‘Today, there are more voices that are speaking against free trade’ – Philippe Schaus, president of World Spirits Alliance & CEO of Moët Hennessy, speaks to Global Drinks Intel

GDI: Who do you feel is challenging the spirits industry that needs this kind of information?

PS: We are moving out of a world in which the universal paradigm for economic development has been free trade. Today, there are more voices that are speaking against free trade; people who think that by reducing free trade, they are going to generate wealth for their national population. But, free trade is what helps countries move out of poverty, it’s created millions of jobs throughout the world, and it’s made the spirits industry particularly successful.

We as an industry thrive on free trade and we’ve created an enormous amount of jobs. There are 36m jobs throughout the world that are directly or indirectly linked to our industry – that’s one in every 84 people working in the world, or the working population of the UK, more or less.

Every year, we produce US$730bn of GDP, which is $1 in every $140. We’re also one of the biggest clients for the agricultural industry – Think about agave for tequila, corn for bourbon, barley for Scotch, or grapes for cognac. We’re often a driving force towards elevating the sustainability of agricultural practices, because we’re very visible to consumers and authorities. We want to be best-in-class in what we do, so we drive a lot of initiatives.

All these things are linked to the fact that generally speaking, we are living in a free trade environment. We hope we can make sure it stays like that.

GDI: Spirits sales seems to have plateaued somewhat this year. How short term is this situation, or is there something underlying here that’s causing concern?

PS: In the very long term, what’s been driving the category is diversification – by which I mean greater choice for consumers – and premiumisation. Over the last 20 years, overall alcohol consumption has been going down. Premiumisation has been going against that as there’s been this whole movement of drinking less and drinking better.

When we look at the closer time frame of the last five years, the industry had very steady growth until 2020, when Covid came. Then what happened in this industry – more than in many others – has been this kind of ‘roaring 20s’ thing from 2021 to 2023. These were fabulous years for spirits, as consumers wanted to travel again, to enjoy themselves and to experience new things – the industry benefited from that.

What we’re seeing this year is a bit of a normalisation, more in line with what was happening prior to Covid.

GDI: How confident are you that the return to single-digit growth rates is set to continue in the longer term?

PS: None of us has a crystal ball for the future. We believe that what has helped us to grow – premiumising what we do, bringing more craftsmanship to our liquids and internationalising, while at the same time being clear advocates of responsible consumption as a societal trend – is a formula that’s going to continue to be good for our industry.

GDI: At the same time, we’re seeing younger LDA consumers coming through who have a totally different relationship with alcohol to the generation before.

PS: If that means young people being into binge drinking much less than before, then that’s a good evolution.

Time will tell. As these young people get older and become more sophisticated, will they want to discover the enjoyment – in a responsible way – of well-crafted spirits? The jury’s out on that, but we’re pretty optimistic.

GDI: The report looks at spirits’ performance within total beverage alcohol. Is that the limit to the pool of opportunity for brand owners like yourself?

PS: Bear in mind that I’m speaking here in my capacity as the president of the World Spirits Alliance, not as the CEO of Moët Hennessy! Each [alcohol] category has its own strengths and its own opportunities. What unites us is that we’re all based on strong, local cultures, on nature, on agriculture and on craftsmanship. We’ve all got stories to tell.

Different categories have different strategies. For spirits, the big story is premiumisation, giving consumers more choice and pursuing an agenda where we are highly supportive of more moderate consumption practices.

GDI: Does it worry you that the current cost of living is steering consumers away from stories of provenance and more towards a product’s price?

PS: Look at the consumer evolution over the last 20 years; We have had cycles when consumers became more price conscious, as well as cycles when they became more quality conscious. The very long trend, however, goes clearly towards quality.

GDI: How do you see spirits being able to win the sustainability argument when the industry is such a large user of energy?

PS: All the spirits companies have their own agenda on sustainability. You have what’s happening on the agricultural side, like stopping the use of chemicals or using more carbon-friendly ways of harvesting. Soil is a very important method of capturing carbon. At Moët Hennessy, we have our Living Soils programme, where we focus on bringing more biodiversity into soils to make them healthier as well as capture more carbon.

There are also moves to using lighter glass for packaging and changing from air transport to ocean transport.

On the distillation side, there are a lot of efforts towards decarbonising. There isn’t a single player in the world who doesn’t have a programme to reduce its carbon footprint. As a result, distilleries are becoming more energy efficient. Some are playing with electric-powered distilleries while, in Poland, for example, our Belvedere distillery has moved from using gas as its power source to recycled biomass from wood manufacturing.

As an industry, we have a commitment to decarbonise progressively because we all know we have an overall commitment to lowering our carbon footprint.

GDI: How comfortable are you with the way the industry is working together on sustainability?

PS: Of course, production methods are not the same throughout the industry, but there’s an opportunity here. I’ve seen good examples of exchanges between industry players.

Moët Hennessy will host a Living Soils forum at the end of this year in the south of France. At the last one, we invited our competitors to join us to share what we’re doing and for them to share what they’re doing.

When it comes to sustainability, there’s a journey there, but the industry can share more. We are all living on the same planet – whatever one of us gets as an improvement can be shared with others. The World Spirits Alliance could also play a role here to facilitate this exchange – we can all win from this.