Duty Free Spirits & Cigars July 2016 Issue

SPIRITS&CIGARS JULY 2016 · SPECIAL ISSUE

Coming trends p.6 TFWA perspective p.8 Retailer insight p.10

DUTYFREEMAGAZINE.CA

LETTER FROM THE EDITOR

Categorically JULY 2016 · SPECIAL ISSUE

Global Marketing Company Ltd. 26 Pearl Street, Mississauga, Ontario L5M 1X2 Canada. It is distributed throughout Central America, South America, the United States, Canada, U.S. Virgin Islands, U.S. Pacific islands, and the islands in the Caribbean.

The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. July 2016, Special Issue. Printed in Canada.

All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2016 Global Marketing Company Ltd.

AMERICAS, GULF-AFRICA, ASIA DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 www.dutyfreemagazine.ca

PUBLISHER Aijaz Khan aijaz@globalmarketingcom.ca EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor hibah@dutyfreemagazine.ca SENIOR EDITOR Wendy Morley wendy@dutyfreemagazine.ca ART DIRECTOR Jessica Hearn jessica@globalmarketingcom.ca OVERSEAS CORRESPONDENT Claire Malcolm claire@dutyfreemagazine.ca

strong T

he spirits industry has always been known as the proverbial “recessionproof ” business. While there may be some truth to that, duty free is a whole other animal, and in some areas of the world recently, that animal has shown signs of injury. One can do little about currency fluctuations or travel advisories, but each company must determine the best way to thrive despite them. For some, the decline at the higher end of luxury has been difficult and for others it has been helpful. Regardless, producers and retailers across the board need to work together to ensure spend stays high even as currencies might drop.

Duty free as a whole has seen a decline this year, but the Spirits and Wine category has remained relatively strong. In this issue, President Erik Juul-Mortensen offers real figures on sales in the channel in 2015. We look at consumer trends, with bonus information on purchasers from m1nd-set’s CEO Peter Mohn: what makes a traveler purchase spirits? We also learn what producers and retailers are doing to stay strong and robust – there is always business to be had – and ready to take advantage of the ever-increasing traveler market in future.

We hope you’ll enjoy this, our very first issue focusing on the Spirits, Wine and Cigar categories in duty free. Please feel free to pass to others who might enjoy it.

Kindest Regards,

ADVERTISING SALES ADVERTISING & MARKETING EXECUTIVE Jacqueline Hammill jacqueline@dutyfreemagazine.ca CIRCULATION & SUBSCRIPTION accounts@globalmarketingcom.ca

Wendy Morley, Senior Editor wendy@dutyfreemagazine.ca

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CONTENTS

What’s inside LEAD STORIES 6 Spirits Overview CURRENT TRENDS

14

Overview and trends in the Spirits category and valuable information from m1nd-set global research

30

8 TFWA STAYING POWER

16

TFWA President Erik Juul-Mortensen offers detailed insight on sales, shopper’s psychology and the future of the important Wine and Spirits category

10 Retailer overview FOCUS ON LATAM

Business must find a way to thrive even in trying times. Two of LATAM’s retailers tell us the secret to their longevity

22 Brown Forman STRONG ROOTS

Having a superpower like the Jack Daniel’s Family in its portfolio helps Brown-Forman weather any difficult storm

26 SPI INNOVATION BREEDS SALES

Stoli® vodka is a pioneer of the premium global spirits market, and especially well positioned for continued success in GTR

32 Bacardi LEADING THE CHARGE

Given its history and its global reach, Bacardi is one of the better-placed companies to lead the charge in the rum revolution that by all accounts is on the horizon

44 Davidoff NATURAL PAIRING

Cigars and art were both in high visibility at Art Basel in Switzerland this June

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24 FEATURES Distillery Tour: Diageo Pernod’s brand champion: Chivas Regal Rémy-Cointreau GTR Managing Director Peter Sant sees opportunities abounding Beam Making a stir in Asia Pacific Distillery Tour: Edrington Ron Abuelo moving in a new direction Disaronno Sour signals sweet success

14 16 18 20 24 28 30

VP Brands International Breaking ground 34 Distell’s Amarula Cream bottle makeover 36 Choya’s taste of Japanese tradition 38 Three cheers for Torres 40 Freixenet adds new sparkle 41 Liquor News 33 & 43 Agio lights up Asia 46 Tobacco News 48

SPIRITS OVERVIEW

The target for spirits companies is the Millennial, and this generation has distinct shopping habits that can be both challenging and rewarding

Current

trends

W

hile luxury sales have dipped recently, premium brands are still riding high. Domestically, premium spirit sales grew in 2015 whereas overall spirits sales remained flat. While overall spirits sales in duty free dropped slightly, premium spirits remain important in the channel, especially as customers are tending to look for increased value.

The new target The target market for every spirits company at present is the Millennial generation, a group that includes those born from roughly 1982 to 1998. This group has a few shopping characteristics that are distinct from those of previous generations. Craftsmanship and authenticity truly are important to this age group.

They are willing to pay more for products with better quality, made in smaller batches and that offer perceived health benefits – this might mean a shorter list of ingredients, organic ingredients or a special characteristic such as gluten free.

Another trend with Millennials is that they are keen to try something new. They are not as brand loyal as older generations. This offers opportunity for those in the spirits industry across the globe as it opens up the market to smaller, less-

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SPIRITS & CIGARS JULY 2016

The spirits industry is going through a bit of a shake-up as the new legalage drinkers have distinctly different needs to those of older generations by

WENDY MORLEY

known brands, to different types of spirits and to new variations on an old favorite.

While the average spirits buyer in duty free skews older (average 41.5, according to research on the next page), trends are not set by habits that are already formed, and markets are indeed changing.

Cane Estate Rums in travel retail. This year, it is launching the Facundo range of select aged rums. Euromonitor forecasts rum sales to soar to over US$50 by 2019, thanks at least in part to smaller premium brands.

Tequila and Mezcal

The cocktail craze has spawned a gin craze, with premium selections again topping the charts. Euromonitor forecasts a volume increase of 11.8% by the end of 2020.

While traditional markets such as blended whisky will not crash, they are softening. The Scotch whisky trend is toward single malts, even in blended whisky markets. For the most part, global growth trends are favoring the habits of the west. Therefore along with tequila, rum and gin, we will see continued global growth of American and Irish whiskeys.

It’s no secret that vodka has had a tough go the past couple of years. In addition to difficult economic times in Russia, analysts mostly blame an oversaturation of the market, too many and too much reliance on flavors and too little real innovation. The coming years should see refinement and innovation in this subcategory.

Tequila and Mezcal are on a growth trend, especially premium and higher selections.

While this is centered in the Americas, rising exports are fueling growth globally.

The strongest growth is expected to be in Latin America in coming years as the region recovers from recent economic woes. According to Euromonitor, this subcategory is expected to grow 37% from now until 2019, from roughly US$11 billion to US$15 billion.

Rum The coming year may finally be the one where rum sales begin to soar – aged, craft rum in particular. While sales were fairly stagnant in quantity last year, value increased by about 11%. Smaller premium rum companies have benefited from the growing acceptance of rum as a sipping drink over a party drink. Bacardi has jumped in with at least one foot; last year the company acquired Banks, a superpremium rum, and launched The Single

Continuing trends

SPIRITS OVERVIEW 

Consumer habits Comprehensive global research by travel retail company m1ndset has revealed key shopper behaviour in the spirits category

Who buys?

What do they buy?

Average: 41.5 years old 69% male, 31% female 83% are on a leisure trip Average: 4.2 trips per year

69% 31%

Average US$44 per bottle Footfall of category: 29% Conversion rate in category: 46% 37% of alcohol buyers also buy in Beauty 31% of alcohol buyers also buy in Confectionery Most frequently purchased sub-category: Whisky

Why do they buy?

Good value Saving compared to domestic Product authenticity Travel retail exclusives

What is the purchasing thought process?

9% knew the exact item they would buy before entering the shop 16% had planned to buy a specific brand before entering the shop 22% had planned which type of alcohol they wanted to buy (e.g. Champagne or white wine) 33% had planned to buy alcohol but made all decisions in the duty free shop 20% had not planned on buying alcohol and decided purely on impulse when in the shop (highest impulse buying was in Americas, lowest in Asia Pacific)

Why do they make the specific selection?

High quality brand Favorite / usual brand Well-known brand Cheaper compared to at home Duty free-exclusive product

45%

interacted with the sales staff

Who do they buy for?

60% decide to buy to take home (mainly to share, to treat themselves, or to stock up) 25% buy as a gift (mainly for family member and/or partner) 11% buy to consume during the trip

If they did interact,

61%

were influenced by staff

www.dutyfreemagazine.ca SPIRITS & CIGARS

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 TFWA

Erik Juul-Mortensen, President of TFWA

Staying

power

TFWA President Erik Juul-Mortensen offers detailed insight on sales, shopper’s psychology and the future of the important Wine and Spirits category

Americas, Asia and Gulf-Africa Duty Free & Travel Retailing (DF&TR): Spirits and wines are traditionally a strong category in duty free. Can you please tell me if there are any trends in the relative numbers/placing of this category?

Erik Juul-Mortensen (EJM): In a year in which growth slowed across the sector by 2.3%, Wines and Spirits remained a relatively strong performer. Sales fell in all categories with the exception of Fragrances and Cosmetics, which grew by 2.3%. Wine and Spirits sales fell by 2.7%, which compares well with other categories such as Confectionery and Fine Food, which saw a 4% downturn, and Watches and Jewellery, which declined by an even more dramatic 13.2%.

Moreover, with sales valued at US$10.2

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SPIRITS & CIGARS JULY 2016

billion in global duty free and travel retail, Wine and Spirits is still the second largest category. It accounts for 16.5% of sales behind only Fragrances and Cosmetics, which saw sales of US$19.5 billion last year, taking 31.5% of all sales. In Asia Pacific, sales of Wine and Spirits remained almost level (declining by a negligible 0.1%) at a significant US$3.3 billion.

In addition, three in ten retail shoppers visit the Spirits section and 15% buy, equating to a 49% conversion. This is the highest of all the six categories alongside confectionery (also 49%).

DF&TR: What, in your opinion, is the key driver to success?

EJM: Our research shows that quality and value are main motivators for alcohol purchases, and this is particularly the

case among spirits buyers. Travel retail exclusives are also important to alcohol shoppers. Value is cited as the reason of purchase by nearly two-thirds of shoppers, and nearly half said they liked the opportunity to own something that little bit different.

Value for money matters. Over onethird of travelers check prices before traveling, and over half believe that there is a price advantage to be gained by shopping for alcohol at the airport, higher than for any other category. Half of all shoppers would be encouraged to purchase in future if prices were lower.

DF& TR: Spirits have been a driving force for premiumization. How has this affected the category in GTR? EJM: It is certainly correct that the Wine

and Spirits category has been driving premiumization. As with other categories, there will always be plenty of room for the premium and super-premium product.

But we do need to consider the increasingly diverse demographics at the airport and offer something that can appeal to all.

We must ensure that the retail assortment is adapted to the profile of the passenger mix, and we also need to be mindful about what “premium” or “luxury” actually means; the high-end brand to one group of travelers may well be the midmarket choice to another.

DF& TR: The duty free industry has seen some difficulties over the past year and a half or so, in many different parts of the world. Spirits fell, as you just reported.

What do you think retailers and spirits/ wine companies need to do in order to recover these sales?

EJM: Improving value perception even further could pay dividends. Among those who did not buy alcohol, the belief that prices at the airport are higher was a barrier for 18%, which means a sizable number of potential customers are not convinced by the price proposition.

Better understanding of which marketing initiatives and brand activations will press the right buttons could also help.

Our study found that gift-with-purchase and product samples were the most popular ideas. Two in five shoppers who interacted with a brand ambassador sampled a product and of those nearly two-thirds went on to buy, which would suggest that this is a useful mechanism to encourage purchasing.

Half of those taking part in the survey said lower prices would tempt them to buy in future, while the next most appealing prospect was a wider product range.

DF& TR: How do you think wine and spirits companies can get more of the share of in-flight shopping?

EJM: The in-flight market is a very specialized channel, clearly distinguished from others. In-flight is often used by passengers for convenience or gifting purposes, so the spirits brands in the retail mix must meet these requirements.

In most cases spirits are more bulky than other products, which means the assortment, given space restrictions, will always be more limited. Demands on the brands listed are therefore high. The products offered on board are by nature compet-

ing with those sold at airport stores, and because of this, pricing is an important parameter, in spite of the convenience factor. Given this, the products available inflight will often be well-known brands from the established categories such as whisky, gin, vodka and cognac.

Inflight shopping is not, however, the only channel where there are opportunities to be explored. Inflight consumption is another important market segment, particularly for wines and Champagnes.

The maritime sector should also not be ignored; and there is significant potential in the ferry and cruise market too.

DF&TR: Spirits producers often lament that duty free is nearly impossible to break into. Is there a place for smaller brands in duty free? What do they have to do to get in and stay in?

EJM: There is definitely room for the smaller brand in this market, and there are numerous examples of this. As airports look to create a sense of place, stocking the quirky or rare local product can be a great way of reflecting the character and atmosphere of the region the airport serves. For a brand to be listed and to stay in the assortment it is important

that activation is planned and implemented from the beginning to support the brand.

Of course this must be balanced against ensuring the customer has access to the big brands they know and love, and half of all alcohol buyers who purchase smaller brands in duty free choose a brand similar to the one they usually purchase. Additionally, pre-planned purchasing is significantly higher among alcohol buyers, two-thirds of whom pre-plan compared with buyers in all categories, where half of purchases are pre-planned.

Over three-quarters of pre-planners already know the brand they will buy.

DF&TR: What is the future for Wines and Spirits in duty free?

EJM: As one of the mainstays of the sector, wines and spirits will always play an important part of the duty free and travel retail mix. The duty free and travel retail market represents a fantastic show window for wines and spirits, and the continuing increase in international traveling constitutes a great platform for continued, long-term growth for the category in the global duty free and travel retail market.

Wine and Spirits continue to be the second-largest category in duty free and travel retail, with Fragrances and Cosmetics the only category to sell more

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RETAILER OVERVIEW

At London Supply, customers tend to go for the well-known and familiar when the economy is weak

Focus on

LATAM

A

few regions of the world have been affected by political, economic and currency strife recently, and this has had a negative effect on the duty free industry despite passenger figures that continue to increase. LATAM has been especially hard hit, with the strong US dollar making a tumbling Brazilian Real and Argentine Peso even more concerning, and low commodity pricing affecting the entire continent.

But the region is no stranger to the ups and downs of the economy. Things may be more volatile there, but the fundamentals of business are the same everywhere: figure out what people want and give it to them, and your business will end up even stronger on the other side of the storm.

The classics win at London Supply At London Supply in Puerto Iguazu, the biggest success has come from familiarity. Whereas in better economic times

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SPIRITS & CIGARS JULY 2016

Business must find a way to thrive even in trying times.

Two of LATAM’s retailers tell us the secret to their longevity by

WENDY MORLEY

people and businesses are more willing to try something new, during times of stress they tend to stick the familiar. “All categories have been affected by the economic situation in the region,” says Lara Plaza, Category Head, Spirits, Tobacco & Confectionery. “Cigars and wines suffered a little more than spirits. We have found that top brands and classic, better-known products tend to be more stable than secondary brands.”

Growth returning to Sineriz Gandhi Abdullah, Director of Siñeriz, says that things have now started to improve in Rivera. “Since May, with greater political stability in Brazil, our region has started to grow again,” he says. “Of course for a time there was a decrease in all categories, and Spirits and Cigars were no different.”

Brand and quantity While London Supply’s customers tended to choose more tried-and-true brands, Siñeriz’ customers tended to decrease

quantity. The Uruguayan retailer found its customers were not willing to sacrifice their higher-quality brands, so they would simply buy fewer bottles. “We have more than 8,000 different labels of wines for example. People who are used to a select quality are not willing to change to a lessexpensive one. They would choose instead to buy in smaller quantities.”

Create the buying mood Aggressive promotion and exciting “retailtainment” is always the key for London Supply, and never is that more the case than during an economic downturn. Customers always want to feel good, and to buy things. The key for London Supply is to create an atmosphere that inspires those feelings, by offering fun, excitement and by offering promotions that make it impossible to refuse. “We always have very aggressive promotional offers going on,” says Plaza. “We are also well known for creating ‘experiences’ for our customers. We plan to keep surprising

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RETAILER OVERVIEW

them, and make their visits to our stores memorable.”

As with all retailers, London Supply depends on the suppliers and brands to help create an environment that inspires customers to buy. “While the ‘classics’ are winning the battle, some brands are getting more active in terms of communication, and also in sharing new ways of serving the products,” she says. The companies succeeding are those that are putting more resources into mixology, brand ambassadors and other ways of reaching new consumers and expanding their target. “We try to support them as much as we can with special exhibitions, creative tastings, and other activities,” she adds, mentioning that the store has many new activities planned for the coming months.

Finding opportunity Taking the message from these two successful retailers in the region, bringing people into the store and then offering them something they can’t resist once they get there are the two keys to remaining afloat through turbulent waters. Both stores are destinations unto themselves – London Supply as an entertaining retail destination, Siñeriz as a shopping destination and now, even more than before, as an eating destination. When times got tough, Siñeriz got bigger, both in retail and food.

“We didn’t stop and wait for the situation to change,” says Abdullah. “In this turbulent moment we took the opportunity to organize the company, to offer more services, restaurants and to increase

Promotions and selection Abdullah says promotions are of utmost importance in trying times for Siñeriz.

“When the economy gets a bit complicated, as it has been in the last months, we must be more flexible with the discounts and promotions,” he says. “More than ever we need understand the customer’s feelings and thoughts, and then offer something, whether that’s a discount or a gift, to complete the sale.”

London Supply creates an environment that is as much about entertainment as shopping.

Siñeriz expanded during the economic downturn, offering not only new shopping and restaurant space, but also increasing products on offer

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SPIRITS & CIGARS JULY 2016

the size of the Siñeriz Shopping. Unlike some stores, Siñeriz did not reduce its SKUs during this time. “We didn’t stop buying anything; we just decreased the quantity. And our customers were very grateful. It was wonderful to hear how our customers appreciated this, that even in this situation they could find whatever they wanted and were even still surprised with new products and world releases.

“Since we opened Siñeriz Shopping in 2012 we instantly became the number one destination for shopping tourism in Uruguay. Now with the expansion there are no doubts that we have become the main destination of gastronomy on the border. This was our objective for 2016 and as incredible as it sounds, the crisis made this opportunity for us.”

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DIAGEO

The distillery’s name is Gallic for “The Sound of Islay,” and it is beautifully nestled in that location

A grand

tour

Diageo allows visitors to many of its Scotch whisky distilleries, and a recent trip to Scotland allowed me to experience tours in four of them by WENDY MORLEY Lagavulin: 200 years overlooking the ruins of Dunyvaig Castle

Lagavulin has released a special 8YO limited edition in celebration of its 200th anniversary

I

t’s no secret that the popularity of single malt is exploding globally, and single malts are especially well suited for the global retail market. In 2012, Diageo invested heavily in Scotch whisky production, increasing overall capacity by over 30%. It was money well spent.

While the spirits giant is especially well known for Johnnie Walker, a blended whisky and perennially the bestselling liquor brand worldwide, it owns more malt distilleries than any other company – over 25. In June, I was lucky enough to visit four of them: first Lagavulin and Caol Ila on Islay, then a ferry ride across to the mainland, a drive up the extraordinary coast to Oban and finally alongside the series of lochs (including the infamous Loch Ness) that intersect the highlands, to Glen Ord.

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SPIRITS & CIGARS JULY 2016

It’s a special year to visit Lagavulin; it’s the distillery’s 200th anniversary, and the feeling of history is rich. On the walk from Port Ellen to Lagavulin the scenery is both pastoral and spectacular, with fields of sheep overlooking breathtaking views of the sea.

The store and offices are located within the old malting building.

The feel is traditional and, in case you forget the history, the walls are adorned with old photos.

While three distilleries are located quite close to one another on this southern tip of Islay, each has its own water source. Water is of the utmost importance to whisky, and a different source can mean vast differences in taste despite proximity. Lagavulin’s source is Abhainn nam Beitheachan. This river runs black with peat, which offers a strong indication of Lagavulin’s nature and of the island’s smoky tradition.

Ruth is my private tour guide through the distillery, and a friendlier and more knowledgeable guide couldn’t be asked for.

First, she led me to the mash tun, which was going through second wash. Nothing is wasted at this distillery; the first wash is used as the second wash, and any remains of the washed grains are sent to farmers’ fields as nourishing food for livestock.

The mash is fermented in wood for 55 hours – one of the longer fermentation times – before heading off to the copper stills. It’s here where the difference in old and new whisky making is apparent. Whereas once upon a time the distillery would have employed dozens of men loading the peat for burning and constantly monitoring the process, heating is now supplied by a boiler rather than peat – a much more efficient heating system – and the entire process is computerized, so one person can keep an eye on the entire distillation at any given time. But for the most part, Lagavulin is made the same today as it was 200 years ago, and the resultant whisky is easily recognizable.

The best part of the tour is always the end, and the Lagavulin tour was no exception. That’s when the tasting happens. Among other brilliant whiskies on offer was Lagavulin’s 8YO 200th anniversary limited edition, a big, smoky, sweet and spicy dram.

A unique privilege, being able to taste aged Oban straight from the barrel

Caol Ila: The backbone of blends Set in a picturesque location on the Sound of Islay, which is the meaning behind its Gaelic name, Caol Ila has distilled whisky since 1846. Traditionally, the distillery has made whisky mainly for blends. That is still mainly the case, as it makes up the smoky component of Johnnie Walker, for one, in particular Johnnie Walker Green, to which it contributes 25% of the liquid. As the popularity of single malts in recent years has skyrocketed, however, the proportion of Caol Ila being sold as single malt has also increased substantially. Whereas about 98% of the whisky was once used in blends, that number has now dropped to anywhere from 70% to 80%, depending on the year.

While decidedly modernized, some aspects of the distillery remain traditional and low tech, from the wooden box used to separate the grist to the wooden fermenting bins. The massive copper stills have an especially long neck, allowing for the heavier compounds to fall back and the smoother compounds to remain.

The tasting reveals the smoky, rich flavors of five Caol Ila whiskies, ranging from 12YO to 25YO, and each with the distinctive Caol Ila flavor profile that lends heft and smoke to blends and, increasingly, is enjoyed as a shining example of a smoky Islay malt.

Oban: A hint of smoke, a hint of the salty sea The drive to Oban after disembarking from the Islay ferry begins pretty and soon becomes staggering and spectacular, with roads so winding I was very glad for the continuation of the unusually warm and sunny weather I was lucky enough to have encountered on my journey.

The town, so it’s said, was built around the distillery and yes, there it is in the middle of town, hemmed in by a cliff on the back, the sea on the front, and buildings on either side. This reality limits the production. As my tour guide Carole (who was raised in barley fields and distilleries) stated, there’s nowhere to grow. With only two small stills, this means production will always remain low. Oban’s water comes from Loch Gleann a

Glen Ord distillery is like a picture, nestled in the Scottish woods

Bhearraidh, and the entire area is made of old volcanic lava flow rock.

Full disclosure: I have to admit here that Oban was my first favorite whisky (these days I say trying to choose a favorite is like trying to choose between your children), and so visiting this distillery had special meaning for me. The location and history of the distillery as the center and origin of the town made it even more special, as with its unique approach to flavor, with a hint of the salty sea, a hint of smoke but the smooth gentleness of a highland whisky.

Along with the luxury of a private tour as a truly special treat; I got to taste whisky straight from the barrel, something I always love to do! The “fresh” whisky was just one year shy of Oban’s 14-year standard, and considerably stronger than Oban at bottling. The tasting, too, was truly special, with travel retail-exclusive Oban Little Bay and its limited Distillers Edition alongside the classic Oban 14 YO.

Hidden in the Highlands: Glen Ord I’ve tried Diageo’s Singleton series before, but I have to admit I didn’t know the Glen Ord Distillery, which makes the Singleton of Glen Ord. A drive along the River Ness and Loch Ness brought me to the distillery in the quaint-sounding Muir of Ord, and what a lovely little place it was – the picture of an old Scottish distillery, hidden within the trees and built of stone and built in 1838.

This single malt is unpeated, smooth and fruity but not overly delicate, and especially appealing to the Asian palate although I also found it lovely. Indeed it is exported exclusively, with availability only in Asia as a single malt. Glen Ord is also used in blends, including Johnnie Walker.

While the distillery was closed twice throughout its history, during WWI and WWII, it reopened again in 1946 and has increased capacity greatly since then, most recently doubling capacity in 2014 with a large new building containing several new wash and spirit stills.

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PERNOD RICARD

Chivas Regal:

a brand champion for Asia Current and future channel potential and a changing consumer profile are twin priorities for global drinks giant Pernod Ricard by

CLAIRE MALCOLM

I

nternational Air Transport Association (IATA) data forecasts place Asia Pacific in the frontline of traveler volume growth between now and 2034 when an additional 1.8 billion passengers will ply routes to, from and within the region, commanding a predicted 42% of global passenger traffic.

“What really excites us is the future potential of the channel in terms of traveler volume and regional growth,” says Nodjame Fouad, Marketing Director, Pernod Ricard Asia Travel Retail.

The company is championing strategic growth with a strong portfolio of brands including global icons such as Chivas Regal.

Says Fouad: “From a brand perspective there is a lot being done on Chivas Regal in the domestic market to continue to attract consumers from a diverse global geography, and travel retail is a channel where we augment that. We have a lot of news and exciting projects underway in terms of both the brand experience as well as product innovation.”

One example where the two elements united in perfect harmony was the May 2016 launch of the Chivas Taste Discovery program at Hong Kong International Airport. Innovation took the form of virtual reality goggles which travelers donned to embark on a virtual tour through Scotland in the company of master distiller, Colin Scott.

In the last year, Pernod Ricard has also launched Chivas Extra, which is selling well in all markets, according to Fouad, who adds: “We are also focusing on a number of travel retail exclusive and launched the Chivas 18 Ultimate Cask Collection last fall, which has enjoyed really good success to date; and at the top end we introduced Chivas Icon.”

A travel retail exclusive, the Chivas 18 Ultimate Cask Collection reflects the traveling public trend for seeking out the new and unique

Nodjame Fouad, Marketing Director, Pernod Ricard Asia Travel Retail Number one single malt, The Glenlivet, has seen good growth both domestically and in travel retail

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SPIRITS & CIGARS JULY 2016

Martell Noblige is a unique proposition that has shown tremendous growth in recent times

Chivas Icon sits at the very top end of the whisky portfolio

The triumvirate of traveler, shopper and consumer is the bedrock of Pernod Ricard’s strategic direction with demand anticipation the end-goal, and innovation key to Chivas’ growth.

Says Fouad: “Obviously the millennial generation has huge potential for the future from a traveler perspective, and for us it’s less about displays and more about experiences because that’s what they look for and appreciate.

“With virtual reality, for example, we feel that we can really engage people and share the Chivas story, our authenticity and strength of the brand; so it is extremely important to be forwardthinking from a technological standpoint to reinforce the credibility of a global icon like this.”

A travel retail exclusive, the Chivas 18 Ultimate Cask Collection reflects the traveling public trend for seeking out products that are unavailable elsewhere, either for gifting or personal enjoyment.

“The Chivas 18 Ultimate Cask Collection serves a number of roles. It gives existing Chivas or other whisky drinkers a new experience and also acts as a recruitment tool, attracting potential Chivas buyers looking to purchase something new and different whilst on their travels,” says Fouad.

Pernod Ricard also sees a growing Asian audience for its single malts outside of regionally dominant Taiwan, and Fouad considers the bigger picture scenario.

“If you look at current trends, broadly speaking from a consumer perspective, and not specifically travel retail, there is

a lot of demand for products with an interesting, authentic and unique craft story, and single malts play into that very well,” she remarks.

“We have The Glenlivet, which is the number one single malt and, in the past few years, we have seen good growth both domestically and in travel retail. It’s an interesting space, and we are also bringing in new brands such as Aberlour,” she adds.

The changing traveler profile is also a growth opportunity, with Fouad referencing the rise of the emerging middle class as key to sustained demand. “We are seeing an increase in female travelers as well as millennials, and from our perspective we need to look at how to target the right type of traveler with the right brand in the right location in order to capture the different segment opportunities,” she says.

“One of Pernod Ricard’s strengths is the breadth of our portfolio, with products to meet the needs of different emerging traveler profiles. This region has the highest proportion of high net-worth individuals in the world, so there is naturally strong demand for prestige-plus products, but with the huge developing middle class there is another aspect to the future growth profile,” she adds.

The impact of China’s anti-extravagance legislation is keenly felt by all in the industry, but Fouad reports that 300-yearold cognac brand, Martell, is holding its own in a challenging market, as she explains: “There is still demand for gifting and, over the last two years, the diverse Martell range has partially compensated for this market softening.

“Our Martell Noblige, for example, which sits above VSOP in the portfolio, is a unique proposition that has shown tremendous growth.”

Hong Kong was the location for this year’s Chivas Taste Discovery Program launch with virtual reality the innovative hook

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17

RÉMY-COINTREAU

Open market

The Botanist gin is the company’s fastest-growing brand, and flies off the shelf wherever it’s listed, thanks in part to the cocktail trend

Rémy-Cointreau GTR Managing Director Peter Sant sees opportunities abounding, and the company is increasing its footprint with multiple brands by

WENDY MORLEY

W

hen one considers the company RémyCointreau, Cognac is top of mind and with good reason; Rémy Martin is an iconic Cognac, and the company’s main brand.

But its portfolio comprises a high-quality assortment with the Bruichladdich range of whiskies, the Botanist gin, Mount Gay rum and, of course, the namesake liqueur Cointreau.

Filling in gaps Rémy-Cointreau GTR Managing Director Peter Sant says Rémy-Cointreau is in a strong position within the Cognac category. “Our range starts at introductory prices for Cellar Master 16 and goes all the way to US$3,200 for Louis 13, so we have a price point for all consumer tastes.” Luxury goods have taken a hit in Asia recently. To bridge the gap between VSOP and XO in the region the company

has introduced a new expression: Club.

“Nestled between VSOP and XO, it’s our answer for people looking for a more value product. It’s an excellent Cognac of course.”

Single malts: traditional and contemporary Single malt whisky has grown tremendously in recent years. “The Bruichladdich range is picking up speed,” says Sant.

“The whisky is still quite small compared to our competitors but we have faith and hope. The brand is doing extremely well where it’s listed.”

Bruichladdich is a progressive, contemporary company that, while nestled securely in Scottish whisky tradition, is not a traditional looking whisky.

Sant says: “Bruichladdich definitely stands out. You’re either attracted to it straight away or you walk away, but it doesn’t go unnoticed, and that’s the most important thing.”

Education is key

Managing Director Peter Sant is excited about the Asian market, seeing growth potential in many countries and with all the company’s brands

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SPIRITS & CIGARS JULY 2016

Rémy-Cointreau spends a lot of time and money educating people, says Sant.

“For a brand like Bruichladdich, education is necessary.

It raises questions. This demands someone with knowledge to answer, but it’s an easy story that fits with what people are looking for today: roots, an authentic story, but with a twist. You won’t see tartan and bagpipes at Bruichladdich. They do things their own way and they do them very well. We’ve been very pleasantly surprised with how positive the reaction as been.”

Rémy-Cointreau also has its eye on India. “We believe

this market is really untapped,” says Sant.

“It’s still heavily dominated by blended whisky, but there’s a definite trend toward single malts. The Bruichladdich 3-year range is doing very well there.”

Growing cocktail trend The Botanist gin is the company’s hottest brand right now. “Everywhere it’s listed, it’s flying off the shelves, especially with Millennials from legal drinking age to about 35. This age group is looking for authentic crafted spirits. That’s a hackneyed phrase, but with The Botanist it’s true.” Sant says the cocktail trend is leading this surge.

Capitalizing on this trend, the company is promoting Cointreau in US, Europe, Australia and New Zealand. “One of Cointreau’s strengths but also a weakness is that it’s seen as an ingredient. Half the time people are drinking it, they don’t realize what it is. So we are promoting the Cointreau fizz, giving the consumer a great-tasting, simple cocktail by adding lime juice, soda water and ice.”

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Rivera - Uruguay

BEAM SUNTORY

Making a stir in Asia Pacific

Beam Suntory’s enviable portfolio and regional footprint is riding high on the dual appeal of American bourbon and Japanese whisky by

CLAIRE MALCOLM

Next up for Beam Suntory is the H2 2016 launch of The Chita, its new single grain Japanese whisky Beam Suntory reports strong performance for Laphroaig across Asia Pacific

Beam Suntory’s recent relaunch of iconic cognac brand, Courvoiser, has refreshed a classic

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SPIRITS & CIGARS JULY 2016

D

iffering tastes define the Asia Pacific market, which is good news for a premium spirits company like Beam Suntory, with its expansive portfolio.

According to Michael Cockram, the company’s Global Marketing Director, Travel Retail, bourbon is the beverage of choice for Australasia while South-East Asia is a hotspot for Japanese whisky, particularly in Singapore and Hong Kong.

Plans to build the bourbon category and bring in brands such as Maker’s Mark are a future focus, and Cockram reports strong performance for Laphroaig across the entire region as well as great presence for Bowmore on the ultra-premium side.

Asian market demand for single malts is also extending outside of the principal Taiwanese market, as he explains: “The category is still in growth in most places, but it’s slightly different from Europe where peated malts are strong, and it still tends to be the bigger non-peated malt brands that do the best in Asia.

“We are seeing strong interest in exploring the category, including from the Mainland Chinese consumer, as we saw from last year’s exclusive whiskies of the world activation in Singapore and Hong Kong where we had a unique sampling that included Connemara, as well as Hibiki. In the past they looked for products they knew from the domestic market, but are now definitely more willing to taste and explore.”

Peated malts such as The Ardmore Traditional Peated present a future opportunity Beam Suntory’s recent relaunch of iconic cognac brand, Courvoiser, has refreshed a classic

The growing influence of the millennial consumer is another area where Beam Suntory is seeing change with a new preference for quality products and heritage cues as opposed to previously seeing something on a billboard and making a purchase simply based on the look and status associations.

This links in to the storytelling aspect of the business, and Cockram flags this as a big part of the buying decision. “In travel retail, people are looking for stories attached to products. They have always been used as social currency between friends, but consumers now want a brand to speak to them and tell a story about its history, provenance and create that emotional connection.”

The “hot” Japanese category presents something of a conundrum for Cockram and the team, with demand outstripping supply, as he explains: “It’s flying off the shelf in Hong Kong and Singapore, and everywhere it’s listed it rotates very quickly, particularly with the Chinese consumer, who is searching out Japanese whisky in a big way.

“There’s a perception of high quality associated with Japanese products and Japanese whisky has previously been voted the best in the world. So, by bringing something new into travel retail with this level of credibility plus product authenticity, beautiful packaging and the rarity factor, this only increases its value.”

Beam Suntory’s recent relaunch of iconic cognac brand, Courvoiser, has refreshed a classic and Cockram is confident of its new-look appeal to the Asian market.

“We know that the trend towards ultra high-end cognacs is softening, with stores replacing the really big fixtures we were seeing up until two years ago; and cognac in general is struggling slightly with whisky definitely in the ascendant,” he says.

In addition to a general downturn, Cockram questions the manner in which cognac is sold, with a different kind of presentation and education required, as he explains: “Consumers can struggle to understand the differences between cognacs in comparison to whisky.

“Whisky is all about flavors, regions and production stories, so what we’re trying to do on Courvoisier, with our new travel retail range, is leverage the combination of an emotional story, which is the Eiffel Tower aspect, with product quality. We also talk about the production side, explaining that VS is double oaked and VSOP triple oaked, which is the industry language that people are used to hearing in relation to whisky, and consumers can relate to this.”

Interaction is also the name of the game when it comes to selling to millennials. “They are far more willing to step up and ask questions to learn more about the emotional story. When we did our exclusives whiskies of the world promotion, we had interactive elements like bowls of vanilla pods so that travelers could get a sense of the flavors in different products,” says Cockram.

“This kind of activity really sings to this generation and gives them a novel way in which to explain to their friends why they like a certain whisky or bourbon,” he adds.

This is supported by Facebook and Twitter presence, as well as interactive media opportunities, with customers able to upload photographs either with product or at brand-related locations such as Kentucky or Paris.

“For example, for Jim Beam we created a 3D virtual reality journey for Devil’s Cut where you could follow the whiskey into the barrel, which was a lot of fun,” remarks Cockram.

More fun is to come in the second half of the year with the launch of The Chita, the new single grain whisky, a company priority; and a planned refresh for the Peated Malts of Distinction platform, which will see the unveiling of a new look and feel.

The relaunched Courvoisier portfolio is also going into Asia in H2 2016, with Cockram confident about commercial prospects with the new packaging an on-shelf eye catcher, and the restyled Jim Beam packaging also adding a new dimension to the travel retail environment.

www.dutyfreemagazine.ca SPIRITS & CIGARS

21

BROWN-FORMAN

STRONG

ROOTS Having a superpower like the Jack Daniel’s Family in its portfolio helps Brown-Forman weather any difficult storm

by

by

WENDY MORLEY

WENDY MORLEY

The 150th anniversary of Jack Daniel’s Distillery is a milestone being celebrated by Brown-Forman throughout the year

A

fter a few wonder years in global travel retail, 2015 and 2016 have been sobering.

“I don’t think any suppliers have been immune to the challenges affecting travel retail of late,” says Marshall B. Farrer, V.P., Managing Director, Global Travel Retail, Brown-Forman Corporation. The company’s heavy hitters are especially helpful at times such as these.

“We have ensured focus on our most important contributors such as Jack Daniel’s Old No. 7, Jack Daniel’s Tennessee Honey and Woodford Reserve bourbon.”

While travel retail markets in Brazil and Russia have been challenging environments for the company, Brazil’s domestic market has remained strong. “This indicates that consumers are staying with our brand, but temporarily changing their purchasing patterns,” says Farrer. Even in these difficult regions, however, Woodford Reserve has continued to grow.

Regional differences Farrer sees a strong future ahead in Asia.

“Topline growth for spirits has been challenging since China changed its policies, but we continue to see opportunity throughout the region. Adding the GlenDronach and BenRiach single malts to our portfolio should help us access more opportunities in Asia going forward. The Pacific region has also performed well, especially behind the Australian currency devaluation. This is a healthy region for our portfolio.”

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SPIRITS & CIGARS JULY 2016

Jack Daniel’s does extremely well in the Middle East, and Farrer sees this continuing despite the rampant discounting that is occurring on blended Scotch and other categories. The company sees strong pockets in Europe, but on the whole this region has not been optimal. “We are cautiously optimistic it will show better this year.” The Americas region is suffering from the strong US dollar, but Farrer feels comfortable with the company’s plans for the coming year.

Trends positive for Brown-Forman The decrease in sales at the luxury end has had a positive effect on BrownForman’s sales. “I think we have seen some consumers enter our price points as we offer such strong brands at more affordable prices. I expect Jack Daniel’s and Woodford Reserve will continue to innovate at the luxury end, but they will remain in support of our priority offerings,” says Farrer. While the company has not changed course to address the current trend toward more value-added promotions, Farrer says some retailers have begun featuring Brown-Forman’s core products more aggressively.

The focuses for the company in all regions are Jack Daniel’s Family of Brands

Jack Daniel’s anniversary provides an exciting focus for activations at airports around the globe

and Woodford Reserve Kentucky Straight Bourbon. American Whiskey has been extremely strong in recent years, and Farrer feels this strength can help lift the entire liquor category. “Since whiskey represents nearly 50% of the overall spirits category in travel retail it must be generating strong growth for the retailer to be successful. We know that American Whiskey is often the driver of that growth, along with Single Malts and Irish Whiskey. We foresee greater focus against these three subcategories to further build whiskey performance. The incredible rise of interest in premium whiskey, but moreover premium American Whiskey, is the story we are most interested in.” This year, the Jack Daniel’s Distillery is celebrating its 150th anniversary, and Brown-Forman has several special offerings to highlight this special achievement.

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EDRINGTON

Past & Present by

The room where the magic takes place, turning distilled liquid into fine whisky

WENDY MORLEY

Speyside and Orkney offer two distinct distillery experiences and two distinct whiskies, each with Edrington’s trademark quality

Kat allows the extraordinary experience to continue in the tasting room in Easter Elchies House

The Macallan: Old and New The area around The Macallan is as busy as the distillery itself these days. The new building will take capacity from 10 million to 15 million liters per year. The Macallan is nestled in the rolling hills of Speyside; reflected in the design of the new building, with its rolling, undulating roof. Non-traditional to be certain, but that is distinctly not the case with the whisky, which is steeped in tradition.

My tour demonstrates that strong tradition, beginning in the original Easter Elchies House, built in 1751 and the first of six “pillars” of Macallan whisky. The estate comprises 270 acres, 90 of which still grow barley used in special The Macallan releases. The water has always and continues to come from wells on the property.

Host Kat Stables ensures that I receive loads of information and wonderfully unique experiences, giving me a real feel for the

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SPIRITS & CIGARS JULY 2016

The casks are being tipped into a trough. The combined liquid will rest for up to six months in order to marry the flavors of the different casks

whisky. From Easter Elchies House we move on to the distillery.

I follow – and taste the liquid every step from barley (a strain grown only for The Macallan) to being ready for bottling.

The story of any whisky must include wood. The Macallan uses 80% first-fill sherry casks, about 1% bourbon-seasoned and the rest second fill. The proportions used depend on the specific whisky being produced. Over a minimum of 12 years of maturing, the sherry casks lend a rich, dried-fruit sweetness to the whisky that I, for one, find delicious.

Edrington makes huge investment in its wood, creating all casks and planting two trees for every one it fells. With a career beginning in a cooperage, Master of Wood Stuart MacPherson brings vast knowledge of the characteristics of wood and the flavors imparted. The Macallan’s Master Distiller, too, worked his way through ever-more-responsible positions, starting as a shift worker in warehousing. One can’t help but think his lifelong

Highland Park, from the land of Vikings

Highland Park is one of only a few distilleries to malt its own barley, hand turning it on the malting floor and then peating it on the smoke floor

A beautiful view of yeast doing its job in one of the wooden wash back at Highland Park

experience every step of the way offers something special to the whisky. Macallan never uses caramel and never will.

Following my distillery tour and a lesson on wood and casks, I’m offered a handful of lovely Macallan – yes, a handful – as Kat opens a secret hole in the floor that accesses a cask below. She uses a whisky thief and asks me to cup my hands.

And then I am offered some more extraordinary experiences.

I watch men filling casks with freshly distilled whisky, ready for maturing. I watch as casks are tipped into a trough, off to be married. This offers me another taste from the streaming liquid.

I even get to taste from a marrying barrel that has been resting for a few months. Finally, I see the newly filled truck driving its precious cargo away to be bottled.

While that is the end of my tour it is not the end of my The Macallan experience. Back at Easter Elchies House I enjoy a fine tasting, including the new travel retail exclusive Rare Cask Black peated whisky, before saying goodbye.

Whereas throughout most of Scotland there are constant reminders of the country’s Celtic past, that is not the case on the Orkney Islands. On Orkney, Viking heritage is at the fore and that is celebrated in Highland Park’s range. Vikings were far more than marauding warriors; they were skilled farmers and craftsmen, and Highland Park’s tradition follows that same skill and craftsmanship.

Like the domestically released Valhalla collection, the travel retail range, the Warrior Series, is a nod to the Vikings of old; each member of the range represents a particular Viking with certain characteristics, and the bottles and gift boxes feature Viking symbols.

People often believe the Highland Park distillery is located in the highlands of Scotland, but its name derives from its location high on a hill overlooking the city of Kirkwall and Kirkwall Bay. Like many distilleries, Highland Park, which was established in 1798, began its life illicitly. Magnus Eunson, its founder, was a pillar of the church community with a secret: He was “beadle by day and smuggler by night.” Stories abound about his close calls from the law, purportedly aided by his good humor, resourcefulness and plucky character.

Due to its location, history and nature, Highland Park retains a truly original character, and has won “Best Spirit in the World” three times. It is one of the very few distilleries to still malt its barley, hand turning it on the malting floor and then smoking it on the smoking floor with local peat. Orkney peat does not contain tree roots, as trees do not grow naturally on these islands; rather, it contains heather and sphagnum moss. According to Patricia, my extremely knowledgeable guide, this creates a uniquely smooth flavor, as tree roots provide an acrid taste. I tasted some of this barley fresh from peating, and at 20 PPM the barley was very gentle and sweet. This peated barley is mixed with unpeated barley, ending with a PPM of less than 2.

Highland Park has a long fermentation, from 60 to even 100 hours. It ferments in wood, mostly Douglas fir or Oregon pine, but the distillery has one very special vessel made of Siberian larch, simply because it is a wood that would have been used

by Vikings.

While many if not most whiskies are matured in ex-bourbon casks and then finished in sherry casks, at Highland Park all casks have been used for Oloroso sherry. This provides richness, color and dried fruit character to the resulting whisky. Many casks are first fill and some are used twice. Edrington has all casks built new, and then sends them for sherry fill. Every cask and every maturation imparts its own flavors, and so before bottling the whisky from different casks is married for up to six months, melding the flavors.

If Patricia had been an informative tour guide she was an even more informative tasting guide, leading me through luscious, long, chewy tastings of Highland Park 12, 15,18, 21 and 30YO. Interestingly, she had me drink them out of order, according to which tastes she felt would be best one after the other.

My favorite was the 21. No, maybe the 18. Actually, they were all wonderful.

www.dutyfreemagazine.ca SPIRITS & CIGARS

25

SPI

SPI’s Global Duty Free & Travel Retail Director Jean Paul Aucher sees luxury choices like the exclusive elit Ushuaïa as key to future success in GTR

INNOVATION BREEDS SALES

W

hile the global travel retail industry has had its challenges over the past year. Jean Paul Aucher, SPI’s Global Duty Free & Travel Retail Director, says this is merely a reflection of the spirits market in general.

“Economic and geopolitical realities and

Innovations based on consumers’ evolving preferences continue to keep Stoli’s sales brisk despite a softened market

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SPIRITS & CIGARS JULY 2016

Stoli® vodka is a pioneer of the premium global spirits market, and especially well positioned for continued success in GTR by

WENDY MORLEY

currency fluctuations all play a part,” he says. “Managing it is just a matter of accepting that this business is always cyclical and to hold firm.”

Despite the down cycle, SPI is seeing positive results in GTR, especially in the UK and Europe. Dayna Dennington, Regional Director North & Central America – Caribbean Duty Free adds that while the Americas is currently a challenging region, North America is still the leading travel retail market for Stoli, “It is also the region where we anticipate the most growth in the next few years, as we still see great untapped brand potential in the category. Our continued focus on the region has brought us closer to our target of being in the top 10 US international airports, on cruise ships and in border stores in the North and South.” She admits that the vodka category is suffering, flavors in particular. “Many vodka brands have seen declining sales with resultant delisting. As whisky becomes more popular it’s even more pertinent for us to narrow our flavor portfolio, focus on providing innovative products and offer great promotions.”

Promotions, new products and packaging innovations are a given for SPI. “There is no doubt that the vodka category is becoming increasingly crowded with brands and products; thus the competition for space is ever more challenging,” says Aucher. “On the plus side, vodka is still a dynamic category where we see great opportunity. The trend is still very much toward exclusive lines, limited editions and premiumization.” Innova-

tions such as the Stoli® Night Edition series and Stoli® Gluten Free are imperative to the company’s success. “The launch of Stoli Gluten Free continues Stoli’s commitment to innovation and pioneering heritage through its 80-year history, and is an example of how we evolve with consumers’ preferences through expanding our product line. We believe Stoli Gluten Free is an incredible opportunity, and that it will help us continue to grow our market share.”

While North America is a stronghold and Stoli is doing relatively well in a difficult Middle East, Asia is the main longterm growth market, says Aucher. “Asia represents real untapped potential for us, particularly in markets such as China, South Korea and Taiwan. We are making a conscious effort to build the Stoli brand in Asia, and particularly in China. We do see potential in the medium-long term, specifically for premium offers and innovative lines such as flavors and packaging.”

While the luxury industry has taken a hit and the focus has turned more toward value-based products, SPI has not seen this. “Our elit® Vodka from The House of Stoli® has stood out amongst vodkas as an ultra-luxury brand and the portfolio has continued to broaden over the past year with limited and special editions. This year also saw the second limited edition version of our unique collaboration with Palladium Hotel Group’s Ushuaïa Ibiza Beach Hotel to create a signature bottle.

Sales have been most impressive.”

PATRÓN

Continued

growth by

WENDY MORLEY

With double digit sales growth in 2015 and expected in 2016, Patrón is bucking the trend toward slowdown in GTR

S

ales growth can continue at a high rate even in a soft market, and Patrón Spirits proves it.

“Globally we enjoyed double digit growth in travel retail in 2015 and are on track to also post double digit growth through H1 2016,” says John Kilmartin, VP Global Travel Retail at Patrón Spirits International. “The Americas have led the way. This is our strongest region, followed by Europe.” The Americas will always be the key region for Patrón, and Kilmartin suggests the company will redouble its efforts and focus in this important market.

The Middle East and Asia Pacific have proven to be a little more challenging for the company, as a result of ongoing economic and political factors in those regions. “Political and economic factors have impacted on our H1 performance in the Middle East, but we are optimistic that we will get the region back on track through H2,” says Kilmartin. “In APAC we have some very strong pockets and we will concentrate our efforts in those key markets in order to deliver our 2016 targets.”

As the luxury market in particular has shown weakness throughout the world, Patron has seen a slight decline in its highest-end Gran Patrón line, but not

in its core portfolio – keeping in mind that even the company’s core portfolio is superpremium. “The decline in the luxury market has not impacted on sales of our core Patrón tequilas,” says Kilmartin. “We have proceeded with the introduction of our new 1-litre-sized bottle for travel retail as planned for our core tequila line and our Patrón XO assortment, in order to provide customers with an even greater incentive to purchase.”

Travel retail continues to be an important market for the company, and Patrón continues to prove it with its always-evolving offerings in the channel.

“Notably, our new 1L bottle for the core Patrón tequila line and Patrón XO Cafe are exclusive to duty free,” says Kilmartin.

“We’ve also introduced a limited edition 1L Patrón Silver bottle and limited edition gift tins. In addition, we recently launched

Promotions and product innovations keep Patrón high on the radar of travelers

our Patrón Extra Añejo 5 Años exclusive to travel retail. Our activity and growth in this channel is truly just starting!” he adds, hinting that there is a great deal more to come in this area. That much is apparent, considering the numerous limited edition and special releases in the channel in recent years.

Promotions and activations are a constant for the company, as is product innovation. Combined, these two forces help result in the continued growth year on year. “Patrón was built on a spirit of innovation and we’re constantly evaluating trends and consumer interests,” says Kilmartin. “That’s exactly what led us to introduce our exclusive 1L size in duty free, our Patrón Extra Añejo 5 Años, and other special offerings such as the beautiful Patrón en Lalique introduced last year.”

While Americas continues to be the strongest region for Patrón, the brand is growing elsewhere, including UK, as shown here at Heathrow

www.dutyfreemagazine.ca SPIRITS & CIGARS

27

COMPANY REPORT: RON ABUELO

Finishing

first Well-known premium rum Ron Abuelo is moving in a new and exciting direction in 2016 with its Finish Collection by

WENDY MORLEY

Strong and growing market

The brand still offers its “Dirty Mojito” kit with a muddler and mojito recipe

P

anamania rum Ron Abuelo’s parent company Varela Hermanos S.A. has a strong history of over 100 years. In 1908, a Spanish immigrant named Don José Varela Blanca created the first sugar mill in the Republic of Panama.

Come 1936, he began distilling the sugarcane and making spirits. Since then, the family-owned company has been a leader in spirit making in the country, today producing about a million cases per year. Their rum is well known in Panama and a popular item for travelers to carry home with them.

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SPIRITS & CIGARS JULY 2016

The premium aged rum market has been strengthening lately and is widely accepted as being the next big explosion in the global spirits market. Ricardo March, Vice President of Varela Imports, agrees. “Yes,” he concurs. “Premium rum as a category keeps growing with producers, with brands and with line extensions.”

The company’s sales are growing 35% annually in the Americas, and March says Europe is seeing especially strong growth. He believes this is partly because it is growing from a smaller base, but also because Europeans are traveling more and more to the region and discovering the pleasures of premium dark rum.

A continued problem for small brands like Ron Abuelo, however, is getting shelf space. “This is one of the biggest challenges, to be able to get the attention and the space in the stores,” says March. “It is one rum against many multinational companies, all fighting for the same space.”

A new finish for rum This year, Ron Abuelo is taking a bold new step in order to stand out in this competitive market by creating something never before seen in a rum: The Finish Collection, which is already being sold in duty free in Panama and is being introduced to the rest of the region at IAADFS. For many years Scotch and other

Ron Abuelo is moving in a new direction with the launch of a new collection finished in Cognac, Sherry and Port barrels

whiskies have played with different barrels as a finishing technique, maturing their product first in whisky barrels and then “finishing” the aging process in barrels previously used for sherry, for example.

The idea is not completely new to rum production, but Ron Abuelo has taken it to an entirely new level by creating a trio of 15-year old Panamanian rums that are each finished in Cognac, Sherry or Port barrels.

“We deliberately chose the names to reflect not just the character of the finishing wood, but also the places that inspired their creation: Napoleon for Cognac and France, Oloroso for Sherry and Spain and Tawny for Port and Portugal,” says March. “It is a proud moment for us and for Panama that we can offer the world such exquisite and nuanced products, and through them convey in our rums a bit of France, Spain and Portugal, countries with a rich history and tradition of creating fine spirits.”

While the Finish Collection is a big focus for Ron Abuelo in duty free for the year, the company is not neglecting its other items. “We continue to promote our Dirty Mojito pack that consists of a muddler and our recipe to make the perfect Dirty Mojito, so everybody can get dirty at home on their own,” says March.

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 ILLVA SARONNO

Disaronno Sour signals sweet success Fashion and flavor came together at the 2016 TFWA Asia Pacific Exhibition as Illva Saronno made its Singapore debut

Nicola Bini, Regional Director Asia Pacific, Illva Saronno

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SPIRITS & CIGARS JULY 2016

The third Disaronno Icons bottle features a Roberto Cavalli design

M

ention Italy and design in the same breath and you’re sure to see something special; and the Illva Saronno team made a memorable Singapore debut with a line-up of on trend products including the third iteration in its Disaronno Icons collection.

While the eye-catching Roberto Cavalli-designed bottle definitely stood out from the crowd, its limited edition Disaronno Riserva, was also a major talking point.

A high-quality marriage of Disaronno Originale and an aged malt blended Scotch whisky from the Highland and Speyside Islands, and aimed at the top end of the market, the elegant bottle is presented in a solid wooden frame, making it prime for ASPAC market gifting.

“We have a really strong market in duty paid in Japan, Australia and India.

In Australia duty free it is doing very well with presence at major airports. Our main area of interest at the moment is southeast China, and the big traffic hubs like Hong Kong as well as Singapore,” says Nicola Bini, Regional Director Asia Pacific, Illva Saronno.

The signature Disaronno Sour is uniting markets and has proved to be a brand hit around the world

The company is also tracking customer movement with an eye on popular travel destinations such as Bali and Malaysia, although emerging Asian nations remain as yet unexplored.

Says Bini: “With countries that are less developed, such as Cambodia or Myanmar, for example, the showcase role of duty free for western brands, especially at main airports, is essential,” he remarks.

A major challenge for Illva Saronno, and other liquor companies looking at Asia’s geography and cultural mix, is the region’s sheer diversity, as Bini explains: “There is such an array of different tastes, societies, cultures and stages of economic development. The real surprise for us has been the success of the classics, such as Disaronno.

“This is proof that this is a single origin product that can work anywhere and everywhere.”

But it’s not just the iconic amarettoflavoured drink that is winning the brand new admirers. Says Bini: “It also happens that we have the right drink as well, which is our signature Disaronno Sour. It works across all the different ethnic groups in the various countries where we are present, regardless of culture.”

One market that he finds particularly interesting is India. “If there’s one lesson I’ve learned, it’s that you can’t focus on targeting specific consumer segments because the country is so layered and the market so complex.

“What is happening is that a huge volume of people are coming to the stage where they have the monetary resources to not only satisfy their basic needs but to also start enjoying their lives. They have a huge desire for all things new and different, and for things that come from outside India.”

He adds: “Asia is a huge market, but so diverse, and we want to take the right steps. We are not in a rush. For us it’s all about finding the right partners and start in the on-trade, and then slowly grow and expand from there. At the end of the day we are selling an experience, not just liquids.

A limited edition, the Disaronno Riserva is a current brand talking

www.dutyfreemagazine.ca SPIRITS & CIGARS

31

BACARDI

Leading the

charge Given its history and its global reach, Bacardi is one of the better-placed companies to lead the charge in the rum revolution that by all accounts is on the horizon. by

WENDY MORLEY The Facundo range offers a selection of exquisite limited edition aged rums to the travel retail channel

B

acardi has identified a US$186 million opportunity for growth in the rum category and is making clear its ambition to lead. A recent activation at Sydney Airport with Heinemann Australia engaged dark spirits lovers with Bacardi’s Gran Reserva range and featured sampling of easy-to-replicate cocktails. Props including oak barrels reinforced the craftsmanship and aging of the liquid, spelling out the similarity with Scotch whisky and cleverly positioning rum as an alternative.

This year, Bacardi is releasing a limited edition rum collection into travel retail.

The FACUNDO® Rum Collection, a range of four sipping rums, is currently available with DFS at LAX, JFK and SFO airports.

Facundo is core to Bacardi’s strategy to develop a premium take on the rum category; these variants are sourced exclusively from the finest and rarest rums in the Bacardí family’s private reserve.

“We believe rum is the biggest longterm opportunity in global travel retail spirits,” says Mike Birch, Managing Director, Bacardi Global Travel Retail. “This is a premium environment and the rum category is yet to maximize that potential.

As the rum category leader we have the ability, insights and full range to drive transformational change.”

During Bacardi’s 150th anniversary celebration, the company committed to 32

SPIRITS & CIGARS JULY 2016

sharing its tradition of sipping rums as a tribute to founder Don Facundo Bacardí Massó. Current Chairman Facundo L. Bacardi states “There was a consensus that now was the time to share the art of rum making and launch a never-beforereleased collection.”

Bacardi Maestro de Ron Manny Oliver began crafting and honing a short list of blends: “We were given carte blanche with the collection and poured our passion, knowledge and creativity into each of the FACUNDO rums – making each blend distinct from its brethren.”

Each rum in the collection of four variants is traditionally aged in the Bahamas, where the climate and charred oak barrels impart a unique character. While tropical aging can accelerate the creation of remarkable spirits, it also accelerates their evaporation to a point where just five percent of the liquid may remain after 23 years. The combination of blending complexity and the exceptional rarity of the liquids limits the availability of the FACUNDO Rum Collection, with fewer than 10,000 bottles to be released in travel retail and very select premium outlets in domestic markets.

NEO™ Crafted from medium-bodied younger to heavy-bodied older rums aged up to 8 years. A complex flavor profile with a smooth, delicate finish.

EXIMO™ Fully blended before maturation in oak barrels for a decade. Exceedingly smooth with deep notes of vanilla, cocoa, caramel and a hint of smoke; round full-bodied texture and long, rich finish.

EXQUISITO™ A perfectly balanced marriage of 7- to 23-year-old rums, finished in sherry casks. Rich, mellow character with robust notes of raisins, apricots and baking spices; a hint of butterscotch on a warm lingering finish.

PARAÍSO™ Crafted of the finest and most distinguished rums in the private Bacardí family reserves, with the highest concentration of the oldest reserve rums in the collection. Finished in French XO casks, some more than 60 years old, to create an exceptionally rich and rewarding sipping rum.

A recent activation at Sydney International Airport inspired travelers to consider aged rums as they do Scotch whisky

LIQUOR NEWS

Wild Turkey hits Sydney Gruppo Campari’s new Wild Turkey Master’s Keep 17 Year Old is the focus at Heinemann’s Sydney store. Brand ambassadors invite travelers to participate, exploring the range, which also includes Wild Turkey 101 Proof, Wild Turkey 86.8 Proof, Wild Turkey Rare Breed and Wild Turkey Kentucky Spirit and two flavor variants: Wild Turkey American Honey Liqueur and Wild Turkey Spiced. Travelers will learn about the heritage of Wild Turkey and about the bourbon category in general, especially as an alternative to Scotch whisky.

As part of the activation, branded light boxes, feature wall panels and back-lit shelving invite travelers to come, explore, learn, taste and ultimately discover their own perfect Wild Turkey.

“As the Australia domestic market leader in premium Bourbon, this is a significant opportunity for us to capitalize on direct engagement with Wild Turkey fans traveling out of Sydney,” says Leigh Irvine, Global Travel Retail Director, Gruppo Campari. “Throughout June we’ve connected them with the incredible choice in our extended portfolio, delivering increased trade-up throughout the range as well as creating greater brand awareness and trial from new bourbon drinkers.”

Branded light boxes, feature wall panels and back-lit shelving welcome travelers to the Wild Turkey booth in Sydney airport, where Brand Ambassadors will help them discover their favorites

World’s largest John Dewar’s® store in Hong Kong Hong Kong’s MTR LoWu station is the new location for the world’s largest The John Dewar & Sons Fine Whisky Emporium. The station is strategically significant, home to train services between Hong Kong and mainland China, with over 100 million cross-boundary travelers using the location every year.

The installation, an eye-catching three meters wide, capitalizes on direct and regular access to the upwardly mobile Chinese

eworking population commuting between Shenzen and Hong Kong. Brand ambassadors invite travelers to choose from the entire portfolio of aged blends, and they will also have the opportunity to buy the single malts that go into the making of Dewar’s. Travelers at this busy store will access the entire age ranges of ABERFELDY® Highland Single Malt Scotch Whisky, AULTMORE® OF THE FOGGIE MOSS Speyside Single Malt, CRAIGELLACHIE® Speyside Single Malt and Glen Deveron ® , Royal Burgh Collection.

Bacardi has made no secret of its plans in the Whisky category, as Vinay Golikeri, Regional Director Asia-Pacific, Bacardi Global Travel Retail, asserts: “We have looked in detail at Chinese drinking habits and believe there is a strong opportunity to drive incremental basket spend in scotch.

This opportunity will come from shoppers who were born during and since the economic reform. They are already actively engaging with the ‘discovery’ opportunity and the brand intrinsics of the five single malts in our aged whisky portfolio. There is a US$40 million incremental opportunity to unlock in GTR whisky. We are convinced the key to this prize is by leveraging the appeal of discovery brands such as ours with shoppers at the second stage of luxury.”

The new John Dewar & Sons Fine Whisky Emporium is located in a highly visible spot at Hong Kong’s MTR LoWu station

www.dutyfreemagazine.ca SPIRITS & CIGARS

33

VP INERNATIONAL

FLIRT Vodka has worked in GTR in part because of appealing offers such as this 5x100ml package. The company promises plenty more exciting items over the coming year

Breaking

ground by

WENDY MORLEY

F

ormerly known as Vinprom Peshtera, VP Brands International has had a successful year despite a challenging environment. The company has had a good year in international markets, with expansion in domestic and global travel retail. “We have significantly expanded our presence this past year, especially in the regions of Africa, Middle East and Asia,” they say at the Export Department of VP Brands International.

Those three regions will be the company’s priority over the next couple of years. “We believe that the strongest potential for business development is there, bearing in mind the current market complications the industry faces in the western world and in South America,” the VPBI Export department explains. “We have managed to develop several key hub markets such as Kenya, Nigeria, Egypt, UAE and Malaysia, and it is at these locations where all our efforts, main investments and expertise will be directed over the coming years. Our strategy is to utilize these markets as primary centers for our products and expand exponentially in the surrounding territories. All of them can be considered emerging markets with a growing population of legal drinkers who are brand adventurous and open to new propositions.”

While the decline in luxury goods has hurt some companies in GTR, VP Brands International has found quite the opposite

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SPIRITS & CIGARS JULY 2016

Over the past year VP Brands International made the most of its strengths, having a spectacular year in all markets, including GTR

effect because of the company’s insistence on offering good value for their high quality products. “We as a company believe that there is a great potential for products with exceptional quality at a very attractive price level. In this sense the decline in luxury goods has given us the opportunity to attract a wider consumer base that is not only interested in discovering new and exciting brands, but has also transformed their traditional purchasing decisions.”

After such an impressive time of growth and expansion, VP Brands International expects 2017 will be very exciting for the company and for its consumers.

“We are working on exciting and innovative exclusive GTR propositions. We will be launching a GTR-exclusive SKU which will be very distinct from anything we have seen before. In addition, we are planning a variety of value-added promotions that will be a first for the industry.”

As in the past few years, VP Brands International’s main focus will once again be the vodka category on its flagship brand FLIRT. But that is only the beginning. VPBI will be launching several new brands in the whisky and wine categories. “We will give the global consumer contemporary, competitive and attractive alternatives to the mundane offered by other brands in these categories,” announces the VPBI Export department.

Whereas traditionally a customer was loyal to a global brand in vodka and

VPBI has done incredibly well in Africa and the Middle East, thanks in part to displays such as these

whisky, VP Brands International is seeing this change, and feels its contemporary choices are the perfect choice for this new legal drinking age consumer. “A young LDA consumer is willing to experiment not only with new brands but also in subcategories. For example, this group is more interested in trying flavored vodka and whisky. We also noticed resurgence in flavored spirits such as aniseed.”

The company understands that variety is not the only reason for purchasing a new product, and offering superior value at a good price is an important one.

“There are great differences in consumer purchasing patterns in GTR, but one theme seems to be constant: consumers want to know they have got a real deal.”

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DISTELL

Animal attraction

A bottle makeover for South Africa’s most famous export, Amarula Cream, is reinforcing the brand’s provenance with travel retail its first port of call by CLAIRE MALCOLM

T

Andrea Baumgartner, Head of Marketing, Global Travel Retail, Distell

36

SPIRITS & CIGARS JULY 2016

he wild marula fruit-harvested drink has long been associated with the rolling savannah, and the bold new bottle is a streamlined silhouette of the majestic African elephant, which brings to life the globally distributed brand’s strong association with elephants and their conservation, and is set to stand out on-shelf.

Amarula has been funding research into elephant behaviour as the basis for conservation management since 2002.

According to Andrea Baumgartner, Head of Marketing, Global Travel Retail, Distell, while the focus of these studies has largely been on South Africa’s elephant community, through its not-for-profit Amarula Trust, the brand is now extending its support across the continent, working with WildlifeDirect and its Kenyan CEO, Dr Paula Kahumbu.

“Funding generated from the proceeds of Amarula sales around the world, combined with the expertise and commitment of WildlifeDirect, will help us continue

to protect the Africa’s gentle giants,” says Baumgartner.

“Our objective is simple. We want to ensure that for generations to come, we will continue to meet the elephants beneath the marula trees,” she adds.

The fragrant, exotic and tangy marula fruit is loved by elephants and other African wildlife. Indigenous to sub-equatorial Africa, it grows in abundance and is hand-harvested for Amarula durig the height of summer.

With Amarula sold in more than 100 countries, the new-look Amarula Cream bottle will debut in travel retail ahead of other market channels. Says Baumgartner: “Apart from its delicious taste and versatility as a drink that can be enjoyed over ice, in cocktails or with coffee, we believe our reinforced commitment to conservation will resonate with travelers who look to brands to make a more meaningful contribution to the world.”

She also confirms Amarula’s continued global popularity. “In South Africa

The Amarula label has strong visual presence and is a stand-out on shelf

and across Africa as a whole, there is huge pride in Amarula’s African origins.

In Europe, the Americas and Asia, it is immensely popular because of its unique taste and exotic provenance.”

Baumgartner also highlighted the recent listing of the Amarula-filled chocolate bars, produced by top Swiss chocolatiers, Goldkenn, at Dubai Duty Free, which is an important market for the brand.

“Apart from being a lovely complement to Amarula’s velvety taste, sales from the luxury chocolates provide additional revenue for the Amarula Trust and its conservation efforts,” she remarks.

The chocolates are also UTZ-certified for using sustainably farmed cocoa. Adds Baumgartner: “This is completely in line with how Amarula is made. We use fruit grown in the wild, from trees that are protected according to South African environmental legislation and thus may not be cut down.

The bold new bottle is a streamlined silhouette of the majestic African elephant

Dubai Duty Free recently listed the Amarulafilled chocolate bars, produced by top Swiss chocolatiers, Goldkenn

www.dutyfreemagazine.ca SPIRITS & CIGARS

37

 CHOYA

Made with the sweet-meets-tart ume fruit, Choya Umeshu is banking on its growing pan-Asia popularity to grow global appeal

AMERICAS PRIMED Seiji Susuki, Senior Manager Overseas Division, Choya

for taste of

JAPANESE TRADITION Asia success under its belt, Choya is now preparing to convert an entire new continent to the delights of umeshu liqueur by

38

SPIRITS & CIGARS JULY 2016

CLAIRE MALCOLM

O

saka-headquartered umeshu liqueur specialist, Choya, is breaking new ground in the Americas, as it takes its 100% natural, no additive-based portfolio across the Pacific to new duty free and travel retail territory.

Made with the sweet-meets-tart ume fruit, Choya Umeshu is banking on its growing pan-Asia popularity to give it a leg up in a number of global markets, as Seiji Susuki, Senior Manager Overseas Division, Choya, explains: “Everyone in Japan knows the Choya brand and we have historically exported into all Asia markets, with a particular focus on Taiwan, Hong Kong and Singapore.

“Today, we are also well supported by Chinese consumers.

We have seen as they start to travel further that they will pick up a bottle of Choya to take home, and are actively looking for it at duty free.”

The brand is already listed at Dubai Duty Free, and is raising brand awareness among European and Russian tourists; with Delhi Duty Free recently signed and Qatar Duty Free launching this summer.

A regular exhibitor at Cannes, this past April Choya headed to the Americas, participating for the first time at IAADFS 2016.

“We are really pushing to enter the American market and already have domestic presence but haven’t yet started in the travel retail channel. We see good potential across the region including Central and Latin America, and we have already made some contacts to get the ball rolling,” says Susuki.

A traditional beverage in its native Japan, umeshu has a reputation as a ‘health tonic’ and, according to Susuki, is the preferred beverage of 70% of Japanese women.

The Gold Edition is the brand’s super premium product, with only 500 bottles produced each day

“Aside from drinking it straight or on the rocks, it’s great when mixed with gin and lime to create a Choya GinGin. And we think it will have the same appeal to female consumers in other markets,” he notes.

Sales in Asia duty free and travel retail were extremely strong for Choya in 2015, which Susuki attributes to a combination of increased brand exposure outside of Japan plus healthy inbound tourism figures for Japan.

“In China we have seen a slowdown in growth but we have maintained a steady increase in sales performance. We also have a factory in Shanghai, which has obvious production-cost benefits,” he says.

An affordable gifting option, Choya Umeshu ranges in price from around US$10 up to US$20 for the premium aged versions; which works well with its target market of 25- to 39-year-olds.

Choya is also becomingly increasingly active at key locations with its Choya Corner – a recognised fixture in Japanese airports, with a calendar of tastings, special promotions and displays in international destinations.

Its current portfolio includes the premium Extra Years line, made from 100% premium Japanese nanko ume, and available in regular, Extra Shiso and Royal Honey flavours.

In addition, the Extra Years Series 50ml mini set is a handy travel-sized trio, and bestseller in Asia, while Choya Yuzu gives a premium flavour to a unique citrus fruit. At the very top end of the collection, the Gold Edition is the brand’s super premium product, with only 500 bottles produced each day.

Choya Yuzu gives a premium flavour to a unique citrus fruit

Its current portfolio includes the premium Extra Years line, made from 100% premium Japanese nanko ume

www.dutyfreemagazine.ca SPIRITS & CIGARS

39

TORRES

Three cheers for legacy by

Torres launched its Viña Esmeralda Rosé in 2016

CLAIRE MALCOLM

It all begins with the brand and Torres continues to innovate in the wines and spirits arena as it works to maintain that all-important competitive edge

S

pain’s leading wine dynasty, the Torres family, has been producing some of the world’s most desirable wines since 1870.

From its home market stronghold to Asia’s outer reaches, the company is focused on promoting its legacy portfolio, which represents an incredible array of appellations.

“In the last decade we have continued to expand our portfolio of Spanish wines, working with different appellations from across the country. Today, we cover 72% of Spain’s wine-growing geography,” says Violaine Creuzé, Global Travel Retail Manager, Torres.

The rationale behind this has been as much to grow Torres’ Spain-wide offering as to promote the Mediterranean nation as the home of an incredible diversity of wines.

“We were the first exporter of wines by appellation, and we currently export 75% of our production to 150 countries. Duty free sales are extremely important for us as they are intrinsically linked to domestic sales, and when we have a good local offer

Violaine Creuzé, Global Travel Retail Manager, Torres

40

SPIRITS & CIGARS JULY 2016

then it clearly benefits travel retail as well,” notes Creuzé.

The company’s Catalonian roots may be deep, but Torres also has vineyards and estates in Chile and California, added over the years to enhance its offering and consumer appeal.

Says Creuzé: “In recent years, we’ve seen phenomenal growth in the volume of wine offers available through the main players in the market. To maintain our competitive edge we need to ensure that we regularly propose new wines.

“In the travel retail environment, customers aren’t necessarily looking for a cheaper or classic wine to purchase, and are more likely to go for a medium range wine to either gift or enjoy themselves, often with a link to the destination.

They also look out for familiar brands, and compare the price difference to their home market. Given the current market circumstances, we are working hard to create special gift packs and POS activations specifically designed for travel retail.”

Star performers include the opulent Celeste Crianza, a Ribera del Duero, with its distinctive eye-catching label; and the 2016-launched Viña Esmeralda Rosé, which has an aromatic, floral femininity.

Torres domestic market performance is mirrored in travel retail and the name resonates well in all markets. Canada is the number one Americas market and China (where Torres has its own distribution company), Japan and South Korea lead sales in Asia.

While wine is the company’s raison d’être, 30% of its production is brandy, and its special edition Torres 20 has been both a domestic and travel retail success.

“This year we are launching a number of new novelties including our first Chilean pisco, El Gobernador; which is a trending spirit right now, and which just got listed in Oslo,” notes Creuzé.

Gobernador, a Chilean pisco, recently joined the Torres spirit portfolio

Current star performers include the opulent Celeste Crianza, a Ribera del Duero

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FREIXENET

Adding new sparkle to

Asia duty free

The addition of Freixenet Ice is a calculated move designed to increase the brand’s appeal to a new tranche of consumers

World-leading Spanish cava producer, Freixenet, is popping the cork on its Asian travel retail channel ambitions with a collection of sparkling wines with strong gifting appeal by

CLAIRE MALCOLM

T

he world’s largest producer of cava and one of Spain’s most recognised brands globally, Freixenet is taking a chilled approach to market growth with the launch of its latest sparkling product.

The addition of Freixenet Ice to its portfolio, and to duty free retailers everywhere, is a calculated move designed to increase the brand’s appeal to a new tranche of consumers.

“This product is specifically targeted at the younger generation, who want to be inspired by bubbles,” says Philippe Jamme, Global Duty Free & Travel Retail Manager, Grupo Freixenet.

“Enjoyed in a larger glass and served with ice, it’s something we believe that Millennials will be able to relate to as opposed to as they don’t want what their parents were drinking and will be able to say ‘this is for us’,” he adds.

For over 100 years, Freixenet’s philosophy has been all about celebrating the moment and this also extends to product packaging and promotions.

The new sparkling product and its distinctive white bottle specifically targets a younger audience

42

SPIRITS & CIGARS JULY 2016

“With Freixenet Ice, and its distinctive white bottle, we see this appealing to an audience that is incredibly active on social media. We have other attractive products that target Asian consumers, especially when it comes to gifting, as appearance counts for a lot in this region and the wow factor sells,” says Jamme.

Primarily a cava company, the group currently has an impressive tally of 23 wineries located around the globe in places such as Australia, Argentina and California, as well as its native Spain; plus a Champagne house in France.

Says Jamme: “The challenge for us in Asia with cava is that the market here hasn’t been as exposed to sparkling wines as in Europe, for example. They’ve heard of the big names and when they go for sparkling, they probably go for a big Champagne house, as that’s what they are familiar with.

“But the recent growth in demand for Prosecco, especially in Europe, is benefiting other sparkling wines. A lot of people

don’t really know what they are drinking and Prosecco has almost become the generic name for sparkling wine.”

Another big plus for Freixenet is its relative affordability, as he explains: “Consumers in Asia are moving away from the attitude of ‘I don’t care what it costs, if I like the look of it, I’ll buy it’, which is compounded by the anti-corruption law in China as well, and looking at alternatives.

“This has really driven the trend down and so it’s definitely an interesting time for us. Our products look fantastic and are very affordable, and that’s how we can catch new consumers. We are also bringing in new packaging and twin pack offers, for example, which again offer value and great gifting opportunities.”

Not on shelf in China just yet - a market that Jamme is keen to crack the group is also looking at travel retail channel potential in destinations such as Malaysia and Thailand.

“Some duty free operators are starting to realise that there is life after Champagne, and with Asian consumer starting to drink less hard spirits and more wines, this needs to be reflected in travel retail in terms of increase space for wines,” he remarks.

LIQUOR NEWS

Ballantine’s matches blends with personalities in new experience Ballantine’s Scotch whisky has unveiled an interactive experience in Asian travel retail stores, inviting consumers to explore and celebrate their personality. In the Ballantine’s ‘Stay True to Your Blend’ experience, travelers are encouraged to interact with a digital game via the microsite sky-reward.com, or on iPads placed in-store.

The game uses consumers’ personality traits, from daring adventurer to playful guru, to discover the range of Ballantine’s blended whiskies. Once the traveler has discovered their own blend, the interactive blending table in-store allows them to learn more about the individual qualities of their matching Ballantine’s whisky.

From a line-up of Ballantine’s 17YO, Ballantine’s 21YO, Ballantine’s Limited and Ballantine’s 30YO, travelers can nose and taste their match through a bespoke tasting ritual and share their results on social media. The promotion is live in

Seoul Incheon and Shanghai Pudong airports until August 2016.

During this time, travelers will receive an exclusive GWP and a voucher to enter an online draw to win a trip to Scotland for a Ballantine’s experience.

In the Ballantine’s ‘Stay True to Your Blend’ experience at two major Asian gateways, travelers are encouraged to discover the blend that matches their personality via in-store iPads

An illustration of the new labels on Johnnie Walker Red Label packs that will include alcohol content and nutritional information per typical serve

Johnnie Walker to introduce new alcohol content labeling design Johnnie Walker is set to be the first Diageo brand to provide consumers around the world with on-pack alcohol content and nutritional information per typical serve. From early fall, the new labels for bottles of Johnnie Walker Red Label go into production and will then be shipped to markets globally, including Global Travel Retail and Middle East.

By the end of the year, up to 30 million bottles of Johnnie Walker Red Label with on-pack alcohol content and nutritional information per typical serve will hit the shelves, including duty free stores, helping consumers understand what’s in their glass. The labels conform to the new Diageo Consumer Information Standard (DCIS), which came into force on July 2 and will apply to all Diageo brands. Diageo developed the DCIS based on research of more than 1,500 consumers around the world, including people from North America, the UK and Spain.

The research found that, of all the information that could be included, the consumer preference was for alcohol information (standard drink size, ABV, how many units), calories per serve, sugar content, allergens and brand facts, such as how a product is made and quality assurances. Updates to Johnnie Walker Black Label, Double Black, Gold Label Reserve, Platinum and Green Label are also planned for the first half of 2017.

Doug Bagley, Managing Director of Diageo Global Travel and Middle East, says: “Within travel retail we work hard to offer consumers an enjoyable shopping experience and access to unique, premium products within the spirits category. We understand the responsibility that comes with this, and the importance of helping consumers recognize the alcohol content per typical serve and the nutritional information that goes with this. As an industry first, we’re proud that consumers around the world, including those traveling through duty free, will understand what’s in their favorite glass of Johnnie Walker, empowering them to make educated decisions.” www.dutyfreemagazine.ca SPIRITS & CIGARS

43

DAVIDOFF

Natural pairing Cigars and art were both in high visibility at Art Basel in Switzerland this June

Fausto Ortiz. Infinite II Exodus series, 2013 Edition 1 /3 © Oettinger Davidoff AG

Jamaican-French visual artist Olivia McGilchrist, whose work was chosen for The Davidoff Limited Art Edition 2016

T

he name “Davidoff ” has been synonymous with fine cigars for the better part of a century. In recent years, the name has also become synonymous with fine art.

Since 2012, when the company began sponsoring Art Basel, the world’s largest art exhibition, which takes place in three cities, it has truly taken root in the global arts community.

Art and cigars may seem like an unusual marriage, but to Oettinger Davidoff CEO Hans-Kristian Hoejsgaard, the two make a natural pairing. There is great craft and artistry to making cigars, and cigar aficionados are often collectors of art. The two worlds blend together as well as the premium tobaccos in Davidoff ’s cigars.

Art Basel in Switzerland takes place in June each year, and Davidoff had plenty of launches and other announcements during the period leading up to and surrounding the event.

Cigars Escurio

The perfect marriage of art and cigars is presented for the second year in a row, with The Davidoff Limited Art Edition

44

SPIRITS & CIGARS JULY 2016

Davidoff ’s mission is to bring the modern cigar aficionado diverse and innovative cigar experiences. In its Escurio line, Davidoff ’s Master Blenders crafted an exciting Brazilian blend inspired by a night in Rio, delivering a spicy-and-sweet palate stimulation, with all the excitement and refined sophistication aficionados would expect from Davidoff.

The new cigars include a Corona Gorda and Gran Perfecto, along with Primeros and Mini Cigarillos, for when time is short.

Brazil is rhythm, intrigue and originality, and the Escurio line matches that energy with cigars and cigarillos that are sweet and spicy, with rich aromas and taste adventures.

Art Limited Art Edition 2016: Olivia McGilchrist For the second year in a row, Davidoff has chosen an artist and a work to be featured on its Limited Art Edition. The Davidoff Limited Art Edition 2016 consists of a cigar edition limited to 7,000 unique boxes, each featuring an exclusive still extracted from McGilchrist’s video “from many sides.” Olivia McGilchrist is a Jamaican-French visual artist whose works explore themes of translocation and issues of Caribbean cultural identity. Each box will carry 10 exquisitely flavorful and well-balanced perfecto cigars, an exceptional format, which only 10 experienced Davidoff torcedores (cigar rollers) are able to craft.

In addition, a highly limited run of Collector’s Editions consisting of one of 16 numbered editions of the commissioned video, a cigar box featuring a unique still image from the video, and a signed certificate by the artist, were released during Art Basel. Visitors also had the opportunity to immerse themselves in a 3D virtual reality video piece by McGilchrist.

Part of the revenues generated by the Davidoff Limited Art Edition 2016 will be dedicated to sustaining the Davidoff Art Initiative and supporting artists from the Caribbean.

Art in Lounges

Leasho Johnson, Lost at Sea 2, 2012, mixed media on canvas. Johnson was selected as the first artist to participate in the new DAI residency partnership program at Residency Unlimited (RU) in Brooklyn, New York

Cusano Nicaragua Estelí Cusano is expanding its premium range with the addition of a new medium-full-body Estelí line. The Cusano Nicaragua Estelí’s Negro San Andrés Mexican wrapper is shiny and veinless, leaving a honeyed sweetness on the lips. The Nicaraguan filler tobaccos stimulate the back area of the palate with spicy notes, while additional woody, creamy and earthy notes are derived from the Dominican filler tobaccos for a more complex experience. The Cusano cigar range is made completely in the Dominican Republic, under the direction of Hendrik “Henke” Kelner.

Davidoff Yamasá This cigar represents the spirit of both founder Zino Davidoff and Henke Kelner, the company’s “cigar visionary.” Both men pushed the boundaries – exploring, discovering and creating.

The Yamasá region is a “harsh and unforgiving swampland where others had tried and failed to grow tobacco.” Everyone said tobacco couldn’t grow there, but Kelner followed his vision and the resultant tobacco offers intense and complex flavors and aromas never before encountered. Davidoff Yamasá is now finally ready to be unveiled late in July.

To celebrate the fulfillment of Kelner’s dream and the launch of Davidoff Yamasá, made possible by that dream, Davidoff is launching a new #SHAREYOURDREAM promotion. Aficionados can share these personal dreams and what they want to achieve in life. The most inspiring dream will be chosen and Davidoff will help make it come true. For further information: http://davidoff.com/shareyourdream

The Davidoff Art Initiative has presented the inaugural Art in Lounges program, featuring Dominican artist Fausto Ortiz in collaboration with Centro de la Imagen de Santo Domingo.

This program builds on Davidoff ’s long-term commitment to bring recognition and greater international visibility to art and artists of the Caribbean region – a goal already pursued by the Davidoff Art Initiative’s Residencies, Grants, Dialogues, and Limited Art Editions. Works will be offered in Davidoff lounges worldwide for a limited time. Ortiz’s work will be on view and available for purchase in Davidoff stores globally, providing further exposure for Caribbean art on an international scale.

In describing his work, Fausto Ortiz has said: “My work is the result of living in and surviving a Caribbean context, where changes and geographical mobility are the norm. Art is the only democratic space for us as humans to discern and craft our ideas, regardless of socioeconomic level or political beliefs. It is the perfect platform to express your feelings towards certain situations that affect you deeply.”

Jamaican Artist Leasho Johnson Selected for the Davidoff Art Initiative’s Brooklyn, New York Residency Unlimited Since its inception, the Davidoff Art Initiative has worked toward its goal of sending five Caribbean artists to art residencies around the globe and selecting five international artists to bring to its residency in the Dominican Republic each year, with a goal of dialog across cultures and across media. Last year, 2015, was the inauguration of the Davidoff Art Residency in Altos de Chavón.

Recently Jamaican artist Leasho Johnson was selected as the first artist to participate in the new DAI residency partnership program at Residency Unlimited (RU) in Brooklyn, New York, beginning this fall. Johnson will be in residency from September through November 2016.

During his residency, Johnson will be expanding upon on his body of work, which aims to redress what he sees as a distinct lack of global understanding of traditional Jamaican Dancehall culture, despite it largely defining the international perceptions of Jamaican identity. www.dutyfreemagazine.ca SPIRITS & CIGARS

45

AGIO

Agio lights up Asia Capitalizing on the success of its previous creation, the Dutch cigar maker recently launched its latest Balmoral gift box by

CLAIRE MALCOLM

All consumer angles are covered with the Agio and Panter travel retail packs

Gertrude Stormink, Global Travel Retail Manager, Agio Cigars

The Balmoral range includes the Anejo Rothschild Masivo

The Balmoral range includes the Petit Robusto

46

SPIRITS & CIGARS JULY 2016

T

he Balmoral Private Collection 25 offers a unique collection of Dominican cigars, beautifully presented in a lacquered wooden box.

“Our previous box was a worldwide duty free bestseller and this is another example of the kind of limited edition product that we wanted to position in travel retail. It’s something that our customers and consumers are highly appreciative of and look out for in airports,” says Gertrude Stormink, Global Travel Retail Manager, Agio Cigars.

“Currently, we are focusing on Balmoral, and the gift boxes especially. We also have our Agio and Panter travel retail packs, so this means we can cover all consumer angles,” she adds.

The ultra-glamorous box also contains a humidifier and cedar wood sticks for

Agio Cigars’ presence at Beirut Duty Free

The Balmoral Anejo XO Torpedo is another popular travel retail choice

The Balmoral Private Collection 25 is a uniquely presented gifting option targeting the Asian traveler

lighting cigars, adding to the upmarket presentation. Stormink is quick to point out that Agio uses the best quality tobacco from South America and the Caribbean for its Balmoral Dominican Selection.

She says: “We are especially targeting Asian customers. It is definitely positioned for gifting and the positive reaction we had from customers in Singapore, and from our Chinese clients in particular, indicate that it will do extremely well.”

Agio Cigars is currently working with Sunrise Duty Free in China.

“What we see and hear from our brand ambassadors in China is that people really like our diverse offer,” she remarks.

Other Asian markets working well for the company include Malaysia and Thailand, while in North Africa it has presence through Dufry, and in the UAE with Dubai Duty Free – another success-

ful location for Balmoral, which is now present in over 30 international hubs.

Says Stormink: “Travel retail is a priority area for us, and the Balmoral range in particular is something we want to focus our attention on as it pretty much falls into a category of its own.

“With World Duty Free in Düsseldorf we developed a gondola that’s easy to restock and that displays the products really well. It’s also important that we can display the box open, so people can see what’s inside. The result was that in just two months we increased sales by 70%.”

Tactical display units go hand in hand with promotion, and Agio works with both staff incentive programmes and gift with purchase (GWP) mechanisms, depending on location.

“Where it is still possible to offer GWP we find that items such as travel adaptors,

small humidifiers and other travelrelated items work well, especially in Asia,” she notes.

The affordability aspect is also bringing Agio new business, as Stormink explains: “With Balmoral, we are seeing a lot of younger people purchase. Cubans cigars are obviously very well known but Balmoral’s Dominicans are a little milder in flavour and so are a good starting point for those new to cigars.

“That’s why we also offer the five piece packs, which act like a taster, and which help drive future business both for our brand and the operators.”

The Balmoral Private Collection 25, which retails at around €120 is an attractive higher end gifting option whilst the five-packs come in at the very affordable €10-20 mark.

Next up for Agio in terms of focus is its Anejo XO collection, with the goal of growing market share in the handmade cigar segment, as Stormink elaborates: “To date we didn’t pay so much attention to handmade in travel retail due to the competitive nature of the segment and the prevalence of Cubans.

“But now we have a fantastic product from the Dominican Republic, a followup from the Anejo 18, and one that is already winning prizes. The products are presented in beautiful wooden boxes and include three different models. It’s really something out of this world and we have high expectations.” www.dutyfreemagazine.ca SPIRITS & CIGARS

47

TOBACCO NEWS Together with José Oliva, Gilberto Oliva Fred Vandermarliere have created an “all-in win-win” deal

Two families

unite B

elgian cigar specialist J. Cortès has acquired US-based Oliva Cigars, with branches in Miami and Nicaragua. The deal was effective on July 1, 2016.With this acquisition, J. Cortès aims to diversify its product portfolio and further establish its position in the worldwide market.

Their combined annual turnover equals US$100 million. “A family business firmly branching out in two continents is unprecedented in the cigar industry,” said J. Cortès in a statement.

The two companies are family owned but are run differently: J. Cortès cigars are manufactured on a production line, while Oliva cigars are rolled by hand. Where J. Cortès is mainly active in Europe, Oliva plays an important role in the American market. J. Cortès CEO Fred Vandermarliere said he had chosen to continue to manage Oliva as a business, including the brands it owns and its current management team.

“Oliva Cigars is a fantastic, wellrun business with strong brands and plenty of future opportunities. This acquisition allows us to further strengthen both businesses’ strategy and to stay focused on brands, people and dedication to great products for cigar lovers,” said Vandermarliere.

Oliva Cigars CEO José Oliva described the deal as an “all-in win-win,” He will continue running the firm, with guaranteed continuity in both brands and the workforce of 1,115 people.

“As a family, it was important to us to be part of a company whose spirit and culture is much like our own, a company that appreciates and wants to continue 48

SPIRITS & CIGARS JULY 2016

When Fred Vandermarliere, CEO of family-owned J. Cortès met José Oliva, CEO of family-owned Oliva cigars, they felt an immediate connection. Four years later J. Cortès’ acquisition of the AmericanNicaraguan company has created a perfect working arrangement

Whereas J. Cortès produces machine-made cigars, Oliva Cigars are rolled by hand

While J. Cortès has acquired Oliva Cigars, the company will continue to be run as it always has

working with our entire team. It is a new and exciting chapter for our company,” said Oliva.

J. Cortès Cigars has been in the hands of the Vandermarliere family since 1926.

The company holds a strong position in the European market, producing 100% machine-made cigars, and is active in 80 countries worldwide. Core activities are brands such as J. Cortès, Neos and Amigos. It has 2,250 employees worldwide and a total annual production of 500 million cigars.

Thanks to solid growth over the past 10 years, Oliva Cigars, based in Miami and Nicaragua, has a strong position in the American market for premium handrolled cigars, branded Oliva, NUB and Kaïn. Total annual production is 15 million handmade cigars.

A wonderful film about the partnership can be found here: http://www. jcortes.com/news or here: https:// www.youtube.com/watch?time_ continue=85&v=h0_MJoxBPLQ

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