Last year’s recovery for spirits in the Global Travel Retail channel was still a long way short of 2019. Kevin Rozario reports.
When it comes to the spirits category, the fragility of Global Travel Retail (GTR) was apparent throughout 2021, but it opened the door for the big multi-brand players to beef up their market shares in what has been a contracting product segment during the pandemic.
In 2020, according to IWSR Drinks Market Analysis, spirits volumes in GTR collapsed by -71%. Furthermore, last year’s recovery “was only partial”, with volumes at just 45% of pre-pandemic levels. That should be a warning that the constantly reverberating theme of a ‘bounceback’ needs to be put in perspective; very few spirits brand owners are talking about any return to 2019 sales levels in GTR just yet.
As with any crisis, there are winners and losers and, once again, Global Drinks Intel has exclusive 2021 data from IWSR Drinks Market Analysis on brand performances in the GTR channel. These are based on sales by volume rather than value, yet they provide sound insight into how the sales channel is moving.
The Top 10 up close and personal
Looking at the IWSR rankings last year versus 2020, there was not much change — rather a time for the major multinationals to consolidate. Diageo’s Johnnie Walker portfolio retained pole position, which is no surprise given the lead the brand has in the channel.
Moreover, in Diageo's fiscal 2022 (to the end of June), the group’s GTR business in 'Asia & the Middle East' saw sales leap by triple digits at 178%. The company said the growth reflected the easing of international travel restrictions, but that it was “primarily driven by Johnnie Walker”, which has gained increasing traction in the region.
Diageo’s only other Top 10 brand was Baileys Irish Cream, which climbed two places to No.8. However, across all channels, the liqueur was the second weakest for volume growth within Diageo’s ‘global giants’ portfolio, which comprises six brands. Still, among this elite group, Baileys managed to lift volume by 10% in FY22, ahead of a limp +3% from Captain Morgan. In GTR, the rum brand also slipped substantially from 15th place to No.22, reflecting that same lack of dynamism.
In July, Baileys added the channel-exclusive Birthday Cake variant for six months to test the demand for all-year gifting. And from an ESG (environmental social & governance) angle, which is becoming increasingly important for duty-free shoppers, Baileys has launched the 'Sustainable Farming Academy' in Ireland as part of a sustainability platform that Diageo is implementing for several of its global brands.
Retaining second place, and flying the flag for the American whiskey/Bourbon category, was Jack Daniel’s from Brown-Forman. In the company's fiscal 2022 (to the end of April), the demand for Jack Daniel’s and its three flavour extensions led to sales growth of 23% across all channels. The company’s overall GTR sales saw a year-on-year increase of 67% after a decline of -50% the year before. Though not in the Top 50, Brown-Forman’s super-premium American whiskey Woodford Reserve has also witnessed higher volumes in GTR.
Pernod Ricard moves upwards
As with 2020, Pernod Ricard continued to dominate the IWSR’s Top 10, holding five positions, but trending higher in two instances. Chivas Regal moved up one place to No.3; Absolut Vodka stayed in fifth; Ballantine’s also climbed one place to No.6, swapping places with Martell, now in seventh; and, finally, Jameson held onto the No.9 position.
In Pernod Ricard's fiscal 2022 (to the end of June), year-on-year sales in GTR jumped by 48%, although the three-year CAGR was still negative at -13%. Nevertheless, the company had what it called an “exceptionally strong” recovery in Europe and the Americas, and is expecting its duty-free business to be profitable again in fiscal 2023.
Five years earlier, in 2016, Pernod Ricard had four brands in the Top 10, with Jameson hovering just outside. In fiscal 2022, the Irish whiskey delivered 22% volume growth across all channels, one of only five labels to break +20% among Pernod Ricard’s 13 ‘strategic international’ brands.
In spring last year, Jameson opened its eye-catching 'TasteHouse' concept store at Dublin Airport, stocking GTR exclusives like Jameson Triple Triple and giving it more profile in the channel. Mohit Lal, CEO of Pernod Ricard GTR, said the store “illustrates our dedication to be at the forefront of innovation within travel retail”.
Meanwhile, Martell’s one-place slip may be more to do with the lack of Chinese travellers globally. Pernod Ricard has moved to rectify this with the inauguration of its first GTR boutique in China Duty Free Group’s Haitang Bay mall in Hainan in January, along with a larger presence at the GDF Plaza in the Mova Mall in Haikou this summer, also on the duty-free Chinese island.
Across categories in 2021, duty-free sales in Hainan soared by about 84% year on year, hitting US$9.5bn. This will have buoyed volumes for some brand owners at the high-end of the Cognac and whisky/whiskey categories.
The arrival of operators like Dufry, Lagardère Travel Retail and China National Service Corporation has helped to further establish the island as a GTR focal point. But, the jury is out on how this will impact the channel when the Chinese can travel internationally again: Will they choose to shop at international airport hubs or find it more convenient to stick to Hainan?
Another Cognac, Moët Hennessy’s Hennessy brand also lost ground in 2021, dropping a place to fourth, possibly also an impact of missing Chinese travellers. Proportionally, Hennessy’s shipments were scaled back somewhat last year. Volumes shipped from the Cognac region were up 16.4% versus 2020 (source: BNIC), while volumes of Hennessy increased by only half of that, at 8.2%.
As a result, Hennessy’s market share dropped to 45%, compared with 49% in 2020. LVMH said that this “marked a return to normal levels”, presumably meaning pre-COVID, but a ‘less but better’ approach does seem to be the way the brand is going, which could affect future volumes in the GTR channel.
In typical Moët Hennessy style, Hennessy artfully launched travel-retail exclusives such as specially-packaged Hennessy XO City Editions for Paris, Hainan, Macau and Singapore in June (though Paris had a pre-launch last year at Les Caves Particulières at Charles de Gaulle Airport). The products are designed to offer “luxurious consumer experiences and bring new energy” into GTR, according to Moët Hennessy’s president of Asia-Pacific, GTR & private sales, Laurent Boidevezi.
Rounding out the Top 10 was Russian Standard Vodka from Roust, dropping two places. At the end of last year, the brand launched Russian Standard Original Jewellery, the eighth in a series of travel-retail exclusives. However, given the ongoing war with Ukraine, it will be interesting to see how the brand performs this year, and whether it can hold onto its ranking.
Whiskies shuffle upwards
Although 2021's Top 10 was essentially only a brand reshuffle compared with 2020, the upward mobility of whiskies was noticeable. The top three places are now taken by Scotch whisky and American whiskey, with Cognac relegated to fourth place, and a Scotch and an Irish whiskey also in sixth and ninth spots.
Five years earlier in 2016, the top three positions were also taken by whiskies, but in a different order (Johnnie Walker, Chivas Regal and Jack Daniel’s), with only one other Scotch in the Top 10: Ballantine’s sitting in ninth place.
Looking further down, Jim Beam, has risen two places to No.15, and single malt Glenfiddich from William Grant & Sons has entered the Top 20, up two places to No.19. In other words, there has been no downward movement for whisky/whiskey brands in the upper part of the table, only upward or holding their own. Outside the Top 20, another single malt, Pernod Ricard's The Glenlivet, rose two places to 25th.
On the pandemic’s two-year impact on GTR’s biggest drinks category, the IWSR commented: “Whisky was relatively more affected, shedding very significant volume in 2020, (and) declines in Scotch sales in Asia-Pacific GTR were pronounced. Whisky sales saw some recovery in 2021, but skewed towards Europe and the Americas.”
The big fallers
There have been some spectacular whisky falls, too, albeit further down the list. Edrington’s The Famous Grouse slipped from No.22 to 31, while the group’s most prized brand, The Macallan, dropped from No.24 to 37. Dewar’s from Bacardi also crashed, from No.19 to 32, meaning that volume momentum at Bacardi — which retains three brands in the 11 to 20 positions, including its namesake at No.12 — came from high-end Grey Goose Vodka, which rose from 23rd to 18th spot.
Other big falls across all categories came from Nemiroff Vodka (No.13 to 21); Stoli Vodka (No.26 to 41); Distell’s Amarula (No.29 to 38); Royal Salute by Chivas (No.33 to 39); Malibu from Pernod Ricard (No.39 to 46). and Rémy Martin Cognac from Rémy Cointreau (No.31 to 49) — the biggest decline on the list.
Nine brands dropped out of the Top 50 altogether versus 2020, including three whiskies: Diageo’s VAT 69 and Canadian whisky Crown Royal, and The Balvenie from William Grant & Sons.
The big risers and newcomers
Brands moving up the chart did so in a less prominent fashion, with one exception. Ukraine’s Hlibny Dar Vodka from Bayadera leapt from 50th place in 2020 to No.23 last year, before the war with Russia began, so it could see strong momentum in 2022 at the expense of Russian labels. Other gainers were Diageo’s Tanqueray (No.25 to 16) and Gordon’s gins (No.18 to 13); Barceló rum (No.36 to 30), and Grant’s (No.40 to 33).
Replacing the nine 'dropouts' were some familiar names, and some less so. The highest new entries — Pernod Ricard’s Havana Club Rum and Tito’s Vodka — came in at 27th and 28th, respectively, with Koskenkorva Vodka from Anora debuting in 35th place.
Bunched together in the upper 40s were newcomers Cuervo from its namesake owner, and three Scotch whiskies: Diageo’s Buchanan’s, Label 5 from La Martiniquaise and King Robert from Ian Macleod. The lowest entries were Bushmills from Cuervo and Metaxa from Rémy Cointreau at No.48 and 50, respectively.
This year and further ahead, the GTR channel is heading for further recovery, simply due to the passenger rebound — but the spirits industry shouldn't get too excited. “We should see further aggressive recovery in 2022 and 2023 as COVID restrictions subside," An IWSR spokesperson told Global Drinks Intel. "However, the return of business travel will be sluggish and the cost of travel will increase alongside fuel (while) the cost-of-living situation will depress the leisure travel recovery.”
Having just begun to emerge from the pandemic, recessionary factors and surging costs are now a big uncertainty for travel retail as nobody is sure how these will play out in terms of traveller spending — or for how long.
The IWSR does not expect spirits volumes to reach pre-pandemic levels before 2025. Over the longer term, however, its analysts think that recovery will even out across regions, with status spirits strengthening their positions in the channel.
This article was initially published in the October issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
