This interview was published for Global Drinks Intel subscribers in August. For details on how to join them, click here.
Back in March, Brown-Forman’s global travel retail team headed to Singapore for this year’s TFWA Asia Pacific Exhibition & Conference. Division MD David Rodiek and global emerging brands MD Philip Epps found time to update Global Drinks Intel on the current and future prospects for the brand owner in GTR.
Global Drinks Intel: What’s the current lay of the land for the global travel retail channel in Asia?
David Rodiek, MD Global Travel Retail at Brown-Forman: Asia – and Asia Pacific, in particular – is certainly an exciting area for us. From a travel perspective, the region only recently opened up completely, with China coming back online at the start of this year, and Australia around six months into being a fully open market again.
We’ve got a lot of new news to talk about from our super-premium whiskey/whisky portfolio, which includes not only our American whiskies – Jack Daniel’s is the flagship and then there’s Woodford Reserve – but also our single malt Scotch whisky portfolio with BenRiach, The GlenDronach and Glenglassaugh. So, there’s a lot going on here.
GDI: Earlier this year, you redrew the regional areas for GTR at Brown-Forman. What prompted this?
DR: On the one hand, we had one of our very renowned colleagues, [Americas & Asia Pacific GTR director] Monte Wilson, retire at the end of last year. On the other, after coming out of Covid and exploring this new normal, we had the opportunity to review the structure and address our focus areas.
We’ve fine-tuned and consolidated our approach, with an Americas region, then Europe, Middle East, Africa & India and finally Asia Pacific. We’ve appointed Oscar Camargo in EMEAI and Dreamy Zhou in Asia, Australia, New Zealand & the Pacific Islands. We’ve also just promoted internally for the Americas with Alex Prendes moving up.
It’s all about addressing the geographic opportunities better with a stronger focus and – particularly in Asia – more of a laser attention.
GDI: Can you define the ‘new normal’ for GTR?
DR: People are getting back to travelling again, which is certainly exciting. What we’re seeing is that a lot of the megatrends are being further amplified.
Premiumisation, for example, was here before, but it’s regaining momentum. Then, there’s the rising middle class across a lot of emerging markets, which is particularly the case in Asia.
Another key area is digitalisation, which plays a really important role in GTR. It’s not just about targeting and engaging with the consumer at the airport, but also how to accompany and excite them pre-, during and post-trip. So, digitalisation is something that’s really emerged from the pandemic.
Another top trend that we’re very focused on is sustainability. You hear a lot about this from the industry, and beyond spirits. Not only do we have sustainability targets as a corporation, but we also have specific targets for our operations in global travel retail.
GDI: Is the company’s GTR division just picking up from where it left off in late 2019?
DR: No, we’re not – We’re certainly accelerating. In Asia, we’re really gaining in terms of geographical coverage, while also putting a strong accent on our premium whiskey/whisky portfolio, both American and Scotch. More broadly, we’ve got the megatrends I referenced earlier and they are transformational for GTR.
It’s certainly a new era that we’re moving into. I don’t see GTR going back to what was happening pre-2019.
GDI: How are you able to gauge your performance in the short term, when year-on-year figures are delivering high double-digit sales increases?
DR: I refer to 2022 as the year of recovery. The next year is all about the growth and then we’ll be comparing apples with apples.
There are ways for us to see how we’re doing against our competition, such as footfall and store-level performance. These kinds of metrics have become part of our key performance indicators [KPIs].
GDI: At what point should we start looking at the figures as comparing apples with apples?
DR: In Asia, the key outliers at the moment would be China being back online since 1 January and then Australia only rejoining the travel retail universe in July 2022. We should probably speak about January 2024 being the starting point for true comparison.
GDI: Where have the surprises come from for Brown-Forman in GTR in recent months?
DR: We’re seeing a lot of momentum in super-premium whiskey, where we’re in the process of rolling out Jack Daniel’s American single malt in Asia Pacific. Woodford Reserve is also driving a lot of growth for us.
We’ve also been very active in consumer experience and activation – we’re engaging in a very creative and experiential way with consumers.
Single malt Scotch has long been important in Asia, so we’re speaking a lot to our customers here about BenRiach, GlenDronach and Glenglassaugh.
GDI: Brown-Forman entered the rum category last year through its acquisition of Diplomático. Is the brand scratching an itch in GTR that you couldn’t satisfy beforehand?
DR: We’re super excited about having Diplomático as part of the portfolio. Rum has been an opportunity for the company to evolve into – in the last five years, super-premium-plus rum has been growing 17%, yet the segment only represents around 8% of the total category. So, there’s a lot of runway for growth that we believe we can spearhead in GTR.
Traditionally, rum has been very strong in the Caribbean and in the Americas. We want to bring it closer to other geographies in GTR, such as Europe, the Middle East and, over time, Asia.
Philip Epps, MD Global Emerging Brands: I’m responsible for our three single malts. I also look after Fords Gin and Gin Mare, which has just come in, as well as Slane Irish whiskey, Chambord and Diplomático. David and I have both been with Brown Forman for 18 years and this is one of the most exciting periods within the company that either of us can remember.
To have two such significant acquisitions in Gin Mare and Diplomático in such a tight period of time is very unusual. It certainly wasn’t planned that way, but the excitement within the business is phenomenal. Add in Jack Daniel’s sponsorship of McLaren Racing in Formula One and the Jack & Coca-Cola [RTD], and it’s been a phenomenal nine months.
Diplomático is about a 400,000 nine-litre-case brand that phenomenally under-indexes in GTR. Currently, the volume that goes to GTR is low single digits – Woodford Reserve, for example, is around mid-teens for our operations. So, the opportunity for Diplomático is phenomenal. It’s amazing that they got to 400,000 cases without a 1-litre SKU, and that’s something that we’re looking at immediately.
There’s a long runway for growth – Brown-Forman couldn’t be happier to be in this category.
GDI: From an outside perspective, the acquisition of Diplomático coming so soon after the purchase of Gin Mare [the transactions were one month apart] looks like a trolley dash.
PE: Brown-Forman’s always interested in super- and ultra-premium products – they don’t come around very often. The conversations on Diplomático had been going on for quite a long time, while Gin Mare was a lot quicker – it just happened to end up that way.
When those kinds of brands come in and there’s an opportunity to have conversations about them, we didn’t want to miss that.
GDI: Which spirits categories have surprised you in their post-pandemic return?
DR: I would say the magnitude of the growth that we’ve seen in Tequila. The growth that’s happening in the US and across the Americas is stunning. In GTR, everybody’s looking at the opportunity – consumers seem to be very thirsty for Tequila. Our customers are asking for a lot of quantities, which we’re very much focused on along with the quality. So, tequila’s the one that I would pull out.
PE: On a more macro level, the consumer trend we saw coming out of COVID of people trading up and spending more on their drinks has delivered a phenomenal benefit throughout our portfolio, particularly for our malts: We relaunched BenRiach 18 months ago and it’s more than trebled in that time. We’re also really excited about our relaunch of Glennglassaugh in the coming months.
GDI: Does Tequila travel?
DR: There are a couple of markets that stand out, not only for us but for tequila overall. In Europe and South Africa, there are some clear pockets of growth.
This might be more of a slower burn, but most certainly we believe there’s a greater opportunity to further expand from a geographical perspective for us and for the category. So, we do see Tequila travelling beyond those markets, and we will do that for GTR.
GDI: Do you have anything else to declare?
DR: I’d like to allude to one of the megatrends: Sustainability is very important to us as a company, but also for our GTR unit. We’re taking specific goals into consideration where we’re banning single-use plastic from our promotions. By 2030, both our primary packaging materials and our secondary display materials will be fully recyclable or fully reusable.
We’re also conscious that when you travel, you automatically impact the environment. We’re working with a specialised agency in the UK to compensate for those efforts. They’re focusing on sustainable forestry and renewable energy to compensate for some of the impacts our teams are causing when we’re travelling.
This interview was published for Global Drinks Intel subscribers in August. For details on how to join them, click here.
