato says the new release of 2,396 cases. “considerable additional potential” in wine is a richer style designed RRP $50/75cl the global travel-retail channel. RRP £44.90 ($56)/70cl

04 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 05 UP FRONT/NEWS REVIEW with Alexander Smith UP FRONT/NEWS REVIEW with Alexander Smith

Rémy Cointreau GLOBAL BEER SET TO Travel-retail CEO to step down spirits up 2.5%

RETURN TO GROWTH Image: iStock.com/Domenec Valérie Chapoulaud-Floquet, CEO of the Rémy Cointreau Group, will leave Global beer consumption may have five years,” said Mark Meek, CEO of to 2.5m cases her position before the end of this slowed last year, but forecasts indicate IWSR Drinks Market Analysis. year, citing personal reasons. Prior to that beer is set to rebound especially in In Mexico, for instance, consumers Overall spirits volume and value joining Rémy Cointreau, Chapoulaud- smaller emerging markets. are increasingly health conscious, in global travel retail increased in Floquet worked for the L’Oréal Group IWSR Drinks Market Analysis which helps have a positive impact on 2018, strengthened by gains for more than 20 years. predicts the category will show a slight the beer category. The large players in several categories. In total, In related news, Rémy Cointreau increase this year and grow to nearly in that market are investing heavily spirits volume grew 2.5% in the revenue amounted to €223.2m 1.9bn hectolitres (hl) by 2023, with a in ultra-low-calorie brands and are channel last year, to reach 24.5m ($250.6) for the first quarter of the compound annual growth rate (CAGR) continuing to develop convenient retail nine-litre cases, with a value of 2019-’20 fiscal year, down -3% on an of 0.7% (2018-’23). Global retail value of offerings in order to make beer more 246M HL OF WINE $9.2bn, according to IWSR organic basis following the withdrawal beer is forecast to increase 5% by 2023, accessible. In Vietnam, already the Drinks Market Analysis. of partner brands. Rémy Martin grew to more than $455bn. ninth-largest beer market in the world, The spirits categories which by 5.5%, driven by high-end qualities. Among the top beer markets in the the increasingly challenging legislative CONSUMED IN 2018 posted the largest volume increases The company said that VSOP has world, the strongest volume gains requirement there for the spirits in duty free were Japanese whisky proven resilient to the significant price in the category (CAGR 2018-’23) are category is expected to benefit beer. Global wine consumption is stable of the US (6.9m), Spain (6.9m) and (up by almost 20% versus 2017), increases that were implemented at expected in Brazil (+0.5%), Mexico The growing global popularity of at 246m hectolitres (hl) and global France (5.5m). OIV’s Roca also delivered gin (+15%), Scotch (+4.9%), and US the beginning of the year. (+4.4%), Vietnam (+2.9%), Spain (+2.7%) craft and low/no-alcohol beer is also trade in wine equivalent to 108m hl by yet more good news when he revealed whiskey (+4.3%). Over the next five and Poland (+2%). The markets forecast strengthening the category. Globally, volume and €31bn ($34.8bn) by value that the top three European producing years, IWSR forecasts that global to contribute the most to global beer’s volume of craft beer is expected to (+1.2%), according to the International countries recorded a 28% increase in travel-retail volume will grow by 2%, New CFO for Bacardi total volume in the next five years are grow by 4.5% (CAGR 2018-’23) to 52.2m Organisation of Vine and Wine (OIV). production last year. led by cane spirits (+6.7%), Japanese Bermuda-based Bacardi Limited, the Mexico (expected to add 21m hl, for a hl, with the largest gains (albeit from The world’s wine-growing area As for the total global wine volume whisky (+6.4%) and gin (+6.2%). largest privately held spirits company total of 108.3m hl by 2023), India (with small bases) in Costa Rica, Paraguay, covered 7.4m hectares (ha) last year, of 292m hl, OIV confirmed that 2018 is By region, spirits volume is in the world, has appointed Tony the addition of 13.4m hl), the Philippines India, Guatemala and the Dominican with global grape production estimated one of the highest since 2000, although expected to grow 3.6% in Africa and Latham as executive vice-president (with the addition of 9m hl) and Vietnam Republic. The US, Brazil and Canada at 78m tons, while wine production it adds that the comparison with 2017 the Middle East, 2.4% in Asia-Pacific, and chief financial officer. Latham joins (adding 6.5m hl to that country’s total). are the largest global markets for craft (excluding juices and must) generated has to be seen in the context of “very 2.3% in the Americas, and 1.2% in Bacardi from Unilever where he served “With major mature beer markets beer. Low-alcohol beer is forecast to an estimated 292m hl (+17%). Spain difficult weather conditions” that Europe (all figures CAGR 2018-’23). as vice-president finance — Group such as China, the US, Germany, Russia grow by 2.8% and no-alcohol beer by continued as the world’s leading country affected production in many countries. The retail value of spirits in duty Performance Management. He will and Japan all expected to continue 8.8% (CAGR 2018-’23). for area cultivated with 969 thousand In Europe, Italy (54.8m hl) was the free is estimated to reach almost report to CEO Mahesh Madhavan. showing declines in beer consumption, The brands that added the most hectares (kha), ahead of China with leading world producer, followed by $10.4bn by 2023. it’s the smaller and emerging markets volume to the global beer category last (875kha) and France (793kha). France (48.6m hl) and Spain (44.4m hl). “Spirits growth in travel retail Pernod Ricard names which will help put beer back into the year were Corona, Heineken, Michelob, OIV director general Pau Roca Roca added: “The level of production softened slightly in 2018, compared overall positive column over the next Modelo and India’s Kingfisher. presented a positive overview of the in the US remains high (23.9m hl). In with the year before, but the positive new SE Asia chief vitivinicultural sector at July’s 42nd South America, production increased news here for duty-free operators Pernod Ricard has named Thibault World Congress of the OIV in Geneva. significantly (Argentina 14.5m hl and and spirits suppliers is that the Cuny as its managing director of South Roca told delegates: “The Chinese in Chile 12.9m hl), while South Africa channel continues to perform Asia. Cuny replaces Guillaume Girard- Pernod Ricard invests in Myanmar wine-growing area continues to (9.5m hl) suffered an unfavourable drought. well,” said Sandra Newman, travel- Reydet who is appointed MD of España increase (+10kha between 2017 and As a result of the drop in the grape yield, retail research director at IWSR and Iberia. Benoit Laug, currently MD Pernod Ricard has taken up its option through its US New Brand Ventures ’18). On the other hand, the European wine production in China (9.1m hl) is in Drinks Market Analysis. of Argentina and Uruguay, is appointed to buy a 34% share in the Seagram MM division, has acquired a majority share Union’s vineyards seem to have curbed a second year of recession, with a fall Johnnie Walker, which for president and CEO of Southern LATAM. Holdings company in Myanmar, which is a of Rabbit Hole Whiskey, produced and their rate of decline and stood at of -22% over the 2017-’18 wine year.” more than 30 years has been the Paul-Robert Bouhier is appointed consortium comprising the Win Brothers, based in Louisville, Kentucky. Rabbit 3,324kha in 2018 (+10kha in 2017).” The OIV said there was a “stabilisation top-selling brand in global travel MD of South Africa, while retaining his Delta Capital and Yoma Strategic. Hole is particularly recognised for its He added that since 2000, the world’s of global consumption at around 246m hl, retail, grew by almost 8% last year. responsibilities as MD of Sub-Saharan The cost of this investment has not iconic, state-of-the-art distillery in the grape production has risen about 1% confirming the trend since 2014 towards Rounding out the rest of the top Africa. Constanza Bertorello, currently been disclosed, although the new heart of Louisville. a year to almost 78m tons, thanks a recovery in European countries and five, in terms of 2018 volume, were Human Resources and S&R director shareholding is hardly a secret, having With this strategic partnership, mainly to increased yields and despite consumption growth in Asian countries”. Jack Daniel’s, Chivas Regal, Absolut of Argentina & Southern LATAM, is originally been disclosed in May last Pernod Ricard expands its newly a reduction in vineyard area. The OIV The US with 33m hl was the biggest and Hennessy. appointed MD of Argentina and Uruguay. year. Seagram MM Holdings company created portfolio of specialty brands, says this is due to the continuous global wine-consuming country — Interesting to note is the Mikkel Olsson, currently marketing owns the Seagram Myanmar Company gathering smaller brands with unique improvement in vinicultural techniques and has been since 2011 — followed continued success of Aperol and director of Pernod Ricard Norway, is which produces a series of brands for and comprehensive value propositions around the world and despite last by France (26.8m hl), Italy (22.4m hl), Jägermeister in the bitters/aperitifs appointed country manager of Norway. markets in the region. and select distribution. year’s -11% drop in production in China Germany (20m hl) and China (17.9m hl). category. These brands posted the Narek Melkonyan, head of marketing Commentators expect Pernod Ricard In the US, Rabbit Hole will be part — the world’s leading producer with Spain (21.1m hl), Italy (19.7m hl) and second- and third-highest increases of Pernod Ricard Armenia, is appointed to introduce more of its brands into the of this New Brand Ventures portfolio 11.7m tons accounting for 15% of global France (14.1m hl) were the main exporters in the channel (behind Johnnie country manager of Armenia. Myanmar marketplace. along with recently acquired brands grape production. China was followed of wine, accounting for more than 50% Walker) in terms of absolute volume In other group news, Pernod Ricard, Smooth Ambler and Del Maguey. by Italy with 8.6m tons last year, ahead of global export volume in 2018. growth last year.

06 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 07 UP FRONT/MARKETING TRENDS UP FRONT/MARKETING NEWS with Kate Wake-Walker

Michael Scantlebury DIAGEO PUSHES THE HIGHBALL

The David and Goliath effect in craft drinks A new global campaign from Diageo’s had developed on highball was the right brand director, said: “The popularity of Johnnie Walker Scotch whisky is choice to reframe Scotch and recruit the whisky highball is soaring — and it’s intended to elevate the whisky highball new consumers. The answer was a easy to see why. It’s where the ease and by putting the serve front of mind for resounding yes. We believe the highball refreshing taste of a cool beer meets e all know the story of David and Goliath — take risks because they have less to risk. And, because millions of consumers in some of the can drive broader consumption. We have the colourful, visceral world of cocktails. and the moral that goes along with it. Young of all that, they are authentic. world’s most influential hotspots. a great opportunity to drive the trend. And for those who think they ‘won’t like Wwee David beats the big, strong, slow-moving Like David, they understand their strengths and they Diageo president of Europe, Turkey “In a world where consumers and whisky,’ it’s a real gamechanger. Goliath, not by trying to out-muscle him, but by simply stick with them. Ever noticed how Tito’s vodka has and India, John Kennedy said: “We bartenders are looking for new, “We’ve celebrated the highball at hitting him in the head with a stone. effectively had the same message and product since revisited our serve strategy and asked exciting, fresh and simple drinks, we Johnnie Walker for the past few years, In truth, that little stone wouldn’t have killed Goliath. 1997? Smart people play to their strengths and they ourselves, consumers and leading-edge can transform the Scotch experience. It but with the trend for longer drinks on It would have annoyed him and possibly dazed him for don’t get sidetracked. bartenders whether the early work we is not a serve. It is a category of drinks.” the rise, it feels like now is the right a while. That’s no different from what’s happened in our So if you run a craft brand, stop reading, you have it Johnnie Walker has played a role in time to really explode the amazing drinks industry, with the big traditional brands feeling a sorted. You’ll be fine. putting highballs on the menu in recent possibilities this category can offer.” bit dazed, and the new, exciting David-like craft brands I get more nervous for the big brands. years, including installing highball The Johnnie Walker Highball feeling heroic. bars at Taste festivals and as part of campaign includes new outdoor We can sit here all day and argue about what makes Over the last few years, unfortunately, some (and I its partnership with Formula 1, as well advertising, digital, experiential, in-bar a craft brand. Does it just mean you are authentic? Have stress, only some) big brands have been a little seduced as through its involvement with the and in-store activations, with a major provenance? Use high-quality ingredients? Have the by the tactics of the craft brands. They have searched world’s best mixologists at Diageo’s focus on showing up in trendsetting ‘personal touch’ (whatever the hell that means)? Or does their archives in the hope of finding a couple of bearded World Class Bartender of the Year neighbourhoods and cities. There will be it simply mean small? According to a Mintel report on chaps in a garage to base their story on. And if not, they competitions. Now the brand will ramp a focus on mixing Johnnie Walker with alcoholic drinks, 35% of Brits said that brands cannot be stretch the truth a little and hope no one will notice. up its highball focus with its biggest- five key flavours: peach, lemon, green ‘craft’ if they are acquired by large companies or if they How authentic. They have shunned away from big mass- ever investment in the serve. tea, elderflower, or ginger — dubbed the get too big (28%). Those drink entrepreneurs that have market plays and tried to build online adorers. But they John Williams, Johnnie Walker global Johnnie Walker Highball Collection. sold out for the big bucks probably care less about what can’t do it as well as craft brands, because these things defines craft and care more about what they’ve aren’t their strengths. just earned. I know I would. The only thing they should copy from the craft brands is the strategy: ‘Play to your strengths.’ As a big brand When David wound up his stone in his slingshot, his that’s been around a while, your strength is your size and strategy was simple: ‘Play to my strengths.’ The craft your money. Ironically, the exact same size and money industry does this well. They’re winning because they craft brands would love to have at their disposal. play to what makes them powerful. They find their In today’s influencer-obsessed, brand-purpose focused Thank you story and stick to it. They move quickly, worrying digital landscape, size is seen as a bad thing. But it’s not. less about being perfect and a hell of a lot more It’s a wonderful thing. Why? Because of a little marketing for all your help getting about momentum. They hustle, building one-to-one truth that seems very unpopular with many marketers TOP us where we are today! relationships with the trade and consumers, stealing these days: you can buy market share. That’s right — you ON-PREMISE the hearts of influencers and building adorers. They can put your brand in front of more people, more often, PROFIT GENERATOR become more available and enter their consumption-set simply by being present in their world. Not by mucking about with one-to-one relationships or finding adorers to buy your product every day, but by having millions of +30.7% 1 people buy it sometimes. However, to do this, you must be big. As a big brand, this is your strength. Tito’s Bloody Mary The infamous brunch cocktail that,

Image: iStock.com/FXQuadro Big brands have muscle, so flex it. depending on the garnishes, can And remember, unlike Goliath, big brands don’t die overshadow the meal. Go ahead… because a smaller craft brand throws a couple of stones. load it up. As Tito says “It doesn’t The market share of craft beer is below 5% of overall make you a bad person!” beer sales. So, you may find that every now and then you get a small stone thrown at you. That little stone may annoy you, it may even daze you. But it won’t kill you. Just play to your strengths, hit harder and more often, and you’ll be fine too.

● Michael Scantlebury is the creative director and founder of independent creative agency Impero.

AMERICA’S ORIGINAL CRAFT VODKA® 08 global drinks intel. AUGUST/SEPTEMBER 2019 Source: (1) Nielsen CGA on premise data - market total, US total spirits top 25 spirit brands by $ value, volume 9L EQ, value $, Avg Price 1.5OZ EQ, rolling 52 w/e 08/11/2018 vs YA UP FRONT/TRAVEL-RETAIL NEWS with Doug Newhouse UP FRONT/TRAVEL-RETAIL NEWS with Doug Newhouse

EC REPORT CLEARS AIRPORTS LTR hails Asia OF ABUSE OF MARKET POWER whisky tour Aelia Duty Free has reported a A new European Commission report on ACI EUROPE represents more than 500 successful ‘World Whisky Tour airport charges has cleared Europe’s airports that handled 2.3bn passengers Promotion’ across its Pacific region Patrón tequila airports of abuse of market power by in 45 European countries last year. Its stores in Auckland, Christchurch, overcharging retailers and airlines. director general Olivier Jankovec said: Queenstown, Adelaide, Cairns, partners with European airport industry body “If there is one thing that comes out Perth and Avalon. Cancun airport ACI EUROPE welcomed the findings very clearly from the commission’s The Lagardère Travel Retail- and said the report refuted “airlines’ analysis, it is that airports’ market owned (LTR) retailer said the Patrón tequila has opened a new tired allegations” in the past that power has significantly diminished in promotion, now in its third year, bar at Cancun International airport airports exhibit “excessive profitability Europe over the past 10 years.” focused on the broad whisky to give passengers a taste of the levels” and “overcharge for the use Most of these airports rely on duty- category spanning single malts, brand’s home, Hacienda Patrón, in of their facilities”. free retailing, food and beverage, blends and American whiskey, plus Jalisco, Mexico. The report evaluates the effectiveness parking and other revenue generators Irish, Canadian and other whisky The bar is the centrepiece of a of the current EU directive on airport to balance their books, with Jankovec The Jura single malt promotion with Duty Zero by CDFL at Hong Kong International airport liqueurs from around the globe. five-year collaboration between charges, while recognising that new pointing out that industry level Describing it as “a complete Bacardi Global Travel Retail, ASUR, market dynamics have resulted in charges paid by airlines cover only category approach to captivate Cancun Airport Authority and Dufry. “increasing competitive pressures upon 80% of airports’ operating cost and Where Jura meets Asia… customer preferences”, LTR CEO In May 2019, its first full month of airports of all sizes across Europe, thus make no contribution to investment Whyte & Mackay’s Jura single malt Scott Hamilton, business director Asia Pacific region Przemek Lesniak operation, the bar contributed to limiting their market power”. and capital expenditure. whisky has engaged with Hong Kong (spirits, wine and beer) at Lagardère said: “We want to bring discovery strong growth across several key and Taiwan airports in two disruptive Travel Retail (CDFL’s JV partner at HKIA) and excitement to our customers’ Patrón tequila lines. activations, introducing customers said: “We have been very pleased shopping journey when they’re The tasting bar, which is focused of Duty Zero by CDFL at Hong Kong by the cooperation with Whyte & at the airport. The tour offers an on sampling, engages consumers Dufry continues its expansion International airport (HKIA) and Tasa Mackay on this Jura pop-up activation. opportunity to experience and learn with Patrón tequila and encourages Meng Duty at Taiwan Taoyuan airport They’ve not only ticked the box in about the many different whisky sales in the adjacent Dufry store. Dufry, the world’s largest duty-free Dufry reported turnover of CHF1.88bn to the brand. education, but they’ve ticked the box styles from around the world.” Among the new products in-store and travel retailer, opened 9,100sq m ($1.87bn) for the first three months Travellers at both hubs were offered also in interaction, so the shopper Regional director of Pernod is a limited-edition Silver Patrón of new retail space in Q1 of this of 2019 — a 2% organic increase on a glimpse of life on the small western has something that’s interesting and Ricard for Pacific Travel Retail, gift tin (RRP $50/1L), featuring a year in multiple locations, including the first three months of 2018. The Q1 Scottish Inner Hebrides island, using engaging. Execution has been fantastic Brendan Coogan commented: vibrant design celebrating Patrón’s Russia (17 new stores), North America result follows a “record turnover” of interactive displays, product sampling and most importantly, generated “We understand the importance Mexican heritage. (14), Casablanca (4), Helsinki (1), China CHF8.7bn ($8.8bn) in 2018, driven by and point-of-purchase displays. significant incremental business for of getting behind category-led Bacardi global travel-retail regional (6) and on new ships (17). like-for-like growth and contributions At HKIA, Jura products were displayed Duty Zero. A great win-win partnership.” activations that deliver new director Americas, Geoff Biggs says Dufry Group CEO Julian Diaz from new concessions. alongside a full-size traditional fishing Jura plans to roll out its in-store experiences for travellers with the bar is the largest brand activation recently told analysts there are The South American market boat, with nets and lobster traps as activation concept to wider travel The Glenlivet and Jameson brands, undertaken since Patrón tequila also agreements to add a further continues to prove challenging for a backdrop for traveller ‘selfies’, plus retail airport locations later this year, and both these brands have joined the Bacardi portfolio in 2018. 18,800sq m of retail space during Dufry due to currency weaknesses real-time Polaroid printing and tastings including London, Edinburgh, Frankfurt, achieved tremendous growth “This is a powerful demonstration 2019 and 2020. He also highlighted in Brazil and Argentina. The retailer’s from in-house brand ambassadors. Hamburg, Paris and Dubai. through this promotion.” of our strategic commitment to an “important project pipeline” Central and South America division highlight and accelerate the global comprising an additional 35,500sq m saw a year-on-year drop in turnover iconic status of Patrón tequila.” of retail space where Dufry is for the fourth consecutive quarter, Patrón tequila grew 14.5% in GTR negotiating or participating in new with turnover down -10.8%. But Diaz CHINESE TOURISM TO US FALLS in 2018, significantly outperforming tenders “across several divisions in said there was an improvement in the category (+3.5%, according to Europe, Africa, Asia-Pacific, the Middle the performance of the Brazilian IWSR Drinks Market Analysis). East and Central and South America”. operation in May compared with Q1. Travel from China to the US fell for the to the US continued to be the biggest spent some $277.3bn globally last year. first time in 15 years last year, falling by overseas international spenders with a The top six most popular destinations -5.7% to 2.9m visitors, according to the total outlay of $36.4bn last year. Chinese for Chinese tourists were Thailand, South Korea weighs up increase in duty-free purchase limits US National Travel & Tourism Office. tourists spend approximately 50% more Japan, Vietnam, Singapore, Indonesia This is despite figures from the revenue on average than any other and Malaysia, according to the China The South Korean government is departure allowance of $3,000 and a for change. Another factor may be the Ministry of Culture and Tourism of international visitor to the US, according Tourism Academy and Chinese travel “reviewing the need” to increase $600 exemption for arrivals purchases. recent introduction of South Korea’s China showing that the total number of to the US Department of Commerce. agent Ctrip. The US ranked seventh on the country’s duty-free allowances, The last increase was 13 years ago. first duty-free airport arrivals stores outbound international trips by Chinese Chinese tourists continued to rank as the list of most popular destinations. according to a brief statement by the Exact details of any proposed rises at Incheon International airport. Two tourists rose by 14.7% to 149.72m in 2018. the world’s highest-spending individual (These numbers exclude trips to Hong Ministry of Economy and Finance. have yet to be announced, although the shops were recently opened by SM It is thought that the trade war travellers in 2018, with the United Kong, which is technically a Special By most standards, the country’s government said increased income and Duty Free and one by Entas Duty Free, between China and the US is the main Nations’ World Tourism Organisation Administrative Region of China, along limits are already generous, with a inflation levels were the main drivers with both offering wine and spirits. reason for the drop. Chinese visitors (UNWTO) calculating these tourists with Macau).

10 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 11 UP FRONT/INDUSTRY DISRUPTORS with Alexander Smith SPIRITS SPOTLIGHT/BEAM SUNTORY IMPACT OF WHERE EAST MEETS WEST

E-COMMERCE Beam president and CEO

Image: iStock.com/ChamilleWhite Albert Baladi explains how ON ALCOHOL the company is gearing up for its next phase of growth. TRADING Alexander Smith reports

E-commerce now accounts for 1.8% It is now five years since Suntory’s of the value of all global beverage blockbuster acquisition of Beam Global alcohol sold, according to IWSR Drinks for about $16bn and this unlikely Market Analysis. marriage is working well on many levels. Like other sectors, the drinks Beam Suntory president and CEO industry has recognised what a critical Albert Baladi says: “When you think medium the digital environment is to $6.5bn of spirits were sold online in in e-commerce growing very fast. about it, there aren’t examples of interact with consumers, inform them, 2018, a figure that represents 2% of all E-commerce in Germany is about Japanese companies buying global learn from them and ultimately sell to global spirits value sales. For example, 10% of our business and growing at companies and being successful. This them. Regulation has made the online e-commerce is now reported to be double digits. China is probably the acquisition has been very successful for retailing of alcohol more complicated Pernod Ricard’s fastest-growing channel. most developed e-commerce market Suntory. Since the acquisition, we have than other sectors and this has stifled Direct selling on owned-online in the world and driving the overall outperformed the market every year development — particularly in the US — platforms has been less effective for spirits market. China is a place, through and are gaining market share in the US CEO Albert Baladi says Beam Suntory has “cracked the art of producing the perfect highball” but this is changing. spirits operators than partnerships or T-Mall and Alibaba, where brands are and in international markets.” Wine has best harnessed the selling acquisitions with established online being built.” Baladi admits that there were initially we gradually developed a really good entrepreneurial spirit, the will to win power of the online retail environment. retailers and delivery services, perhaps The reported 800m Chinese internet cultural challenges to overcome. understanding. Diversity can present and the ability to build businesses on Last year as much as 3.6% of all wine because it compromises choice to users have been quick to embrace the “There are sometimes the small things problems, but there is also a strength a global basis. It is what Beam brought value sales stemmed from e-commerce exclusively sell their own brands. advent of e-commerce. The explosion in that you need to become attuned to. In from diversity. Looking at ideas and to Suntory — a global footprint and outlets, a figure that translates into The recent trend has seen operators smartphone use, social media apps and meetings in Japan someone may nod different ways of coming at them can knowledge of how we run a company nearly $8bn of sales. The rapid expansion partner with existing platforms to mobile e-commerce has facilitated this their head, but that doesn’t mean that also be very powerful and a source of on a global basis. Combining those two of wine sales online has even threatened maximise exposure and showcase their shift in buying habits and meant that they agree, as it would in the West. strength. Today, we are in a great place.” things creates something unique.” the viability of independent bricks-and brands from a different angle. 6.5% of off-premise sales of all alcoholic In the early days, we would leave a Baladi says the East-meets-West Beam Suntory has come a long -mortar wine stores in the UK. Online drinks are now ordered online in China. meeting thinking that everyone agreed aspect is one of the elements that way as a company. It has doubled wine sales in the country have reached China quick to embrace online The e-commerce channel has proved and that wasn’t the case. sets Beam Suntory apart within the its business in the last eight years, 6.5% of total sales value, prompting The development of the online particularly popular for wine sales in “The way that people in Japan and industry. “From the East, it is that focus with sales growing from $2.3bn in one leading wine retailer, Majestic, to marketplace is happening at different China. Encouraged by fierce competition, the US process information is different. and passion for quality and craft, and 2011 today to $4.5bn in 2018. The announce that it is to sell off much of its speeds, with drinkers in some markets which has ensured low prices and fast The Japanese really love detail, whereas what the Japanese call Kaisan, which is company’s flagship Jim Beam brand retail estate to concentrate on its online quicker to adopt new purchasing delivery, online sales now account for in the US it is maybe more top-line. the spirit of continuous improvement,” has grown from 6m cases and is now business, Naked Wines. practices and habits than others. 9% of sales value – that is a fifth of all We had a lot of face-to-face meetings, he explains. “It is also thinking big and surpassing the 10m-case mark. The extensive number of wine Diageo CFO Kathryn Mikells told off-premise wine sales, as well as online video conferences late at night and long term. From the West, we draw the The acquisition by Suntory in 2014 producers and the diversity of Intel: “E-commerce penetration varies spirits sales of almost 4%. Even in clearly came after a successful period choice has meant that a culture of market by market. In the US it is still markets like China where e-commerce Scale of Top Spirits Companies (Retail Sales Value $000s) by Beam. What we have seen since experimentation has always existed quite low because the three-tier system penetration is already comparatively high, the acquisition of Beam by Suntory within the wine sector. The online creates barriers for beverage alcohol that it can be assumed that the e-commerce 41.5m is the company adopt a longer-term environment has proved to be well are not present in other e-commerce channel will continue to take share perspective. Beam Suntory has set placed to service wine drinkers’ categories. China is a big opportunity for from bricks-and-mortar retail. ambitious targets taking the company curiosity and to educate and inform us. We are gaining share in e-commerce Nevertheless, the potential remains 24.5m through 2030. It aims to more than consumption choices. that is bigger than our share of offline. for Amazon, Alibaba and other powerful double sales over that period from the The dramatic expansion of online E-commerce is also bigger penetration online retailers to move into private current $4.5bn to $10bn by 2030. wine marketplaces like Vivino, which across Europe because you can sell spirits label to a greater extent. Baladi said: 11.7m 10.4m The company will remain 8.0m after just nine years of trading now in supermarkets. We have partnered up “Long-term, as they develop their preoccupied with leveraging its rapidly 3.8m 2.4m claims to have 10m different wines and with those retailers to make sure that our private label business, the challenge for growing Bourbon business. Baladi as many as 35m users, has illustrated brands are showing up well.” us is to make sure that our products are says: “We are the leader in Bourbon. just how compatible wine selling is Beam Suntory CEO and president must-haves and not easily replaced. We We believe that our task is to make Ricard Grant Diageo Suntory Bacardi within the digital space. Albert Baladi told Intel: “Globally, where do that through a focus on quality.” ● & Sons Bourbon the world’s whisky. We are Edrington Sales of spirits through e-commerce e-commerce has had unfettered access playing a lead role in this growth. William may not be as pronounced as wine, to consumers, as in Western Europe, we NEXT MONTH An exclusive interview Pernod Beam Brown-Forman We are investing behind the market. but IWSR research shows that around have seen the development of spirits with Alibaba president FMCG Mike Hu Source: IWSR Drinks Market Analysis/Retail Sales Value This is clearly underpinned by Jim ➔

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➔ Beam. We have a vision of Jim Beam Beam Suntory has been a big part a New York base two years ago. It is want to play. For us it is a category that becoming a billion-dollar brand. You of that growth. “We just had two now looking at opening offices in Los is very important and for Courvoisier can see that the growth trajectory consecutive years of out-performance of Angeles and elsewhere. Baladi says the we are earning the right to win.” behind the brand has really improved the spirits market driven by our Bourbon company hasn’t settled on an exact Becoming more impactful with the since the Suntory acquisition. We and tequila brands —and also Cognac,” number of regional offices. “These multicultural consumer, not only with used to grow at 2% CAGR until 2014, says Baladi. “Courvoisier has been doing clusters will be brand led and market Courvoisier but its other brands such and then we started growing at 7% very well. We are also doing well with fed,” he explains. “We know what we as Sauza, is part of what is leading CAGR. We are really focused now on emerging segments like the House of want to do with the brands, but the the company to revise its approach growing the brand on a global basis. Suntory Japanese whisky performing way we express them depends on the in the US. “A lot of this multicultural Global expansion is a big deal for us.” strongly. As a result, it is really pivotal consumer in that specific market.” opportunity in the US is what has The US market remains central to how we craft the next phase of growth informed our strategy to go more local,” meeting that overall $10bn sales target and where do we go from here and Premiumisation opportunity explains Baladi. “It is probably an area and the company is working toward meet our ambition of nearly doubling the There is also the premiumisation where we under-index today. Every doubling the contribution from the size of the existing US business, and how opportunity. Beam Suntory under- time that we put dollars and people US market to $3bn. This doesn’t seem we look at untapped opportunities — indexes at premium-and-above price and focus behind that multicultural unreasonable given the momentum places where we under-index.” points ($20+). Just 35% of its products opportunity we have done well. We in the US distilled spirits market. To better exploit those opportunities, sell at premium-and-above levels, Cognac Courvoisier’s HQ in Charente. Cognac has been a key driver of growth for Beam Suntory have been really encouraged by some Baladi points out that 2018 will be the Beam Suntory plans to adopt a more with 40% being the industry average. of our pilots. We started recruiting ninth consecutive year of the spirits localised approach by forming several “In the last five years, we have moved Beam Suntory has also been gradually initiatives are imperative in the face multicultural specialists a couple industry growing in the US and gaining regional offices based around brand/ our premium portfolio from 30% to churning its portfolio, selling off its of rising agave prices. “We are of years ago and through the new share from beer, but warns that while market combinations. “We see more 35% by injecting life into our legacy lower-margin Spanish brandy business managing agave costs, which is an strategy that we have deployed in the there are “lots of favourable trends, opportunities to become more brands, acquisitions and divestitures,” for instance, and acquiring higher- issue because costs have gone up US, which is to think about the US as there are also a lot of disruptors.” localised in our approach to the US says Baladi. “We have introduced a lot of margin brands like Sipsmith gin or five times,” he says. “Premiumisation a cluster of markets, we are going to In the US, Beam Suntory very much market,” confirms Baladi. “This is in innovations. This is on top of our existing launching successful new super- within tequila will be more important go much harder after the multicultural sits in the sweet spot of the market recognition of the diversity of the US brands. There is a massive opportunity premium innovations such as Roku gin. than ever to offset rising agave prices. consumer — the Latin American, Asian given its strength in the booming market. We see opportunities in the for premium innovation, particularly in Pricing will also play a role. “The The higher you go up in price the less American and African American.” Bourbon, Cognac and tequila sectors. on-premise and with the multicultural American whiskey, Cognac and tequila, way we have grown our gross margin price sensitive is the consumer.” “We are turning this opportunity into consumer. We are viewing the US as but most other categories too. That is historically is that we have relied on Beam is also a major participant Innovative edge profits and building a global spirits a cluster of must-win markets with going to be a big focus for us.” pricing,” observes Baladi. “We believe in the vibrant Cognac market in the Much of the company’s recent growth powerhouse,” says Baladi. “Back in the different jobs to be done, and different Baladi isn’t satisfied though. He that we are now in a position on many US through its Courvoisier brand, has been fuelled by innovation. Baladi 2000s, going out with friends was all investment profiles. This cluster explains that while Beam Suntory is the of our premium brands where we which sits some distance behind the estimates that innovation contributes about beer and wine. If you go out approach will better help us deploy our third-largest spirits player with retail can build margins through pricing market leader Hennessy. “Courvoisier more than a quarter of its annual today it is all about cocktails. The resources against these opportunities.” sales value of $11.7m, in terms of spirits and mix. This year, we are going up in the past two years has been doing growth. “It has been a very important ongoing premiumisation in the spirits While the company will maintain its above $20, it is at the lower end of the in pricing on Courvoisier, our tequila very well for us,” says Baladi. “It is a pillar of our strategy,” reveals Baladi. industry and consumer knowledge and base in Chicago, it will set up offices in leading spirits players at 35%. That 35% brands and American whiskey.” brand that at certain times of our “We look at innovation in several interest in spirits is just incredible to the key leading cities. It inaugurated a places it on a par with Diageo, but a Premiumisation is also fully evident history has gone through waves of different ways. One of them is how see and the best is yet to come.” San Francisco office in May and opened considerable distance behind its chief in the tequila category and Beam investment, in and out, but now do we renovate our existing legacy US whiskey rival Brown-Forman at 72% Suntory has led that trend through we are absolutely committed to brands, refresh and premiumise them? (see chart below left). As part of that innovations. Hornitos Black Barrel has Cognac and we are making a lot of But also, how do we enter adjacent Premiumisation Across the Industry goal, Beam Suntory aims to grow the been very successful, and it is tapping investments — in brands, but also in categories or introduce new-to-world premium proportion of its total sales into the latest cristalino trend with distillery capacity and expansion. It innovations? Many of the House of from 35% in 2018 to 60% by 2030. Hornitos Cristalino. Hornitos is now has been on a growth curve in the Suntory brands, for example, like 28% 42% “We have work to do in the premium rolling out new packaging and the US. We are taking price increases Roku gin and Haku vodka, have been ‹ Standard 52% space,” Baladi explains. “If you look company has also launched super- this year in the US on Courvoisier developed for the Western consumer, 65% 65% 59% 58% at the premium space, we are No.5 premium craft brand El Tosoro. and the brand is responding well.” against a certain trend, against a and that tells us that maybe we are “Tequila innovation is playing a really Beam Suntory is also introducing certain need. We always start with the 40% 72% Average not as good as we think we are. It is a key role as the category has been innovations such as Courvoisier Sherry consumer and the consumer occasion.” 58% wake-up call. The underlying theme premiumising with wood finishes and Cask, which has been successful in The company is also prepared to 42% 48% Europe and is now gaining traction 35% 35% 41% is that we have an amazing portfolio other high-end expressions,” agrees acquire brands when there is a need. Premium in the US. The company is preparing ($20+) of 39 premium brands. We aren’t that Baladi. “We are taking what is today “Do we have gaps and are we on far away from Pernod Ricard. We only the fastest-growing tequila brand in more innovations at the XO-and- the lookout for small, opportunist

have one premium-plus brand that the US to the next level. This is where above level and also in the VSOP and acquisitions? Yes, is the answer,” admits

Grant Diageo Ricard has achieved retail sales value of half a we see the next wave of growth for VSOP-plus segments. “Cognac has Baladi. “There are spaces where we Bacardi Suntory & Sons Edrington billion dollars and that is Maker’s Mark. us. Just driving the portfolio and been an incredibly resilient category,” don’t play in today and the question says Baladi. “In the US it is very status William Our challenge and opportunity will be building on the category dynamics of then is: do we buy or do it organically? Beam Pernod Brown-Forman to build scale in premium and build premiumisation, craft and storytelling.” driven and is right at crossroads of Sipsmith was our latest acquisition Source: IWSR Drinks Market Analysis/Retail Sales Value brands that transcend markets.” He explains that these premiumisation the multicultural consumer where we and has been incredibly successful. ➔

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➔ When we look at acquisitions, we ask US WHISKEY’S LONG ourselves: is it playing in premium, does it fill a gap and, most importantly, is there an interesting quality story behind RUNWAY FOR GROWTH the brand? It is about prioritising our organic growth, but then when we find something unique being in a position to move and acquire it with agility.” The US whiskey industry has Baladi notes that the company displayed impressive growth in already has a very full portfolio and recent years, but the best is to participates in most categories at most price points. “What we need come, reports Alexander Smith to do first and foremost is build premium brands of scale on a global Winning in Bourbon is central to Beam Suntory’s ambitious plans Global US whiskey sales continue to basis,” he says. “A lot of our capital is explode, rising by 8.7% (or 4m nine- inward looking, fuelling investment whisky, particularly Suntory brands which Suntory repopularised, is litre cases) in 2018 over 2017 to reach a in our brands and organic growth. It such as Yamazaki 12yo, Yamazaki effectively stealing volume from the new high of 51.1m cases, according to is not only on the brand investment Sherry Cask and Hibiki. These brands large Japanese beer market. “We have IWSR Drinks Market Analysis. This is that you must spend. It is also the have won numerous awards in the really been able to develop the highball led by surging sales in the domestic US upstream investment in things like most prestigious spirits competitions. as a better alternative to beer,” he market, as well as a growing following in distillery capacity and visitor centres.” “The combination of these two says. “The highball is refreshing, you international markets. factors has suddenly created a gap can session drink it and you can play There were many impressive Investing in production because the market decline that with the ABVs. Suntory has cracked aspects about that performance, but That investment in distillery capacity preceded this led many companies to the art of producing the perfect foremost is the broad-based nature is significant. Many of its hottest reduce investment in capacity,” says highball. Then, with the incredible of that growth. All of US whiskey’s top products such as the Maker’s Mark Baladi. “We are looking to remedy execution muscle that Suntory has 10 markets posted gains last year, six US whiskey cocktails, such as Jack Daniel’s Apple Jack, have been embraced by millennial consumers Bourbon brand or its Japanese this and five years ago we began in Japan, we can do that in outlet of them at a double-digit rate. The whiskies are supply constrained. ramping up capacity in a big way. In the after outlet. It has created a massive slowest-growing market in the top 10 There are a few hiccups in various It is worth noting that US whiskey In the case of Maker’s Mark the meantime, we are doing smart things explosion in highball consumption.” was Australia at a still-impressive 4.7%. places and the tariffs don’t help sales in the domestic market are only earlier investment in extending like introducing non-age statement Beyond whisky, Beam Suntory is The category’s performance in the business in the EU and other places, just above half of what they were at its capacity is now due to bear fruit. whiskies.” These include Hibiki a dominant player in the dynamic US was nothing short of astounding, but in general consumers continue peak in 1970, despite a much smaller Baladi says: “We started investing Harmony at the ultra-premium $50- ready-to-drink (RTD) sector. Japan is rising by 8.7% to 33.3m cases. That to be very much interested in the population. Shapira adds: “That just heavily in production capacity at $60 range and above. It also introduced the largest RTD market in the world. is an increase of nearly 2.5m cases. category. The history, the heritage, the shows what kind of a very broad runway Maker’s Mark in 2014-’15. That liquid is the non-aged Suntory Toki in the US “Our performance in RTD in Japan has Heaven Hill president Max Shapira told tradition, the new styles of product, the and opportunity the industry has.” now coming on stream, so we are in a in the $35 price segment and it has been nothing short of extraordinary,” Intel: “Today, there’s a continuance new taste characteristics and all the There are several factors driving good place. We can grow the brand at performed strongly, reaching nearly says Baladi. “We have been growing of American whiskey’s renaissance. other elements that have been part of sales. Generally, US whiskey with its double digits all the way to 2030 and 130,000 cases in just its third year. RTDs at a double-digit rate for the Everything looks very robust both this industry for a very long time. That’s sweeter profile is more mixable and beyond. About 88% of Maker’s Mark is in Baladi says there is no short-term past five years from a leading and domestically and around the world. very positive for the future.” probably better suited for the palates of the US today. It has tremendous room fix to the supply issue: “It depends very high base. Brands like -196 young millennials than Scotch whisky. to grow internationally. We are pushing what expression, what blend and what and Horoyoi are doing very well.” Top 10 Global Markets for US Whiskey Brown-Forman CEO Lawson Whiting Maker’s Mark in international markets age statement. Overall, we should be Baladi points out that Suntory is told analysts recently: “Approachability now. There is also a big opportunity to more comfortable in about five years building a third tier in Japan beyond Volume Volume % Mkt Share % Chg Vol Vol Chge doesn’t often get talked about. There Rank Country 2017 2018 2018 2017-’18 2017-’18 grow it further in the US.” and can go more aggressive on our its existing whisky and RTD business. has been an explosion of flavours and Supply of its Japanese whiskies aged expressions. In the meantime, The House of Suntory is extending into 1 United States 30,887 33,345 65.2 8.0 2,458 cocktails that has really changed the will continue to be very tight. “We there is enormous room to grow premium white spirits, notably with the 2 United Kingdom 1,988 2,303 4.5 15.9 315 dynamic of the US whiskey business; remain very supply constrained. There with [non-age statement] brands like successful launch of Roku gin. “Now we 3 Germany 2,153 2,260 4.4 5.0 108 it has removed the barriers that were is no doubt that as the world has Hibiki Harmony and Suntory Toki.” are seeing the emergence of premium 4 Japan 1,405 1,575 3.1 12.1 170 in the category back in the 1970s when discovered Japanese whisky and as white spirits. We are really impressed 5 Australia 1,378 1,443 2.8 4.7 65 everybody drank it straight. US whiskey the market in Japan has turned around Highball steals beer share by the success of Roku in Japan. It is today combines the tradition and 6 France 1,306 1,373 2.7 5.1 67 it is putting pressure on stocks.” Despite the supply constraints, Beam growing from a small base, but it is an heritage you see in Scotch, with the There was a massive decline in Suntory is performing well in Japan. opportunity for us going forward.” ● 7 Poland 761 901 1.8 18.5 141 modern, stylish and mixable attributes Japanese whisky consumption from “We have been outperforming the 8 Canada 502 559 1.1 11.4 57 of vodka. At least half of today’s US the late 1970s to the early 2000s. overall market in Japan for some time NEXT MONTH Intel looks at Beam 9 Russia 449 524 1.0 16.7 75 whiskey consumption is mixed. Scotch Then Suntory’s introduction of the now,” says Baladi. “That is driven by Suntory’s international strategy, how 10 Brazil 333 401 0.8 20.3 68 by comparison is very traditional, highball really took whisky into the the performance of whisky both at it plans to win in the emerging Rest of World 5,869 6,424 12.6 9.5 555 it is an acquired taste, which is a beer space and revived demand. At the standard and the premium end markets and the challenges arising disadvantage among millennials.” Global Total 47,030 51,108 100.0 8.7 4,078 the same time, the world began to through the highball promotion. from disruptors such as e-commerce, The number of active domestic recognise the quality of Japanese Baladi explains that the highball, trade wars and cannabis. 000’s of nine-litre cases Source: IWSR Drinks Market Analysis whiskey brands on the US market ➔

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US Global Whiskey Market by Price Brand Subscribe now! Don’t miss our Volume Volume % Mkt Shr % Chg Vol Abs. Chg Vol Price Band 2017 2018 (Vol) 2018 2017-’18 2017-’18 ➔ surpassed 400, an increase over prior years. Many of the new craft Prestige-Plus 0 1 0.0 71.4 0 distillers entered the category with a Prestige 35 40 0.1 14.1 5 view toward participating in whiskey. Ultra-Premium 1,087 1,271 2.5 16.9 183 The multinationals are also increasing Super-Premium 1,535 1,708 3.3 11.3 173 TFWA CANNES ISSUE their participation either through Premium 20,264 21,396 41.9 5.6 1,132 acquisitions, new-to-world innovations Standard 19,941 22,635 44.3 13.5 2,694 EXCLUSIVE: TOP 10 DUTY-FREE or by restoring old trademarks. This has, in aggregate, created a Value 4,167 4,058 7.9 -2.6 -109 LIQUOR RETAILERS • TOP BRANDS greater critical mass of investment Global Total 47,030 51,108 100.0 8.7 4,078 IN DUTY FREE • EXCLUSIVE BIG and so-called ‘new news’ to generate 000’s of nine-litre cases Source: IWSR Drinks Market Analysis RETAIL INTERVIEW: ALIBABA • consumer interest. The growth in Bourbon tourism is both a sign of and much innovation, not much glamour cases and that is the market we are TRAVEL-RETAIL INTERVIEWS: DUBAI a contributor to this growing interest. associated with it and most analysts going after.” DUTY FREE/DUFRY/ABU DHABI Bourbon tourists made a record 1.4m were consigning the US whiskey Indeed, US whiskey is a hotbed of LAGARDÈRE/AER RIANTA • distillery stops in 2018 — a 370% increase category to that great liquor store innovation and this is helping to peak over the past 10 years, according the in the sky. We started to get our consumer interest and fuel consumer SUPPLIER INTERVIEW: BEAM Kentucky Distillers Association. The act together in the late 1980s and demand. Sazerac senior marketing SUNTORY CEO ALBERT BALADI • industry is in the middle of a $2.3bn early ’90s and began innovating to director, Bourbons, Kris Comstock DIAGEO TRAVEL-RETAIL INTERVIEW • capital investment spree, from innovative a greater extent. Today, you have says: “Small craft distillers are exploring new tourism centres to expanded different styles of US whiskey within new styles, some larger brands are PREMIUM BROWN SPIRITS •COGNAC production facilities, to meet the growing the American Bourbon category, the adding flavours like honey, cherry and IN TRAVEL RETAIL • VODKA IN global thirst for Bourbon. rye category and other styles as well. peach. Rye whiskey is still growing, and TRAVEL RETAIL • PREMIUM VODKA The latest data from SipSource, You have great innovation in terms of our Sazerac Rye brand is becoming which looks at depletions from US recipes, of alcohol strength and age more popular. Buffalo Trace Distillery TRENDS IN EUROPE • GIN IN EUROPE wholesalers to retailers, indicates characteristics. Packaging has also continues to experiment with well-aged • INNOVATION IN LIQUEURS • that US whiskey is maintaining been upgraded tremendously to make Bourbons using an array of new recipes PACKAGING TRENDS IN SPIRITS momentum. SipSource consultant Dale it relevant to the times. And it caught as part of our experimental program and Stratton says: “US whiskey continues on with American consumers.” different varieties of oak barrels, as seen • TRAVEL-RETAIL EXCLUSIVE to outperform the larger US spirits with the Old Charter Oak brand.” PRODUCTS • BERLIN BAR SHOW category. The only whiskey category Cocktail culture instrumental Many companies are experimenting PREVIEW • CRAFT BRANDS IN growing faster than US whiskey is The rise of cocktail culture in the US with different mash bills, yeasts and Irish, but that is off a smaller base. has been hugely instrumental and is finishes, according to Michter’s Distillery TRAVEL RETAIL • HOW TO GET US straight whiskey is performing beginning to have an impact all around president Joseph Magliocco. “Some INTO TRAVEL RETAIL • THE CASE particularly well in the on-premise.” the world, according to Shapira. “It other companies are producing whiskies FOR WINE IN TRAVEL RETAIL US whiskey depletions for the 12 isn’t any one specific thing — it is made with techniques intended to months ended 31 March 2019 were up by many things that have come together speed up the ageing process,” he adds. • HEINEKEN TRAVEL RETAIL • 3.5%, according to SipSource estimates. to create this perfect cycle. Fifteen “At Michter’s our goal is to make the CHAMPAGNE AND SPARKLING Within that, straight whiskey was up years ago, nobody ever thought we greatest American whiskey, and, though WINE IN TRAVEL RETAIL by 4.7% in the off-premise and 5.3% in would be where we are today.” we constantly try new things as we the on-premise, while blended was less Bourbon’s move into flavours has pursue that goal, we generally take a dynamic, rising by 0.6% in the off-premise further broadened the category’s traditional Kentucky approach.” and falling -0.4% in the on-premise. appeal, helping it to reach non- Much of the innovation is geared SUBSCRIBE NOW FOR PRINT + DIGITAL ACCESS Producers, both large and small, are traditional demographics such as toward premiumising the category. There benefiting from current consumer younger females. The most significant is also a sense that US whiskey remains The global drinks industry is overwhelmed with information. global drinks intel. demand and are releasing high-end recent development in this area was under-developed at the high end and innovative product extensions. Much of Brown-Forman’s introduction of Jack there is scope to take the category up curates that information for you, bringing to light in a concise manner the ‘how the innovation has been led by smaller Daniel’s Tennessee Apple. Whiting says: vertically. Beam Suntory CEO Albert and why’ behind the top-line numbers. Stay in the know, subscribe today. independent or craft distilleries. One “We have had tremendous success with Baladi tells Intel: “The American whiskey area that they have pioneered is the Honey and Fire. Honey was introduced category is clearly premiumising. We see creation of a new category — US single eight years ago, and Fire was about massive opportunity in premiumisation. To subscribe, visit our website: drinks-intel.com or contact our subscriptions malts. These craft distillers are also five years ago. We have been relatively If you think about US whiskey and releasing innovative blended whiskies slower about the pace of these flavour Scotch, there is a big price gap. Just manager Kate Wake-Walker at [email protected] or at +44 (0)7798 600 407 by combining atypical ingredients. introductions than some of our compare single-malt Scotch with the Shapira says: “What happened was competitors. These favours remain very age statements and American whiskey. the industry for a very long period attractive. [Canadian whisky brand] US whiskey is under-priced. There is an shot itself in the foot by having not Crown Royal Apple is approaching 2m enormous opportunity for premium ➔ A ‘one-stop shop’ for the global drinks executive

18 global drinks intel. AUGUST/SEPTEMBER 2019 SPIRITS SPOTLIGHT/US WHISKEY SPIRITS SPOTLIGHT/US WHISKEY

➔ innovation.” Baladi adds: “Our for the larger category, something the Mark has been on a journey now of page 13). Other US whiskey producers, small cask business is growing very Scotch and Cognac industry has been 10% CAGR pretty much for the past such as Sazerac and Heaven Hill, are fast. You are seeing brands in the doing for many years. five years, but 90% of Maker’s Mark also turning to international markets $60, $70 and $80 area and we are Magliocco of Michter’s says: “People is in the US because we had capacity in a more serious way. Comstock starting to break the $100 barrier. at home in the US and abroad are issues. The brand took off much faster of Sazerac says: “There is certainly There are opportunities there. increasingly recognising that great than we expected. Now that we have growing demand for our brands in the The more we keep building the Bourbon can rival the great spirits the capacity and liquid, we have started US, but we are also beginning to make quality, the story telling, investing from other parts of the world, and to expand it globally. Our goal with efforts in global markets such as the in our distilleries so that we can be this growing realisation is driving up Maker’s Mark is to become the No.1 UK, Germany, France and Australia.” transparent and create incredible prices of whiskies made in the US.” He craft whiskey on a global basis.” Most of the upside to date has come experiences, the more we can leverage notes that at an auction in London in Baladi adds: “As the category from the mature whisky markets of this premiumisation opportunity.” November 2018, a bottle of Michter’s premiumises, we are seeing fantastic Western Europe. US whiskey in the UK IWSR Drinks Market Analysis data 22yo Bourbon sold for £13,340. growth in our other Bourbons. Basil blew past the 2m-case mark last year indicates that this premiumisation It is the super-premium end that is Hayden’s is up 36% CAGR (2014-’18) and after a 16% rise (see Asda sidebar on trend is accelerating. On a global level, currently on fire, led by the likes of Knob Creek by 12%. They are still very page 20). The category also registered a super-premium sales climbed by 11.3% Woodford Reserve and Maker’s Mark. US focused, but Knob Creek has just healthy 5% rise in France, taking the total to 21.3m cases, while ultra-premium Whiting of Brown-Forman says: “Looking passed 500,000 cases at a $45 price Maker’s Mark is on a “very impressive trajectory in Japan” built behind the craft highball volume there to 1.4m cases. sales climbed by 17% to 1.7m cases. across the different categories in the point. It plays in different occasions. The category is displaying real strength It also validates the notion that the spirits business, I can tell you that We are seeing fantastic growth with against multinational brands. There category overseas. The question is where in Central and Eastern Europe. In Poland category remains underdeveloped at the American whiskey is the most attractive these brands, in addition to our small- is competition but it’s Jim Beam, its are we going to get this growth from? it grew by 18.5% to around 900,000 cases very highest segments with negligible category out there. The premium and batch Bourbon brands.” Bulleit... It’s the traditional Bourbon Obviously, there is beer where we have last year and it is on track to surpass the sales at the prestige and prestige-plus super-premium segments are growing at brands that we continue to compete been taking share from for some time, million-case mark in the next year or two. ends, which is largely the domain of the such fantastic rates. Woodford Reserve Receding craft challenge? with on a global basis.” but we are mostly going to get it from The category may lag far behind Cognac and Scotch players. was the right brand at the right time, and While the craft entrants deserve The pattern with craft spirits has been Scotch. This is particularly so when you Scotch in the Asia-Pacific region, This won’t be far away. Bourbon is it is approaching the million-case mark credit for much of the innovation and very different from that of craft beer, leave the US. The Scotch category is still but it does have certain pockets of achieving high valuations at auctions with growth rates north of 20%.” excitement that they have brought to according to IWSR CEO Mark Meek. “In twice the size of US whiskey. strength, namely Australia and Japan. and as producers create more products Beam Suntory’s Maker’s Mark should the sector, relatively few are breaking spirits, the iconic global brands like Jack “Over the last 20 years when we Its recent performance in Japan targeted at this prestige end it will present firm competition at this super- through on a commercial level. Many Daniel’s and Jim Beam have continued to have asked where is the international has been impressive. US whiskey inevitably grow. It also creates a halo premium end. Baladi says: “Maker’s have found attaining distribution difficult grow, and you have seen relatively few — opportunity? The answer was often just was very large in Japan in the early and have come to adopt the direct-sales if any — breakout brands from the craft look at where the British imperialists 1990s, but went into a long decline model from the distillery. Most craft side,” he explains. “The multinationals went 100 years ago, that is where we along with the broader brown spirits brands sell less than 1,500 cases. should not be complacent about the are going. Scotch had a 100-year head market. It has recently revived, rising Whiting says: “Some of these brands are competitive threat from craft, but it’s not start on American whiskey. Now we are by 12% to just under 1.6m cases. American whiskey ‘on fire’, going to break out, but the vast majority a big threat and certainly not the same very much taking share from Scotch. Beam’s Baladi says: “There is a are not. A lot of them have developed threat to big brands that craft beer was. The opportunity is still very large.” lot of growth in the overall whisky says British retailer Asda nice little businesses, but I don’t see The craft spirits brands are probably more In the emerging markets US whiskey category in Japan, led by Japanese many as being a threat to global brands. of an enhancer to the overall category. is making up for lost time, although it whiskey. Bourbon is doing well and Asda has been outperforming the But it has evolved over time into a A substantial number are in decline The craft whiskies have generated remains some distance behind Scotch. obviously the Scotch whisky brands UK market on American whiskey, bigger reach of other interesting right now. It is a tough business. some excitement, but ultimately the A good point of comparison is Jack are trying to gain share. Jim Beam has according to senior wine and and engaging products. “It is not easy to sit around and wait core brands are growing even faster Daniel’s and Johnnie Walker. Johnnie exploded. It used to be at 20,000 to spirits buyer Charles Craven, “We have also had a focus on rye five years for whiskey to mature. Many than the craft brands.” Walker derives 53% of its volume from 30,000 cases. We will be close to a although the current EU tit-for-tat whiskey in the last 18 months to of them have made some pretty bad emerging markets compared with million cases by 2020, when the Tokyo tariff increases on US imports — try and put some more challenging mistakes along the way in terms of International growth just 15% for Jack Daniel’s. Jack Daniel’s Olympics occur.” Beam’s growth, he including whisky and wine — may flavours and innovation in there.” releasing whiskies that were not ready. US whiskey is relatively underdeveloped stood at just 5% in 2000. adds, is very much driven by a strong dampen growth in future. Asda’s customers really buy into It is not that easy to make a really good in international markets compared with Whiting says: “The emerging markets presence in the on-premise through Nevertheless, at press time it, says Craven: “We kind of have whiskey. It is a science and an art.” other international categories such as have been the shining star of the the highball. The on-premise is a Asda reported an “overtrade on this sort of divide of an over-trade Whiting admits the craft movement Scotch. That is true in developed and company for the last several years. South third of the brand’s sales in Japan. American whiskey” which Craven is on American whiskey and an was initially viewed as a threat to emerging markets alike. Because US America, generally, has been just a very Baladi also notes that the company very pleased with. “Our fair share under-trade in malt whisky, so we the multinationals. “A few years whiskey is relatively underdeveloped fast-growing region for us, particularly launched Maker’s Mark in Japan two as part of the spirits category is very much put a lot of focus and ago internally we said there’s a big in export markets, it can target both Brazil and Mexico. We also continue to years ago. “Maker’s Mark is also on a concerned is around 17% market emphasis on that range. threat coming,” he explains. “We the mature Scotch markets of Western get solid growth markets like Poland and very impressive trajectory in Japan. It share, but for American whiskey “It is a really dynamic category for saw what the craft sector did to the Europe and the emerging markets of Eastern Europe in general. We see a lot is being built behind the craft highball, we overtrade at about 19%, so us and an important one which is big beer companies and expected a Asia, Eastern Europe and Africa. of emerging market potential and we are which is a little more premium. US we actually outperform versus vital for us to get right. We are really challenge along those lines. The fact The obvious source of that volume will only beginning to turn our eyes to Asia.” whiskey has this approachability the market which is great,” he looking at how we continue that is that threat hasn’t transpired for a be the Scotch market. Whiting says: Look for Beam Suntory to also and offers the Japanese consumer says. “We’ve got a real loyal core with the use of cocktail solutions, as variety of reasons. A lot of the craft “Globalisation of our business has been become a much larger player within something different from what they following on American whiskey that well as the whiskies that are to be brands just don’t have the size and a big driver for many years now. There’s emerging markets, particularly as it are used to in whisky. We see a massive starts from Jack Daniel’s as a brand. drunk neat or on ice.” scale and that’s where they struggle still an enormous opportunity to take the invests in route-to-market (see article opportunity there.” ●

20 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 21 SPIRITS SPOTLIGHT/HEAVEN HILL SPIRITS SPOTLIGHT/HEAVEN HILL CRAFT BEFORE CRAFT

enough stocks to satisfy that kind Whiskey (with bottlings to be released WAS COOL of demand.” each spring and fall) is another good The inventory issue is significant. example of how the company is drawing Most companies were taken by on the past for inspiration. “We brought While the US whiskey sector is Heaven Hill Brands president surprise by the current boom and have it back to the way it was in the 1950s dominated by the big multinationals Max Shapira says the struggled to keep pace with demand. and 1960s in a decanter-style bottle. It is it is sometimes less recognised that This partially accounts for the lack of only bottled in bond and carries unique there a thriving and large independent independent producer international ambition by some players. age statements of 9yo, 11yo and 13yo sector. Heaven Hill Brands is America’s helped kickstart the craft Most of the leading players such as and is in limited supply. There are all largest independent family owned and movement — 85 years ago Heaven Hill have subsequently invested those aspects of premiumisation that operated producer and marketer of heavily in expanding capacity and are the consumer is looking for.” distilled spirits. digit growth. The company recently better situated to service this demand. With a suggested retail price of $110, Heaven Hill, under the three introduced a new campaign for Evan Asked about the state of production, it also highlights the premiumisation generations of Shapira family leadership, Williams titled ‘Bourbon Done Right’. Shapira says: “That’s the crystal ball opportunity that exists in the Bourbon has steadily built the business through It seems that the company and question. We have today about 1.6m industry at the high end. US whiskey internal brand development, line indeed the larger Bourbon industry are barrels of whiskey ageing and we remains relatively under-priced extensions, agency relationships doing a lot of things right. Shapira says: continue to increase our production. relative to Scotch. “Consumers are and strategic acquisitions. Now the “Consumers continue to be very much We look at it frequently to see if looking for more premium brands country’s sixth-largest spirits supplier, interested in the category, the history, that’s enough to support the branded today and that’s going to continue much of the growth has come during the heritage, the new styles of product, programme because all our brands for some time,” says Shapira. “There Max Shapira’s tenure as president. the new taste characteristics and all are doing well. Heaven Hill is known is substantial and rising demand for Returning to his family business in 1971 the other things that have been part Max Shapira, president of Heaven Hill Brands for making good whiskey and being that. You don’t want to take advantage after a period on Wall Street, Shapira of this industry for a very long time, conservative in the way that we of consumers because there is some oversaw a period of dynamic expansion and that’s a very positive thing for the taste those kinds of extensions and International expansion approach the market. We are not shortage of supply. There must in an often-turbulent industry climate. future. The best thing is even though innovations and characteristics.” Heaven Hill, as with most of the US looking for 10% or 15% growth for be some balance and you must be Shapira’s rejoining the company we’ve come a long way in the last 10 In April, the company introduced whiskey industry, was relatively late the next 15 years. I’m not sure that cognisant of what consumers are coincided with the beginnings of what years of expansion of the US whiskey Evan Williams Apple, the newest getting into international markets. even at conservative growth rates prepared to pay. You also have to offer turned out to be a long decline in the category, today we are really only addition to the fast-growing Evan There was such a large domestic market that we have enough whiskey to them something that is genuinely fortunes of the Bourbon sector as US selling in the US just a bit over 50% of Williams flavours portfolio. Apple has to service that there was relatively little support everything long term.” justifies that price premium.” consumers switched to white spirits. In what we sold back in the late 1950s and seen significant success across the incentive to focus on exports. That is There have been some challenges fact, as a sign of just how far the sector ’60s at its peak. That was with a much brown spirits category as the flavour now changing such is the apparent Trademark revival along the way. One of these has been fell, US sales are still only about half of smaller population. That just shows has recently surpassed honey in demand for US whiskey abroad. He notes that the company would like the growth of the craft spirits industry. what they were in 1970 despite a much what kind of a very broad runway and popularity. As the flavoured whiskey “Outside of the US the industry to revive several long-inactive brand Shapira is magnanimous about these smaller population. Fortunately, the opportunity the industry has. There’s a category has continued to expand, both has barely tapped the surface,” trademarks but is held back by supply. upstarts and says: “The craft business industry finally bottomed out and has good base of business and it is growing established flavours, such as honey and agrees Shapira. “We are primarily an “There is a lot of potential in taking a has added a lot to the conversation since rebounded strongly. at a very nice rate. That is going to newer entrants like apple, are propelling American-focused company, but we historic and dormant brand and bringing about the American whiskey category.” Heaven Hill Brands is enjoying a continue for some time.” the segment to nearly 10m cases, certainly have realised that the US it to life again,” adds Shapira. “We are But he also points out that groups such period of rapid growth in line with the Shapira attributes much of the indicating that flavoured whiskies are whiskey opportunity around the world interested in doing more of that, as and as Heaven Hill were the original craft overall expansion of the US whiskey improved fortunes in American whiskey still a key growth opportunity. is extraordinary. The international when supply constraints lift.” producers. “We have been in the craft category. That growth is led by the to heightened innovation, particularly These flavours are helping Bourbon opportunity is probably even bigger Last month, for instance, it business for nearly 85 years,” he says. Evan Williams and Elijah Craig brands. in flavours. “There are a lot of people appeal to new demographics, particularly in terms of growth than in the US, introduced Heaven Hill 7yo Bottled- “In many ways we were the original The former is now approaching 3m experimenting with taste in American females. This development has also been and that’s saying something. Bourbon in-Bond Kentucky Straight Bourbon craft producers. We feel that we, and cases following several years of double- whiskey,” he explains. “Bourbon is far and supported by the growth of cocktail is very much underdeveloped across Whiskey. The origins of Heaven other large Bourbon producers, are away the leading part of the US whiskey culture. “There has been a very positive the board. We really have a job to do Hill’s eponymous Bottled-in-Bond part of that craft movement because category, but look at rye whiskey. It and controlled expansion of the way in terms of educating international brand dates to 1939, when upon we have so many unique styles of is fairly small relative to Bourbon, but that Bourbon has presented itself to consumers about Bourbon.” release, it quickly became the No.1- whiskies and have really maintained our is expanding at a rapid pace. It has consumers,” says Shapira. “You have He notes that any time you are selling Bourbon in the state of innovative edge. We have inventories a taste profile that is different from many women today who think Bourbon travelling round the world and you ask Kentucky. Shapira says: “At a time of whiskies ranging from whiskey Bourbon. Others are experimenting whiskey is the best drink there is. Fifteen for a whisky and water, 99 times out when American whiskey is surging, produced today to whiskey that is in with different grains and malt whiskies. years ago, that would have been unusual. of 100 the bartender will bring you we are proud to release a namesake excess of 20 years of age. That gives you Those are tiny niche pieces of the US There is no question that these flavours a Scotch. “If we can bring that ratio product that really brings us back a range of age statements, a range of whiskey category today, but it shows appeal to a broad and different consumer down from 99 times out of 100 to 94 to our company’s founding.” alcohol strengths and wood finishes all the amount of interest by not only including a lot of women, as does or 95 it would have a tremendous Last year’s release of a limited- of which combine to produce products the people wanting to produce the straight Bourbon in a cocktail. This has impact on the industry. If we did, edition series of Old Fitzgerald Bottled- that are unique and exciting and that’s Evan Williams Apple taps into the flavour trend product, but by consumers to at least been very beneficial to the business.” I don’t know if anyone would have in-Bond Kentucky Straight Bourbon what consumers are looking for.” ●

22 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 23 SPIRITS SPOTLIGHT/COCKTAIL TRENDS COCKTAILS EMBRACE THE LOW/NO-ALCOHOL TREND

Low/no-alcohol cocktails are quickly becoming a mainstream on-trade trend which can not be ignored, writes Joe Bates

The issue of sustainability and the growth of low/no-alcohol cocktails have undoubtedly been the hot topics within the cocktail-oriented on-trade this year. In addition to these forward-looking trends, 2019 has also seen the cocktail world take a look back to mark the 100th anniversary of the Negroni and important milestones for key cocktail brands Cointreau (170) and Aperol (100). Relentless creativity and reinvention seem to be the modus operandi of many top mixologists, but it’s worth noting that for many end-consumers Elegantly Spirited CEO Alex Carlton who co-founded the zero-proof range of spirits Strykk in the UK classic (and what many in the business might consider passé) cocktails are the bartenders are magicians, or at the of sustainability. Teaching bartenders still hugely popular. The top 10 googled same level as chefs,” he says. to work in a sustainable way, e.g. by cocktails worldwide last year have all Growing concern about global educating them not only on the use been around for decades and in some warming and single-use plastic has of sustainable ingredients, but also to cases even longer, according to research pushed sustainability up the agenda encourage bartenders to reduce plastic from analytics firm SEMrush. The both for consumers and the cocktail and non-recyclable waste and food spill top five googled are: the Manhattan, bar industry. The issue is a key focus is an integral part of our basic training.” Cosmopolitan, Old Fashioned, Sex on at New York-based bar Bluebird The growth of low/no-alcohol cocktails the Beach and Champagne Cocktail. London, says its beverage director shows no sign of stopping and is clearly Nevertheless, cocktail culture Rosario Toscano. “For us sustainability a trend no major supplier can ignore. continues to grow, making it top of mind is important; for the guests it’s just a Bols creative and communications for many spirits producers. “In the last selling point,” he says. director Sandie van Doorne says: “We 15 years, the cocktail scene has become “Most guests are as concerned with see the trend towards low-alcohol drinks more and more important for us,” the sustainability of their drinks as strengthening and are fully dedicated admits Matteo Luxardo, export director they are food — more so wine than to promoting this. We train bartenders at Italian liqueur producer Luxardo. cocktails. But for the bar, sustainability in the Bols Bartending Academy and in “Our products are well recognised can translate into better beverage workshops around the world how to within the cocktail industry, with the costs as well. Use your juiced lime to implement low-alcohol drinks on their ‘King’ being Maraschino [liqueur]. make cordials; clean and reuse soda or menus and how it can help their business We work closely with the bartender beer bottles as your cheater bottles, while serving a growing consumer need. community, especially when it’s the encourage draft beer, which is also better “We launched a number of new moment to launch new products.” for your COGS [cost of goods sold].” flavours in our Bols liqueurs range that Luxardo rates the US as the leading Sustainability also influences are a perfect base for a light alcohol cocktail market worldwide, followed by operations at Dutch liqueur producer drink. For instance, our Bols Cucumber the UK. “I see South America growing De Kuyper Royal Distillers, says liqueur is an excellent fit with tonic fast with incredible bartenders, but CEO Mark de Witte. “Sustainability to create a refreshing, low-alcohol also countries like Kazakhstan, Georgia, is an import aspect in the way we cocktail. Another example is Bols Armenia and Ukraine are coming work, this starts at the source of Ginger with soda water, a low-alcohol up very fast,” he adds. “Everywhere production and all the way through and low-sugar cocktail with a rich and in the world the cocktail market is the chain, which we are constantly tasty flavour. We are actively promoting growing; the quality is incredible and challenging and improving in terms these new drink concepts with our ➔

24 global drinks intel. AUGUST/SEPTEMBER 2019 SPIRITS SPOTLIGHT/COCKTAIL TRENDS

➔ Bols low-ABV signature drinks signature serves are the classic serves and through the global on-trade of the spirits categories we mimic, community, aimed at offering consumers i.e. Stryyk Not Gin & tonic. However, exciting low-alcohol alternatives.” more adventurous bartenders are using Low-alcohol spritz-style cocktails, our products to offer no/low-alcohol traditionally comprising wine, an aperitif alcoholic versions of best-selling and soda, are set to become one of the cocktails, for example the Mojito, most fashionable summer serves this Porn Star Martini, Cosmopolitan, Funkin Cocktails Pornstar Martini year. In London this August, premium Moscow Mule and Tom Collins.” mixer supplier Fentimans is opening It’s now “pretty much standard to have is also benefiting from the trend. The a pop-up Secret Spritz Garden, which NA [no-alcohol] cocktails” on the menu, company’s export sales grew by 20% last — will offer customers a range of spritzes says Bluebird London’s Toscano. “Only year, according to marketing director using Fentimans tonics and herbal a few years ago that wasn’t the case,” he Ben Anderson. “Our key market was garnishes grown in the garden. Cocktail recalls. “The first time I heard someone Ireland where we introduced a raft of expert Dino Koletsas, who has worked order a ‘Virgin Mojito’ I laughed. Now new products including our Cocktails on at establishments such as The Langham it’s ordered all the time. And if it’s on Tap draft solution and Funkin Cocktails and Callooh Callay, designed the menu. your menu, it has to be inventive, not Shaker Packs, launched into the off-trade “Spritzes have a long tradition just a blend of some fruit juices.” to enable consumers to make their own ALL THE of being created to be low ABV as Growing demand for tapped and cocktails at home in a quick, easy format. historically noblemen and women draught cocktails is another emerging “Last year, Funkin Cocktails expanded would ask for their wine to be weakened trend. Earlier this year, Bacardi-owned its global footprint by signing a new with water to make it easier to drink,” Grey Goose introduced what it claims distribution deal with Masoliver Group Koletsas explains. “The inherent low- is the world’s first sub-zero draught — a leading Spanish distributor of beer, ABV nature of the drink makes them wine and spirits — which saw Funkin a great choice for anytime drinking Cocktails be made available nationally — from brunch all the way through to across Spain, including the Canary and late in the evening, and they are 100% Balearic Islands. The brand also entered SPIRIT, the drink of the summer. With their Singapore for the first time, which combination of lightness and diversity, further reflects the brand’s global there will be something for every palate. expansion strategy.” “More importantly, they fit in RTD cocktails are another growth fantastically with the ever-growing area. One company which sees trend of people looking for a more untapped potential to grow the positive drinking experience where premium end of this emerging segment the alcoholic strength of a drink is less is Canadian firm Duvernois Creative important or even often unwanted.” Spirits, the producer of Romeo’s NONE OF THE UK-based Elegantly Spirited introduced Gin and Pur Vodka. Following the a range of zero-proof spirits called Strykk Romeo’s Fizz Gin launched this year successful launch of an RTD gin-and- into the UK last year. The Strykk range tonic last year, the company launched now comprises Strykk Not Gin, Stryyk Not cocktail tap system. Cocktails ‘on two 7% ABV canned RTDs into Quebec Vodka and Stryyk Not Rum. In June this tap’ or ‘draught’ serves will become this year: Romeo’s Fizz Gin (gin, lemon year soft drinks firm AG Barr took a 20% more of a staple within the on- juice, cane juice and soda) and Pur stake in the firm, investing £1m. trade sector, in both influential bars Vodka Moscow Mule (vodka, ginger, Elegantly Spirit CEO and co-founder and more mainstream High Street lime and Quebec maple syrup). Alex Carlton says: “Over 4m people offerings, predicts Bacardi European Duvernois vice-president executive ALCOHOL signed up to Dry January 2019, a tenth programming director Marc Plumridge. Stéphane Rochefort says: “People are of the [UK] drinking population, a “As major brands begin to increase trading up, but if you look at the RTD significant indicator for the potential investment and research in this sector category there is no innovation. The of Strykk. But it’s not only January — to make the technology more widely price point is always pretty much the when consumers are choosing to available and advanced, as well as more same time; it remains a convenience moderate their drinking. It is now cost effective, together with a more item. We want to give consumers the — not only an acceptable option but a direct focus on quality pre-batched opportunity to buy a high-quality growing trend. National accounts are cocktails — this will open up more cocktail that’s ready to drink.” looking to evolve their menus further cocktail occasions, which perhaps Clearly, the on-the-go cocktail increasing the real estate offered didn’t exist before or were dominated opportunity (along with the make-it-at- NOT VODKA, NOT RUM & NOT GIN to no/low-alcohol and recognising by the likes of beer and wine.” home cocktail consumption occasion) the importance of attracting a wider Funkin Cocktails, a UK-based are part of a growing drinks trend where available now pool of guests looking to moderate producer of premium purées, syrups, the bartender is no longer front and their alcohol consumption. Our draught products and cocktail mixers, centre of the action. ● for more information visit

26 global drinks intel. AUGUST/SEPTEMBER 2019 stryyk.com or contact [email protected] SPIRITS SPOTLIGHT/PINK DRINKS ANY COLOUR YOU LIKE …AS LONG AS IT’S PINK

Pink drinks have never been more in vogue. Joe Bates reports on one of the hottest drinks trends of 2019

From gin and wine to liqueurs and cider, pink-hued drinks are all the rage among the important Instagram-loving millennial customer demographic. Pink has traditionally been associated with femininity and, from the 1970s onwards, the gay rights movement. However, over the past six years the colour’s supposedly calming, nostalgic and flattering qualities have made it widely accepted among millennials. Pink, in its various shades, is now the colour of choice for fashion designers, stylists, celebrities and social media influencers. Rosé wine, once dismissed as cheap, mass-market plonk by critics, In the pink: Bottega Rosé Gold, strawberry-infused MOM Love gin and Edinburgh Gin Watermelon & Lime has experienced a surge in both popularity and reputation over the 17th-Century estate in the Provence for ‘Il Vino dei Poeti’ Venezia DOC Rosé, past two decades. Globally, rosé an undisclosed sum in May. a blend of pinot noir and raboso wine is forecast to grow at a CAGR “We have definitely noticed sales piave grapes, harvested in Treviso of 2% between 2018 and ’22, adding growth of rosé wine in recent years: and Venice; ‘Il Vino dell’Amore’ Petalo incremental growth of $24m, according our Bottega Rosé Gold is on this trend Pink Manzoni Moscato Rosé, a sweet to a new report by Technavio. and its sales are growing at double- sparkling wine made from rare hybrid Hollywood celebrities and rock digit rates,” says Sandro Bottega, owner Monzani moscato grapes; and newly stars such as Angelina Jolie, Brad Pitt and manager director at family-owned launched Bottega Stardust Rosé, also and Jon Bon Jovi have all launched Italian wine and spirits producer made with the Monzani moscato their own rosé labels. French luxury Bottega. “Rosé wines, especially the varietal presented in a pink glass bottle goods giant LVMH, the owner of sparkling ones, are more difficult to decorated with diamond-cut crystals world-famous marques such as Dom produce; they are more elegant, they (pictured bottom left). Pérignon Champagne and Hennessy sport an outstanding charm and their Bottega is hopeful that the prosecco Cognac, snapped up the cru classé rosé image attracts female consumption.” DOC will back a proposal to allow producer Chateau du Galoupet, a Bottega believes that many sparkling rosé within the prosecco indigenous French and Italian wines appellation, a move which could could boost their sales if they were provide a further boost to the already presented as rosés. “Rosé wines hugely popular Italian sparkling wine. don’t belong to one country, they are “Prosecco Rosé will offer a new, global,” he argues. “We believe that alternative version of prosecco; it the sparkling wines and those that will be slightly different from the are neither brut nor sweet have an ‘white’ version, but will express the innovative charge that appeals to those same characteristics underpinning its who approach wine for the first time.” success: an easy-to-drink wine that is Bottega currently produces four easily matched with food and can be sparkling rosé wines: the floral and enjoyed by a larger public — not only fruity Bottega Rosé Gold, made with for its fresh, uncomplicated taste, but pinot noir grapes grown in Lombardy; also for its less demanding price.” ➔

28 SPIRITS SPOTLIGHT/PINK DRINKS

➔ Bottega hopes approval for this around three quarters of the astonishing historic change will be made before 751% growth for the flavoured gin the next harvest in September, but category, according to Wine and Spirit cautions that this is “not a certainty”. Trade Association figures. The flood of The pink drink craze has also lifted pink gin launches has continued into 2019. the fortunes of what might be described Notable newcomers include Edinburgh as the ‘granddaddy’ of the rosé wine Gin Watermelon & Lime, launched in world: Mateus Rosé. The slightly fizzy June as a travel-retail exclusive with Portuguese wine was launched in 1942 Dufry, and strawberry-infused pink gin by Fernando van Zeller Guedes, the MOM Love from González Byass. founder of Sogrape, in an iconic bottle Swedish brewer Kopparberg moved inspired by the flasks worn by soldiers into spirits in May with Kopparberg during WWI. “In the 1960s, ’70s and Premium Gin. It followed this with ’80s, several celebrities — Jimi Hendrix, Kopparberg Premium Gin Strawberry & Baileys Strawberries & Cream is selling as well Queen Elizabeth II, Steve Jobs and Lime, a 37.5% ABV gin which launched as Baileys Original Irish Cream in some locations the Portuguese fado singer Amália in over 700 Greene King pubs in the Rodrigues — were fond of Mateus Rosé UK, and in the British supermarket some leading cider producers this year. wine,” reveals João Gomes da Silva, chains Asda and Morrisons. A month Irish cider brand Magners introduced Sogrape board member for Mateus. later, to capitalise on the potential for Magners Rosé, a light blush 4% ABV, The brand is still available in more impulse sales, the company introduced semi-sweet apple cider in a 33cl can, than 120 countries and last year sales a 5% ABV RTD line: Kopparberg into the UK on-trade in July. Bespoke hit a 10-year high of around 20m Premium Gin Strawberry & Lime mixed stemless glassware was created for the bottles. The year was also memorable with lemonade packaged in 25cl cans. line extension, which it is suggested for the unveiling of refreshed bottle Rob Salvesen, head of marketing at is served over ice with an apple slice design. “Mateus now has a taller and Kopparberg, says existing gin and cider garnish. The launch is supported by a more elegant bottle and a renewed drinkers are the target for the company’s PR, social and advertising campaign modern label in lighter tones to convey gin range. “We wanted Kopparberg fans to using the strapline ‘Your New Crush’. its freshness,” says da Silva. “It is a more find the same delicious, natural taste that Diageo introduced a limited- premium and contemporary look for a is in our cider in our new gins. Equally, edition Baileys Strawberry & Cream brand born in 1942 that keeps setting we wanted to offer gin-lovers something liqueur last year. Diageo global travel sail to explore new markets. Through new to the market in the pink gin innovation and marketing director this evolution, Mateus reinforces its category as the demand for it increases.” Anna MacDonald says it has been a lifestyle positioning and connects with “huge summer hit” in travel retail. “The younger consumers by challenging Does pink mean more sugar? liquid is a luscious combination of rich new generations to explore different While the flavoured gin boom remains flavours, and we’ve found the vibrant moments to enjoy Mateus.” in full swing, recent media scrutiny in colour, design and quality packaging Da Silva reveals that although the the UK has focused on health fears over has created huge appeal and talkability UK, Spain, Germany and France are still the high sugar content of many pink among consumers. These factors, Mateus Rosé’s main export markets, sales gins, which producers are not required combined with much-loved Baileys, has have been growing faster at double- to list on packaging. An independent proven the ultimate recipe for success. digit rates in Denmark, Eastern Europe, study by Eurofins Food UK Ltd, found “We’ve had brand ambassadors delight Australia, Brazil and Nigeria. “There that some of the best-selling pink gins travellers with tasting opportunities in are still a lot of people in this world in the market contain up to 15 teaspoons over 15 locations, including larger-scale that haven’t tasted Mateus, especially of sugar in a standard 70cl bottle. activations in London Heathrow and younger targets, so we are working on In response, Quintessential Brands is Dublin airports. This approach has been several markets like Portugal, Spain, the spending £800,000 ($899,000) on a UK vital to engaging and recruiting new UK, Australia and Switzerland in order ad campaign highlighting the fact that Baileys fans,” she adds, noting that in to be present at medium-size events Greenall’s Wild Berry and Blueberry gins some locations Baileys Strawberries & and festivals where we can give Mateus contain no sugar. “With our flavoured Cream is selling as well as Baileys to taste. The feedback is very positive, gins, the sweetness comes from the Original Irish Cream. especially now with the new bottle that natural berry flavours infused with our From subcategory to subcategory looks more modern and trendier. Social Greenall’s Original London Dry gin,” says it would appear that pink drinks media has been also a powerful tool to Greenall’s master distiller Joanne Moore. are in favour. Although sales are raise brand awareness and engagement. “We work hard to balance the botanicals inevitably skewed towards the summer Nowadays we continuously interact with and natural flavours to create a smooth months, pink seems set to stay as the over 350,000 fans worldwide.” taste, so we don’t need sugar to mimic colour of choice for drinks buyers Pink gins were the driving force of the smoothness or mouthfeel.” during key gifting periods, such as UK’s gin boom last year, accounting for Pink is also the colour of choice for Valentine’s Day and Christmas. ●

30 global drinks intel. AUGUST/SEPTEMBER 2019 RETAIL REVIEW/UK OFF-TRADE RETAIL REVIEW/UK OFF-TRADE ASDA UPS ITS GAME

Easter is usually big for the UK- Asda senior beer, wine and Today’s “hard data-led industry” sees unit pricing there was no variation. based Asda supermarket group, but spirits buyer Charles Craven Asda heavily reliant on getting the beer, You paid the amount for the liquid that this year was “phenomenal” for the wine and spirits product mix right, the minimum unit price determined.” alcoholic beverage business, with talks new ranges, essential utilising a combination of hard sales He says it was important for Asda to an outperformance of “roughly 21%” own-label, branded spirits, information, e-commerce, numerous understand whether different sizes still against the overall market, according US whiskey and Brexit. listening groups and other insights. had a role to play — even though there to the group’s senior beer, wine and “It is vital for us to understand what was no longer potential value benefit in spirits buyer Charles Craven. Doug Newhouse reports the long-term trend opportunities are, buying bigger sizes. This was relevant “We knew we were looking at a less where the focus seems to be, how the from the perspective of consumption competitive Easter than in previous products that are better for the three areas of beer, wine and spirits management and in terms of the impact years, so we had an opportunity across environment, their lifestyle and health, complement each other, and what is in on individual customer basket spends. total wine,” says Craven. “It was a real and this is now “definitely part” of shared baskets,” says Craven. Craven says the exercise provided opportunity to do a better job and we ran Asda’s focus, he explains. “Our shoppers have a certain amount “really good” information for Asda overarching activity in line with what Relatively new growth areas, including of money to spend and we want to management, along with other shopper the market was doing by 6% and 7%. Extra Special English sparkling wine, make sure that they are getting the insights gained from minimum unit “That was our new mechanic in line is also a focus for the group. “English best value. We also need to target pricing. The change effectively saw with what Tesco and Sainsbury’s were sparkling wine has potential for further what they are looking for and what the premium become more accessible as doing at a similar time.” expansion in future,” observes Craven. trends are that they are telling us. This the step up from core range to premium The lower price band was set to “It is not the easiest sell because is crucial to keep the category evolving reduced. At the same time, shoppers engage and encourage shoppers to buy customers question why they are paying and our customers coming back.” adapted their consumption patterns by into the value wine offer. “Four pounds more for an English sparkling wine Asda has also identified more recent drinking less but better quality. was the limit, because under that than they would for Champagne. But Craven emphasises that Asda must opportunities” under the Extra Special insights from its “numerous listening “There have been a lot of positive you’ve got duty, plus VAT and we can’t once they understand the nature of the ensure its products are valued properly label, explains Craven. “Gin has been groups”, including those raised by learnings we’ve taken out of it,” says legally go below that,” says Craven. product and they have actually tried the and acknowledges it is “very hard” to get a big focus and we have new flavours minimum unit pricing in Scotland. Craven. “We’ve still got plenty more to He adds that the lower price band was wine it makes a big difference.” prosecco back to where it should be. coming in from our special range, with “It is vital to get our customers’ learn on how we give the best possible “great value” for Asda shoppers who Asda, he says, is therefore looking an expansive range of gin liqueurs in insight and crucial to understand what value to our shoppers in Scotland and were able to shop the entire range with Focus on crémant and cava to expand the range to protect the 50cl bottles under Extra Special. they want to see in our shops,” explains the range will continue to evolve, but more confidence to trial new products. Crémant from the Loire is also getting category for the long term, with “We also have gin flavours at 40% Craven. “One of the first things that our real learning was to see how it goes Asda’s extensive wine range is more focus in the Extra Special range prosecco rosé seen as a “really exciting” ABV in 70cl bottles coming through and we needed to understand is we had an and don’t do anything too drastic.” designed to be very flexible thanks to and gaining ground in the on-trade, and viable option for 2020. some really exciting education around opening price-point range on own-label Asda will take a similar approach the retailers’ wholly owned International with sparkling wine “very much moving Craven is similarly excited about our new Extra Special gin range.” spirits that overnight instantly became with its Welsh stores when minimum Procurement & Logistics arm, which away from the New World options that the role of Asda’s own-label wine and Added to this is a new range of the same price as our entry branded lines unit pricing is introduced in Wales directly sources 50% of all its wine. customers don’t seem to find value in”. spirits offerings, which he believes help Extra Special soft drinks, flavoured [due to minimum unit pricing]. early next year. “We are on a journey of how to Craven says Asda’s response is to put to underwrite customer confidence. tonics and lots of advice for customers “So we needed to understand whether actually get people to trade through more focus back into the traditional “Extra Special is our premium-tier around perfect serves and cocktail they still had a relevance or a role Shift to own-label brands the category and part of this range areas, with another future project now own-label and we have a number of solutions on Asda’s website. to play with our customers — what Interestingly, Craven says Asda’s change is new innovation in prosecco lined up to bring customers back to the great quality products under various do they expect to see? Interestingly, overall own-label spirits business was — both from a quality perspective, but cava category. “We know that there is names within the wine category,” Engaging new shoppers is key there is loyalty in all of these different “traditionally small” compared with its also organically,” says Craven. a bit more of a push in the on-trade he says. “Our Extra Special Albariño Craven says the strategy is around new areas, although we could have taken an total spirits business, but has become Customers increasingly want and that the quality is there,” he says. Spanish white has been in the range a shopper engagement and education on extreme view that these lines no longer much bigger over time. At the same time “Customers probably underestimate the long time and it gets a lot of quotations how best to drink its own-label products. have a role to play. But actually the he points to “a real shift away from the quality of cava for the price they pay.” and awards. We also have a fantastic The company is also introducing a shopper feedback is they like what they traditional brands into own-label”. Craven also acknowledges that cava Extra Special chenin blanc from South ready-to-drink (RTD) own-label range. like, and they have been used to drinking Asda’s own-label spirits business is in general did have a “problem” in the Africa that has always done incredibly “This is something we’ve done these products for a number of years.” “probably still under 10%” of the total, past which was partly self-made due well, and our sancerre and pouilly-fumé previously under a sort of separate In this respect, Craven acknowledges says Craven, “but it would previously to very low pricing. “Yes, they have have always been very well received. exclusive label, but we have some great that many own-label offerings have have been under 5%. You’d love to driven it down and the risk now is that “We are now bringing 10 new Extra products and we are proud of them, effectively evolved into “go-to reliable be able to say that it is going to be prosecco is kind of going the same way,” Special wines into the category and so we want to put our name on them,” brands” for repeat customers, so they 20% of the category. For us it is the he admits. “There is a lot of competition trying to branch out a little on choice explains Craven. should retain protected status. best way to offer the best value to at the £6 price-point level on prosecco, with the offers we now have from Spain At the same time he adds that a lot “On top of that, pack size was also our customers. Quality is crucial and both through discounter levels and and South America — that has been a of other cocktails in premix form are interesting because how do customers provided that it is there, they will ourselves, then matching that value to real focus for us.” being removed from the range as they understand the true value?” he asks. tend to seek better value for money.” Champagne and sparkling wine aisle at Asda’s offer to our customers. But whether Own-label spirits are also delivering have lost popularity with customers “In the past, bigger packs meant better The one downside with own-label, Bexhill branch in East Sussex, UK that is sustainable is the key question.” “massive and exciting growth over time. value, but in the new world of minimum acknowledges Craven, is that Asda ➔

32 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 33 RETAIL REVIEW/UK OFF-TRADE MARKET INTELLIGENCE/CHINA WINE CHINESE MARKET SHOWS ➔ doesn’t have the marketing budget wine and spirits category in isolation.” to really drive home the quality Of course, any change in costs and message. He also emphasises that it tariffs that may or may not have applied SIGNS OF MATURITY is important to continually maintain had the UK enacted Brexit in March a keen focus on responsible drinking — along with the potentially huge Volumes may be down, at all times. “This is at the forefront of impact of the now abandoned £12bn but a recent report from Top 25 Wine Brands in China by Awareness and everything we talk about and we are Sainsbury’s/Asda merger — all remain Respective Purchase Level really strict on who we are targeting, unknown quantities. What is clear is Wine Intelligence shows the why and what the drinking occasion that Asda management now considers Asda rolls out market for imported wine in Great Wall 33% 61% is,” says Craven. the matter closed and it is back to China is maturing, which is Changyu 35% 60% business as usual. own-label gins Lafite 23% 55% Brexit challenge Looking at the beer, wine and spirits probably a good thing Dynasty 18% Brexit represents yet another major sectors as a whole, Craven says his Asda has added five new gins and 50% challenge ahead for Asda, says Craven. six-strong team comprises three two non-alcoholic botanicals to its At first glance, 2018 may look like a Concha y Toro 13% 43% It is potentially a buyer’s nightmare traditional buyers and three with a well established own-label range. rough year for members of the Chinese Rawson’s Retreat 13% 40% in terms of second guessing if, what, focus on product sourcing. He says the The UK supermarket group wine trade: the imported wine volume Helan Mountain 9% 37% when and how it will all play out. team tries to be consistent between its has taken a lead with its own- in the country has seen its first decline Yellow Tail 16% 36% “It is impossible to plan for in-store and online offerings, with the label wine and spirits division since 2014. In 2018, imported wine something that you have no control latter in particular described as “a big in recent years, including an volumes have declined by -7% to 56.7m Torres 11% 35% over,” says Craven. “We just need to growth area” — never more so than in innovative response to the cases compared with 2017, while value Casillero del Diablo 11% 35% make sure that there are no short- the run-up to Christmas. revitalised flavoured gin business. rose by 2.1%, according to data from Carlo Rossi 12% 33% term slip-ups from a supply-chain “We take lots of learnings from The retailer said: “One of IWSR Drinks Market Analysis. This is Penfolds 14% 32% perspective. That’s the crucial one.” previous seasons, what happened in the the really interesting things the first decline by volume since 2014, Jacob’s Creek Craven says last March’s stop- market and what we can we do better,” about the rise of gin has been however, the imported volume is still 10% 31% start-stop deadline saw some internal Craven says. “It constantly evolves, and it that people have been looking higher than it was in 2016. Castel (CHINA) 7% 29% interest in building advance stocks to becomes a longer period of time. It starts for a mixture of great taste, Domestic wine sales fell by an even Robert Mondavi 6% 29% prepare for customer stockpiling from in September now, so it is vital to get it new flavour combinations, greater -11% to 85m cases. Villa Maria 5% 26% ■ anticipated higher costs. right and ensure we’ve got the best offer and a real sense of theatre.” Connected to this, consumers appear % who have heard JP Chenet 6% 25% of the brand “We needed to protect what was all the way through for our customers.” The Walmart-owned company to be drinking wine slightly less, and less Tarapacá 6% important for our shoppers and we Asked what percentage of Asda’s responded by creating its own often. Per capita consumption in 2018 25% ■ % who have bought did do some of that on some key beer, wine and spirits sales are “vibrant sweet-shop-inspired was 1.2 litres versus 1.3 litres in 2017. Les Dauphins 7% 25% the brand in the past three months core volume lines, but again it is the accounted for in the last four months gins” in three flavours: Lemon Trade experts believe this can be Marques de Casa Concha 5% 24% unknown,” he says. “What we were of the year, Craven says it is currently Sherbet, Pear Drop and Parma explained by the following factors: Gallo Family Vineyards 5% 24% planning for more was actually a pre- running at 40%, although it varies by Violet (£18). The final two ■ Low-end market losing traction. 4% emptive stock-up from our shoppers category. “For wine particularly there creations are the Extra Special ■ Consumers moving towards ‘drinking Félix Solís 23% that actually didn’t translate to the level is a significant uptick when it comes to Scottish Gin (lavender blossom, less but better’ as they are becoming Catena 4% 23% that we expected. Not just in beer, wine Q4,” he says. “From a beer point of view nettle and gorse) and Extra more selective and looking more for Baron de Lestac 5% 23% and spirits, but across the board. it is a bit more consistent through the Special Berry Gin (blackcurrant, quality. Brown Brothers 6% 23% “We needed to ensure that we year and weather is a big factor.” blueberry and blackberry). ■ Market is slowly digesting the were protecting availability on core For instance Asda saw beer sales rise It has also launched two Extra large volumes of wine imported from Base = All Chinese urban upper-middle class imported wine drinkers (n=2,000) volume lines and everyday essentials. during the 2018 FIFA World Cup which Special non-alcoholic botanical previous years. Source: Wine Intelligence 2019, Vinitrac® China, March 2019 For us, Brexit was far more about our was televised from Russia and coincided drinks (rhubarb/ginger and More players than ever, such as core everyday essentials than the beer, with good weather in the UK. Latching premium), which retail for £15. distributors, importers and retailers, from a wider variety of countries, suffered, falling by -10% to 6.8m cases. onto these opportunities, Asda has A range of Extra Special tonics have entered the field, perhaps shown by wine volumes growing According to Wine Intelligence, recently promoted special deals for has also been created. fragmenting an already complicated for more origin countries between domestic producer Changyu is the most those watching sporting events in the market. The new Wine Intelligence 2014 and ’19. Although France is still powerful wine brand in the Chinese UK, such as the England and Scotland China Landscapes 2019 report indicates the leader of the market, its share market, outperforming all other brands men’s World Cup football qualifiers, the spirits sales during the Christmas that China is evolving into the sort of (currently 14%) is gradually declining for purchase and connection, closely women’s World Cup football and the season. Craven says having the “best wine market that the world’s producers as Australian (+5% t0 12.3%) wines gain followed by the domestic brand Great World Cup cricket tournaments. possible Christmas offer” is crucially and exporters would recognise: more popularity alongside other countries, Wall. Australian brands perform well Offerings include special prosecco important, as is evolving the beer, transparent, more stable, and with especially Chile (flat at 8.3m), Italy in the Chinese wine market, with two wine and other deals, along with spirits and wine range and ensuring a population that is increasingly (flat at 3.3m cases) and South Africa Australian brands, Yellow Tail and discounted beer offerings including existing customers remain excited knowledgeable and able to buy product (+19% to 1m cases). Australia and Chile Penfolds in the top five most powerful Budweiser and Corona. about Asda’s festive activity. If it also they trust at a reasonable price. have both benefited from free trade wine brands in China as a result of their Such targeted promotions are attracts new customers to Asda’s beer, Consumer tastes are broadening in agreements with China. French sales high connection scores. French wine- increasingly successful, although very wine and spirits range, then so much terms of countries of origin and styles. were hard hit, falling by -20% in 2018 producer Lafite is the most powerful The weather has a huge influence on beer sales little gets close to the beer, wine and the better, says Craven. ● For example, more wines are available over 2017 to 19.3m cases. Spain also imported wine brand in China, with ➔

34 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 35 MARKET INTELLIGENCE/CHINA WINE MARKET INTELLIGENCE/TOP SPIRITS & BEER BRANDS

Online Retailer Usage in China: Tracking Rank Retailer 2017 % 2018 % 2019 % Mid-term Short-term ASIAN SPIRITS AND BEER ➔ the highest awareness, purchase 2019 n= 1,000 1,000 2,000 and connection scores of all imported 1 JD.COM 30 42 38 ▲ ▼ brands. Wine producers are exploring 2 Tmall.com 34 33 35 ● ● different ways to reach consumers, such BRANDS IN THE ASCENT ● ● as the internet, social media platforms 3 Amazon.cn 24 22 23 and DTC (direct-to-consumer) channels. 4 Jiuxian.com 22 20 19 ● ● ▲ ● This diversification could mean two 5 Sam’s Club 13 15 16 The latest Brand Finance Brand Finance Top 10 Most Valuable Spirits Brands 2019 things. On one hand, the market is 6 Taobao.com 15 14 16 ● ● spirits and beer rankings Rank Rank Brand Country Brand Brand % Brand increasingly fragmented, which makes 7 Wine9.com 17 14 16 ● ● it even more challenging for players to confirms Asia’s rising power, 2019 2018 Value ‘19 Value ‘18 Val Chg 9 Yihaodian 16 13 11 ▼ ● become established. However, it is also 1 1 ● Moutai China $30,470 $21,243 +43.4 ▼ ● says Alexander Smith a sign that the market is progressing. 10 Yesmywine.com 14 10 9 2 2 ● Wuliangye China $16,038 $14,635 +9.6 ● ● One trade expert noted that the 11 Aussino World Wines 9 9 9 Chinese baijiu brand Moutai 3 3 ● Yanghe China $9,060 $7,795 +16.2 Chinese market is starting to look a lot 12 Jiumei.com 12 10 9 ▼ ● retains its status as the world’s 4 5 ▲ Luzhou Laojiao China $5,371 $3,825 +40.4 like other international markets in terms 13 12580wine.com 9 9 9 ● ● most valuable spirits brand with an 5 4 ▼ Johnnie Walker United Kingdom $4,644 $4,297 +8.1 of the range of wines offered, and ways 14 Wangjiu.com 9 7 9 ● ▲ impressive 43% increase in brand distributors reach consumers. While value to $30.5bn, according to the 6 6 ● Jack Daniel’s United States $4,335 $3,517 +23.3 15 GJW.COM 11 8 8 ▼ ● some distributors confirmed that it is latest report by Brand Finance, the 7 7 ● Hennessy France $3,869 $3,306 +17.0 16 1919 N/A 5 7 N/A ● becoming difficult to keep their heads brand valuation consultancy. 8 10 ▲ Bacardi Cuba $3,657 $2,378 +53.8 above water, others who have been in 17 Jiuq.com 6 6 7 ● ● As China’s most prestigious baijiu 9 8 ▼ Russia $3,497 $3,235 +8.1 the market for longer, said they haven’t 18 Pudao Wines 7 4 7 ● ▲ brand, Moutai has recorded healthy Smirnoff really felt the cold winds. In fact, more 19 Wine stores on WeChat N/A N/A 6 N/A N/A brand-value growth since last year, a 10 9 ▼ Gujing Gong Jiu China $2,703 $2,451 +10.3 than ever before, they believe there’s a 20 Vinehoo.com N/A N/A 6 N/A N/A nod to its heightened brand presence Source: Brand Finance June 2019 positive outlook for the Chinese wine and large-scale marketing campaigns. 21 Everwines 4 4 6 ● ▲ market as consumers are maturing. Chinese baijiu brands dominate the spirit, made using rice, barley and brand strength is a crucial driver of 22 Cheers 4 2 5 ● ▲ Traditional perceptions of Chinese rankings, with Wuliangye (brand value tapioca, is popular among millennials brand value. wine drinkers paint a picture of those 23 None of these stores 0 1 1 ● ● +10% to US$16bn) and Yanghe (+16% as well as older consumers. According to this criteria, Mexico’s who don’t know much about wine, aren’t to $9.1bn) defending their second and Don Julio (brand value +77% to $536m) really into it and who drink wine mainly % who mainly use the following retailers to buy wine third-place positions respectively. Patrón is highest new entrant has retained its title as the world’s for health benefits. The wine they most Base = Those who buy wine to drink at home Wuliangye, despite recording Super-premium tequila brand Patrón strongest spirits brand with a Brand likely go for is a red Bordeaux. But this ▲ / ▼ Statistically significantly higher/lower than previous waves at a 95% confidence level lower brand-value growth than its is the highest new entrant in the Strength Index (BSI) score of 88.05 picture is increasingly outdated. baijiu counterparts, recorded strong ranking at No.14, with a brand value out of 100. Don Julio, hit the million- Source: Wine Intelligence 2019, Vinitrac® China, March 2017-March 2019 share-price growth in the latter of $2.2bn. The tequila boom shows case mark in 2018, which is impressive n>=1,000 Chinese urban upper-middle class imported wine drinkers Impact of e-commerce part of 2018. Luzhou Laojiao (+40% no signs of slowing down, with the given that it sells at a relatively high Wine Intelligence’s China Landscapes have bought wine from online stores, most used source of information among to $5.4bn) knocked Diageo-owned spirit’s popularity continuing to price. The brand largely attributes its 2019 report found that the typical wine and the penetration of online shopping is Chinese wine drinkers, they are also Johnnie Walker (+8% to US$4.6bn) grow worldwide. Patrón has recently success to the way in which its tequila drinker in China drinks wine more for around 40%-plus across most segments, perceived as the least reliable sources into fifth position, making it a focused its marketing efforts on is crafted, its excellent mixability pleasure than medicinal purposes. So they including the older drinkers aged 40 to of wine information compared with in- Chinese top four for the first time. highlighting the brand’s rich artisanal and the effective capitalisation of its are looking for better-quality wine, and 54. Chinese consumers buy online mostly store signage and producers’ websites. All baijiu brands have had to contend production story. Patrón was fully network of influencers, particularly it doesn’t matter as much to them if they due to the diversity of options available, Word of mouth remains the most used with several years of sales-growth acquired by spirits giant Bacardi high-profile DJ ambassadors. Also must spend more. They also now drink both in terms of brands and varietals. and trusted source, while traditional stagnation, a result of the Limited in mid-2018, opening up vast in tequila, Jose Cuervo saw brand all types of wine, including sparkling. The fact that online retailers offer media is a reliable source but is less used. Chinese government’s opportunities for growth in foreign value rise by 4.4% to $578m. Their country of origin repertoire better or cheaper wines is now less of While WeChat and Weibo may have crackdown on lavish markets, which could stand the brand Vodka brands were well represented has expanded both by awareness and a motivation for consumers to buy helped with spreading the wine culture, spending. However, in good stead for the year ahead. despite the slowdown of the global consumption, which is evident in both online. While these behaviours haven’t reviews from influencers on these demand is now on a Diageo-owned tequila brand vodka category with Smirnoff (at IWSR and Wine Intelligence data. As changed on a frequency level over platforms are considered less reliable. sharp upward trajectory, Don Julio also rated highly. No.9 following an 8% rise in brand consumers become more knowledgeable the years (i.e. they aren’t buying more Though the proportion of those who which will no doubt In addition to measuring value to $3.2bn), Absolut (No.12 after about wine, and more wines become wines), they are spending more than buy from specialised shops has declined further boost brand overall brand value, Brand an 11.5% rise to $2.15bn), Grey Goose available to them, it’s inevitable that they were before. This is another sign since 2017, it remains the dominant values in the coming Finance also evaluates (No.13/+11.5% to $2.15bn) and Finlandia they become more selective about what that consumers are ‘trading-up’ as wine-buying channel in China. Other year. South Korean the relative strength of (No.34/+16.1% to $422m). Diageo’s they drink. This may partly explain why, they become more sophisticated. channel usage levels remain stable. ● soju brand, Chamisul, brands, based on factors Cîroc has recorded an extraordinary despite declining volumes of imported JD.com and Tmall.com are the two has also seen a such as marketing increase in brand value, up 113% to wine, value has remained relatively dominant online channels, with 38% To purchase the Wine significant increase investment, familiarity, $941m. The brand, which first became stable, growing by 2.1% in 2018. and 35% of respondents saying they Intelligence China in brand value, loyalty, staff satisfaction internationally recognised in 2007 E-commerce is another factor have bought wine from the two retailers Landscapes 2019 report, growing 94% since and corporate when it announced a partnership with contributing to the spread of wine respectively. Although comments and contact Emily Carroll at last year to a brand reputation. Alongside rapper Sean ‘Diddy’ Combs, has thrived appreciation. About 46% of consumers reviews on shopping websites are the [email protected] value of $649m. The revenue forecasts, under his marketing direction. ➔

36 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 37 MARKET INTELLIGENCE/TOP SPIRITS & BEER BRANDS BEER REVIEW/BREWDOG BREWDOG’S ‘SHARK ON ➔ Whisky was well represented in the countries and regions globally. As general decline in beer consumption list, led by fifth-ranked Johnnie Walker with other Chinese brands, Tsingtao across millennials, and the preference (+8.1% to $4.3bn) and sixth-ranked Jack faces fierce competition from other for healthier alcohol-free alternatives STEROIDS’ EXPANSION Daniel’s (23% $4.3bn). No.15-ranked global brewing giants but despite have contributed to the slowdown in Chivas Regal (+18.8% to 1.7bn), 16th this, Tsingtao has recorded strong their brand-value growth compared ranked Crown Royal (+67% to $1.3bn) sales growth over the last year. Brand with previous years. BrewDog has recruited and 19th-ranked Jameson (+19.5% to Finance CEO David Haigh says the The AB InBev portfolio still almost 116,000 craft beer $1.1bn) all ranked highly. Hennessy was Asian, particularly Chinese, beer dominates the rankings however, with the top-ranked Cognac brand with brands saw the highest brand-value 11 brands claiming spots in the top 25, crusaders to its community a brand valuation of $3.89bn. Rémy growth. “With demand for beer at an down from 13 last year. The brewer and £72.6m in investment Martin (No.18) and Martell (No.25) also all-time high in China and predictions closed the third-largest acquisition through crowdfunding. made the list. of inflated growth over the coming in history in 2016, after merging years as a result of greater disposable with SABMiller, and has since been Doug Newhouse reports Chinese brands top beer table income from the emerging middle tackling its mountainous debt pile, Chinese brands also performed well on class, this trend looks set to continue,” predominantly through sales drives. Craft beer and spirits company BrewDog Brand Finance’s Top 25 Most Valuable he adds. “If these brands begin Innovative Scottish craft beer brand, likens its approach to international Beer Brands ranking. China’s Snow to expand beyond China and into BrewDog, is the highest new entrant expansion to “a shark on steroids”. It is the fastest-growing brand in this new markets, we could potentially in the ranking in 19th position, with launched its mission to “revolutionise year’s ranking having broken into see some very stiff competition to a brand value of $1.5bn (see related beer” 12 years ago and has been named the top 10 for the first time, with an established Western beer brands.” interview on page 39). Now 11 years in the Sunday Times Fast Track 100 list impressive 52% rise in brand value Nevertheless, Budweiser claimed the old, the brand is undertaking ambitious of the UK’s fastest-growing companies to $3.7bn. Snow is the best-selling top spot as the world’s most valuable growth plans across key international for a record seven years. beer in the world, clocking up 101.2m beer brand for the first time, overtaking markets, with new breweries and bars The company started in 2007 by hectolitres (hl) of beer sold per year, long-standing leader Bud Light. in the pipeline both at home in the UK James Watt and Martin Dickie — who more than double that of Budweiser’s Budweiser’s brand value has increased and abroad. Its flagship beer, Punk IPA, brewed tiny batches, filled bottles by sales. The brand, which historically 6% to $7.5bn, following the immense is already the No.1 craft beer in the hand and sold their beer from the back BrewDog’s Ellon HQ in Aberdeneshire, Scotland has only been sold in China, has made success of its global sponsorship UK and the brand is striving to make of a van — is now Scotland’s largest a number of strategic partnerships campaign of the 2018 FIFA World it the beer of choice internationally. independent brewer and has over House pubs (in London and Aberdeen). in order to raise its global presence, Cup. The campaign, the brand’s most The brand is committed to 1,500 employees. Last year it secured The company became the world’s notably with Dutch brewing giant expensive to date, reached 3.2bn football expansion, with gin and vodka already a place in The Sunday Times Best 100 first crowd-funded brewery when Heineken and America’s Molson Coors. fans globally, facilitating accelerated in its portfolio, it is widening its reach Companies To Work For. it launched its ‘anti-business’ model Tsingtao (+49% to $1.7bn) has growth in new markets including South further by entering into the whisky BrewDog now operates four ‘Equity for Punks’ in 2009, offering jumped up nine places in the ranking, Africa, Colombia, China and Australia. market, in a bid to make it more breweries – Ellon and Overworks in people shares in BrewDog online. more than any other brand. The Budweiser and Bud Light (-5% to playful. In 2018, BrewDog announced Aberdeenshire, Scotland; Columbus, More than 1,300 people invested. brand continues to retain its loyal $7bn), the flagship brands of Belgian its foray into the hotels business, Ohio in the US; and Berlin, Germany — Four more rounds of Equity for Punks customer base in its home country brewing giant AB InBev, have had to opening the doors to the world’s first and exports to 60 markets globally. A followed, bringing the total number of and is also the most exported contend with the changing consumer craft beer hotel, The DogHouse. new brewery in Brisbane, Australia, will shareholders to over 70,000 in 2017. Chinese beer, sold in over 100 drinking habits across the US. The According to the criteria used by open by the end of the year. It also has The latest crowd-funding drive, Brand Value to evaluate the relative 80 bars in 60 countries, as well as a hotel Equity for Punks V, where BrewDog strength of brands, Colombia’s Aguila is (the DogHouse) and beer museum at its shares have been offered at £25 each BrewDog’s DogHouse Columbus hotel in Ohio Brand Finance Top 10 Most Valuable Beer Brands 2019 the world’s strongest beer brand with Ohio brewery, the BrewDog Distilling has seen the number of shareholders Rank Rank Brand Country Brand Brand % Brand a Brand Strength Index (BSI) score of Company, Hawkes Cider, and two Draft grow to almost 116,000 (headed up by raised to help fund the next round of 2019 2018 Value ‘19 Value ‘18 Val Chg 88.41 out of 100. Aguila (brand value founder Watt with 24.7% of the issued BrewDog’s development. Equity for down 18% to $1.1bn), part of AB InBev’s share capital and Dickie with 21.6%). Punks V has raised £5.6m so far, with 1 2 ▲ Budweiser United States $7,519 $7,082 +6.2 portfolio, is Colombia’s second most All Equity for Punks V investors the initiative as a whole raising more ▼ 2 1 Bud Light United States $6,976 $7,377 -5.4 popular beer and its consistently low are being entered into a prize draw, that £72.6m in crowdfunding to date. 3 3 ● Heineken Netherlands $6,766 $6,090 +11.1 price ensures high customer retention. BrewDog Millionaire, with one winner Equity for Punks V will help fund: 4 5 ▲ Harbin China $5,180 $3,539 +46.4 The brand, which has sponsored the set to take home £1m in shares. two breweries in Asia – with a promise national Colombian football team since Participants also receive ‘thank you’ to open a brewery in China by 2020; 5 8 ▲ Kirin Japan $4,048 $2,783 +45.4 late 2014, lowered its prices further in incentives in the form of free meals, a fully immersive beer experience 6 6 ● Corona Mexico $4,006 $3,417 +17.2 2018 to celebrate the FIFA World Cup. ● drinks and invites to BrewDog events. featuring a hotel, brewery and beer 7 11 ▲ Snow China (Hong Kong) $3,666 $2,415 +51.8 The crowdfunding scheme has museum in London; the launch of the 8 4 ▼ Brahma Brazil $3,637 $3,715 -2.1 just been extended to April 2020 and firm’s brand new ‘Hop Drop’ chilled BrewDog has unveiled a new way to beer delivery service later this year; 9 7 ▼ Skol Brazil $3,426 $3,317 +3.3 The Brand Finance Spirits 50 2019 report invest — via cryptocurrency. and 20 new ‘outpost’ BrewPubs in 10 10 ● Guinness Ireland $2,884 $2,528 +14.1 is available at brandirectory.com/ BrewDog is giving new investors the chance to win Unorthodox maybe, but effective Germany, France, Spain and Italy. Source: Brand Finance June 2019 reports/spirits-50-2019 £1m in shares through Equity for Punks V — especially if sufficient funds are If Equity for Punks V is successful, it ➔

38 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 39 BEER REVIEW/BREWDOG WINE FOCUS/SHERRY CAN SHERRY FINO-LLY ➔ will support the creation of 200 new jobs, says BrewDog, and help it raise the production capacity at its Ellon facility. REINVENT ITSELF? BrewDog aims to raise the stakes even higher if the crowdfunding round raises more than £7m “up to a maximum The latest headline figures for the global Despite the dismal sales stretch goal of £50m”. In this scenario, sherry business make for depressing BrewDog promises to increase its reading. Worldwide volumes slumped figures for sherry, upbeat investments four-fold in Germany, -4.9% to total 3.97m cases in 2018, producers are focussing France, Spain and Italy to £16m, and to according to IWSR Drinks Market on the fortified wine’s, boost investment in Ellon from £1m to Analysis. The fortified wine’s top three high quality, diversity and £8m and in DogHouse London from £1m markets — Spain, the UK and the to £9m. Significantly, it will also up its Netherlands saw volumes decline by versatility. By Joe Bates investment in BrewPubs in Asia to £6m. -0.8%, -1.8% and -15.4% respectively. All of which sounds strategically Of sherry’s top five export markets, only The category as a whole is in sound and a far cry from the different the US, in fifth place, posted growth, a decline, according to Diego and anarchic image BrewDog likes to The BrewDog Distilling Company aims to “bring some life into the Scotch whisky category in the UK” modest 1% to 173,000 cases. Talavera, international sales portray to its loyal fan base. Despite the gloom and doom, director at González Byass, the BrewDog is a very fast-growing the Compass Box company to pair with rum spirit and ageing it with botanicals leading producers are upbeat about owner of Tio Pepe, the world’s business: last year it increased its BrewDog’s flagship Punk IPA beer. in oak. The company clearly has further the prospects for higher-priced Finos; best-selling Fino. “But those gross revenue by £60m to £171.7m, as Pairing spirits with its brews is just one spirits ambitions, although it emphasises so-called ‘en rama’ sherries, basically producers concentrating on it consolidated its claim to owning small part of BrewDog’s grand ambitions that it will be “reclaiming Scotch for minimally filtered Finos and Manzanillas, premium sherry production are three of the top best-selling craft beer for its spirits business following last people who believe that you don’t need as well as PX and vintage sherries. seeing that they are able to hold brands in the UK off-trade: BrewDog November’s high-profile appointment of to be able to recite the five different Suppliers are also optimistic about their own in the international Punk IPA (said to be worth £9.3m), David Gates as the new MD of BrewDog whisky regions of Scotland to enjoy it”. sherry’s increasing use as a cocktail marketplace,” he adds. “Special- BrewDog Elvis Juice (worth £8.8m) and Distilling. Gates previously worked for Gates acknowledges “the incredible ingredient and the growing popularity edition sherries and top-end, BrewDog Dead Pony Club (£6.8m). Diageo for 27 years, as global whisky job” done by BrewDog’s head distiller of Spanish tapas-style cuisine for which niche launches of very special Earlier this year BrewDog bolstered category director and Johnnie Steven Kersley and his team sherry is an ideal match. sherries are areas that González its spirits offerings with the launch of Walker global brand director. in effectively putting The Alfonso Roldán, international sales Byass has been concentrating on Williams & Humbert’s Canasta 20yo its boilermaker whisky series, created Noting the magnitude BrewDog Distilling Company manager at Bodegas Williams & for a number of years and this and Dry Sack 15yo. Harveys Bristol for those wishing to sip or pair spirits of the opportunity, Gates on the map and promises to Humbert, says branded sherries are strategy is reaping rewards. Cream has been given a new look with the company’s beers. For example, says: “The opportunity to bring the same “innovative faring better than cheaper private- “Initiatives like the launch of blended Scotch Skeleton Key, created shake up the spirits category and courageous attitude to label varieties and that there is a trend the Las Palmas range and Tio Pepe drink’s profile overseas, according to by Duncan Taylor, is designed to with the industry’s biggest the spirits world”, especially towards wines with a clear indication of En Rama, along with our Finite wines Talavera. “Both are very important complement BrewDog’s Jet Black Heart disruptor was just too good in the whisky category. age. “Traditional wineries in Jerez have sherry portfolio, is sparking interest at promotional opportunities and González stout or its chocolate-nutty-vanilla to pass up. What BrewDog Gates says that while huge been launching new concepts like ‘en the top end of the market and with a Byass is a firm supporter,” he explains. tasting Zombie Cake ale. has done for the beer strides have been made in rama’ or vintage sherries,” he adds. “Like new generation of sherry drinkers.” “These international initiatives are Rye whiskey Torpedo Tulip was industry is nothing short David Gates MD of whisky, it is his belief that in Spain, England and the US, special Talavera is keen to stress that instrumental in keeping the noise level up created for BrewDog by the Zuidam of awe-inspiring, you can’t BrewDog Distilling the industry “still lacks and premium sherry brands have been Tio Pepe Fino remains the world’s on sherry for consumers and trade with Distillery in the Netherlands to partner help but be impressed with the real innovation” and he promises introduced onto the wine lists of the best-selling Fino with nearly a 45% ISW and to the top end of the global on- with its Dead Pony Club pale ale, while energy, vibrancy and unapologetic to change this by creating more bespoke gastronomic establishments. market share. “We are also leaders in trade with Copa de Jerez. ISW is growing Transistor is a Scotch blend created by attitude they’ve injected into the excitement, new playfulness and Unfortunately, the growth in this market the Oloroso and PX categories with its levels of engagement and penetration category. It’s that same creative flair greater creativity into spirits. segment has not outweighed the losses Alfonso and Nectar, holding 20% of with consumers year on year and is also and obsession for quality that I hope Gates says his mission now is to work in the standard brands and private label. the global market,” he says. “Similarly, building impact with bars, shops and to bring to the spirits portfolio.” to revitalise Scotch in its home market: “Williams & Humbert was the first for Amontillado and Palo Cortado, restaurants competing in many markets.” BrewDog’s shareholders will carry “A huge part of what we are trying to Bodega in the Jerez region to launch González Byass brands continue to Talavera is also very enthusiastic similar hopes, especially following do is to try to bring some life into the a sherry with indication of age on its be the most well-known with leading about sherry’s potential as a cocktail the considerable investment and Scotch whisky industry in the UK,” he label: Dry Sack 15yo,” says Roldán. “We brands Viña AB and Leonor.” ingredient. “Especially in markets like infrastructure put into place on the explains. “We are on a massive mission already pioneered the elaboration Industry-wide promotional events the US and UK, top bartenders tend to spirits side — an effort which resulted to try and get Brits to fall back in love of biological vintage sherry with the such as the International Sherry Week call top brands for their cocktails and in “a rejuvenated spirits range” being with their national drink. launch of the first vintage Fino of Jerez. (ISW), a celebration of sherry in over because of the heritage and quality of launched earlier this year. The range “When you’ve worked in it for as long “Carrying on in this innovative 30 countries each November organised our brands, Tio Pepe and Matusalem, includes LoneWolf gin, Zealot’s Heart as I have — 27 years — you really care spirit, we continue to diversify and by the industry body El Consejo we tend to be the mixologist‘s first gin, Rogue Wave vodka and the about it and to see the state of Scotch launch wines which are included in Regulador Jerez-Xeres-Sherry, and the choice. As proven by Tio Pepe being aforementioned boilermaker series. whisky in this country it is actually a the segment of very special sherries. A Copa Jerez, an annual international nominated as the world’s top-trending BrewDog also plans to launch an bit disappointing when you see the recent example is the first Organic Fino gastronomic food-and-sherry-pairing sherry for three year’s running by The boilermaker series of whiskies from BrewDog “authentic spiced rum” by distilling white vibrancy elsewhere in the world.” ● 2015, and Canasta 20yo Cream.” competition, are key to raising the Drinks International magazine. “We ➔

40 global drinks intel. AUGUST/SEPTEMBER 2019 AUGUST/SEPTEMBER 2019 global drinks intel. 41 WINE FOCUS/SHERRY

➔ take this sector very seriously decline, Harveys remains in position and have been running the Tio Pepe as the strong No.1 brand — over 60% Challenge now for five years and bigger versus the second-largest brand, in 2019 held national finals in 16 and performs ahead versus the market,” countries worldwide. she says. Outside the UK, Hamilton says “This annual competition that the brand has most potential in the US seeks to find the world’s best sherry González Byass launched the Tio Pepe and Canada, while a launch in Spain is mixologist was launched by González Challenge to inspire sherry-based cocktails planned for this summer. Byass to inspire bartenders and In 2018, Harveys Bristol Cream mixologists around the world to London, led by the Jerez-Xérès-Sherry packaging was redesigned for the first create original, great-tasting cocktails Regulatory Council, has been crucial time in 15 years. “It’s iconic blue bottle using sherry as their main ingredient. in helping us drive category awareness was refreshed with a colour-changing Regional masterclasses and heats are by reaching out to a younger audience, label that tells you when it’s hit the held in each nation through the first tackling new consumption moments perfect serving temperature,” says part of the year to decide the country and offering different consumption Hamilton. “The refreshed packaging winners, who gain the chance to fight propositions, like the Rebujito & was brought to life together with the it out at the grand final in Jerez at the Mint, or our very own Mojito del Sur new communication ‘Best Served Feria del Caballo each year.” — its combination of Fino Quinta, Chilled’. This was the first time we were Like González Byass, Osborne Group peppermint, Angostura bitters and actively telling people to store the sees growth in the fortified wine ginger ale which results in a refreshing product in the fridge. market coming from the premium, and light cocktail that proves a great “Anecdotal research showed that super-premium, ultra-premium and introduction to new consumers.” most people store their sherry in the prestige price segments both in Spain back of a cupboard from Christmas to and the UK. “This is a clear indication Chance in China Christmas, thus hampering the taste. of the growing, yet niche, trend in In October last year, Osborne Group Chilling the liquid, serving over ice with qualitative sherry winemaking and an started to sell its sherry, wine and a wedge of orange was a revelation for increasing interest from consumers Spanish hams with Chinese e-commerce many Harveys consumers.” and wine lovers,” says Mariangel site Tmall. Of China’s potential as an Along with the bottle refresh, Harveys Lezama, global marketing manager emerging sherry market, Lezama says: Bristol Cream has invested more than wines. “Since premiumisation remains “The sherry (and sherry-style) category £250,000 in off-trade promotion, with a key feature in both markets, it is the saw a double-digit growth in China in sampling and activation at point-of- basis of our portfolio and route-to- 2018, with a CAGR of 35.3%. The growth purchase in store and online. “The on- market strategy. An example of this is driven once again by the diversity of trade sees a moderate drinking trend and is the recent appointment of a new style and its versatility when it comes more sociable drinking where consumers importer/distributor in the UK for to food-pairing. Sherry is no longer are going to the on-trade earlier and our sherry range with the objective to seen as a sweet drink to end a meal, but leaving earlier,” explains Hamilton. deliver against our strategy.” it has made its way everywhere from an “The aperitif culture is set to expand Lezama argues that education is key aperitif to pairing with a whole menu. beyond Mediterranean Europe and this to encouraging younger generations “Styles like Palo Cortado pair convivial ritual suits many compelling to try sherry for the first time. “Last fantastically with spicy Asian food. modern trends: a desire for quality over year’s launch of the 360º integrated- The 17% to 18% CAGR growth of our quantity, lighter drinks and the growing campaign ‘Why not?’ in Madrid and sherries in China exceeded that of importance of foodie and snacking the category by almost 8%, and we culture, which goes well hand in hand aim to continue driving penetration with the Spanish way of drinking sherry. and availability where the Chinese “To educate consumers to serve their consumer expects to find our brands.” sherry chilled, to open up a whole new The sweet Harveys Bristol Cream taste experience, unlocking the rich, brand — a blend of four different sherry mellow and long-lasting finish, remains types from the ‘solera’ of different our key challenge.” casks of different ages — has been There are clear signs of life for the run by Whyte & Mackay on behalf of premium end of the sherry market Philippines-based parent company as producers explore new styles and Emperador since 2016. Harveys brand promote sherry as an aperitif, cocktail manager Isabelle Hamilton says Harveys ingredient and accompaniment to food. remains the best-selling sherry in the Whether this can broaden and even Osborne Group says there is a growing, yet world with the UK its biggest market. offset the steady, long-term decline of niche, trend in qualitative sherry winemaking “Although the category is in the overall sector remains to be seen. ●

42 global drinks intel. AUGUST/SEPTEMBER 2019 OLD SCHOOL. NEW TASTE.

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