On 11 March The House of Suntory celebrated the inauguration of its first travel retail shop-in-shop – housed within Lotte Duty Free’s newly renovated central duplex store at Changi Airport Terminal 3. The Moodie Davitt Report Asia Pacific Content Strategist, Hainan-based Lara Netherlands, was on location for this landmark event and to conduct exclusive interviews with Beam Suntory President & CEO Greg Hughes and Managing Director Global Travel Retail Ashish Gandham.
In our follow-up to the conversation with Hughes, we discover what gives Gandham a sense of calm and confidence when he wakes in the morning. In a captivating interview, he also unveils the pivotal role that travel retail plays in shaping Beam Suntory’s identity. Delving into the company’s internal ethos, Gandham elucidates on its value creation model, emphasising the paramount importance of authenticity in brand building. He also articulates how prioritising people fosters a virtuous cycle of reinforcement, driving sustainable growth within the organisation and beyond.
Ashish, today is an important landmark for The House of Suntory and Beam Suntory. Sum up your initial reaction.
Ashish Gandham: First, I’m super excited. I’m extremely proud of the entire team who have worked really hard to bring this event to life. And not just the event – I was sharing with Greg Hughes the journey that our company has been on. This is the first House of Suntory shop-in-shop. Not too long ago – let’s go back to 2019, when I joined the company – as an organisation we were not confident enough to express ourselves in terms of a shop-in-shop and boutique.
From that point of view, we then created the Courvoisier boutique in Hainan [with China Duty Free Group at the cdf Haikou International Duty Free Shopping Complex]. We’re doing some great work on Bowmore. And now, for our most-cherished range to have a shop-in-shop in Changi tells a lot about the journey that the organisation has been on, going beyond a brand or a single team. This is, I believe, a journey for the entire Beam Suntory organisation.
Last year marked 100 years for The House of Suntory, an auspicious celebration that saw the company release a series of travel retail-exclusives, limited and rare editions, and a flurry of activations and campaigns. This shop-in-shop with Lotte Duty Free at Changi Airport is very much focused on that heritage, while also offering some unique products. Tell us what role a project like this plays for the company as a whole.
I think 100 years is a momentous occasion for any company or organisation. But as Masa [Masato Hayashi, Beam Suntory President APAC and Global Commercial Excellence] was saying during the opening, from a Suntory perspective while it was a milestone we needed to recognise, it also means we are starting to plan for the next 100 years. And that talks a lot about the DNA of the organisation. That was the point from where we said: “OK, what is this? And what does the next iteration look like?”
The next iteration looks like taking more products, which are consumer-centric, and bringing more experiences that we can be really proud of and that we can own. There has to be a distinctiveness to what we do.
[In your interview], Greg was talking about quality so the tenets remain the same. We need the quality – that has to be the fundamental cornerstone experience. But we also need to start creating experiences, products which we can own, categories that we play in. Do we have the right to win?
So now with the shop-in-shop and the travel retail-exclusive collection – this is the first House of Suntory Japanese whisky exclusive launched outside Japan.
The US market is one of our biggest, but the reason our company has been inclined to launch this in travel retail is because we are able to touch many different consumer types and shopper types, and really showcase what we can bring to this industry – the uniqueness of what Suntory and Beam Suntory can stand for. So there is a commercial aspect to it.
The expectation from our customers and our stakeholders, Lotte Duty Free and Changi Airport, is for us to bring Japan to the world. We can own the fact that we can bring Japan to the world. We are extremely proud of that. But beyond that and the commerciality of it, that’s what we are proud of.
This will also set the tone for our other pillars when we talk about bourbon and American whiskey. Now the question is: “What do we do with our American whiskey and bourbon range?” That goes on a similar journey for us. So the commerciality will always be a key role.
Regarding P&L delivery – I have some objectives. But I think that’s always going to be an outcome. What we do while achieving that outcome, and what legacy we leave behind or create, is something that we always hold ourselves to.
In the context of a global surge in demand for high-end Japanese whiskies and spirits, we observe an interesting dynamic: limited editions whose very rarity drives their premium appeal. How do you navigate the delicate balance between satisfying growing consumer demand and preserving the upscale image synonymous with your Japanese spirits?
There are two facets to this. One is an internal ethos – we have something called a value creation model, which I’ll come to explain later.
Earlier, we were in conversation with both Changi Airport Group and Lotte Duty Free. And we asked them the same question: “What do you expect from us, from a company like Beam Suntory?” For them, it’s the same thing. Creating unique products, not just for the name of it. You see a lot of ‘me too’ today, and a lot of “Oh, let’s launch an exclusive!”
That is not what we do here. When we want to bring something to our shoppers and consumers, it has to be authentic – authentic to the product, authentic to the brand, but also authentic to the DNA of the company.
That brings me to the model that we have (the internal ethos mentioned earlier) where we say: “People always first.” People can be our employees, but also consumers and communities. We always keep that in mind. And then we start with: “Let’s get the best-quality product for a demographic, or a consumer type that we are trying to attract.”
If we are confident of the quality of the product, then we can start talking about the story and the marketing element. Can we tell the story and the essence of why we are bringing it forward? How is this created and brought to life?
Once you’ve created the story and then executed, naturally, the consumers are like: “OK, I love this. I want to see more of it.” And you get a virtuous cycle of reinforcement where the consumers love your product, and you are constantly becoming more confident in creating something unique.
Shinji (Fukuyo, House of Suntory Fifth Generation Chief Blender) is where he is because he’s confident of his art and his craftsmanship. Therefore he can experiment and say: “I think this is authentic.”
Some days we get it right; some days we don’t. But we constantly keep moving forward. That’s the value creation, not just for us, but also for the entire ecosystem. And I think that’s what the exclusive range and The House of Suntory presents here and talks about. This is what we want to create in travel retail. Travel retail has to be the face of Beam Suntory, and the best way to do it is bring these stories and these products to life.
Beam Suntory performed strongly in travel retail last year helping to drive an +8% year-on-year hike in revenues in the international region. How are you viewing the channel’s state of health, both in general and for Beam Suntory?
As a company, we are extremely confident of the entire travel retail space. There are multiple reasons for that.
From our overall perspective, what do we expect? We expect travel as a space to continue to grow. As disposable incomes in the developing world go up coming out of COVID, people have realised that as a species we are meant to travel, we like to explore, we are curious – and that’s why we are who we are as human beings.
That lends beautifully into travel, so we expect that to continue. There will be some bumps along the way where you might have some flattening etc., but overall, if you take a long enough view travel will continue to grow. Within that, if I give you some statistics: out of every 100 people who travel, about 12-15% walk into a store, and from that, about half buy something.
So if travel is going to continue to grow, we’ve still got a long way to go when it comes to getting more people into the store and making them part of our journey. I guess there is huge potential for travel retail.
Naturally travel is also a space – when we go on holidays – that puts an individual in an elevated state of mind. What that does is make us curious, it makes us believe: “I can spend on myself. I can splurge. I can treat myself.”
All of those naturally lean into people either buying more, consuming more or treating themselves. So that then goes back to the commerciality aspect of it.
I believe travel as an industry and travel retail will have good growth over the next sustainable future. Some shopping groups in Asia such as Indian and Chinese travellers will lead the way. You’re also seeing the Vietnamese traveller spend more; that’s from an industry perspective.
What are the things that I believe could be a ‘watch out’? If you think about it, even today airline capacity is a constraint. Airbus can’t create enough planes for the demand that has been placed by airlines. Regarding staff, big airlines haven’t been able to recruit enough staff. So there are still some capacity constraints that we have to tide over because there will come a point where, if we don’t move fast enough as an industry, the consumer or the traveller experience will become so bad that they will start weaning off.
So there are some ‘watch outs’ that tell you the demand is there but we are not able to cater to it in the right way. That’s overall from an industry perspective, so I’m quite bullish on it. There are some ‘watch outs’ that we all need to attend to.
From a Beam Suntory perspective, we are globally number three in the world when it comes to spirits. In travel retail, historically, we’ve been about number six or seven.
From my perspective, as my boss is listening here, he will expect more growth out of us, but that’s fine. It tells you the headroom to grow is there for Beam Suntory. We are relatively new entrants into travel retail. For example, most of our illustrious competitors have had a travel retail arm for a decade or 15 years. For us the journey started somewhere around 2016 or 2017, where we created a business unit called ‘Travel Retail’ – so there is that basic headroom.
If you look at our presence and brands, have we done complete justice to them yet? I don’t think so – there is enough room for us to drive that growth. I believe we can create a niche for Beam Suntory by the way we go about doing what we do.
There are some things we have to constantly learn. Some of our competitors are doing exceptionally well in terms of storytelling and product innovation. We are starting on that journey. For us, we have to learn from what others are doing very well, but then bring our steer to it.
What’s our take on creating a shop-in-shop? Why will it be different? Is it just another few products on the shelf trying to drive a certain level of sales? That’s not our ambition; we want to be one of the most-admired companies, as Greg said, not the biggest, but we want to be the most admired. That means we want consumers to talk about us in a very different way.
What are your key strategic and geographic priorities in travel retail this year? Can we look forward to seeing more campaigns and activations from Beam Suntory during the balance of 2024?
The way we define the role of travel retail for Beam Suntory is that we are a brand-building channel. What that means is we need to give the right platforms for our brands to be showcased. That is the starting point.
Yes, we want to grow the sheer scale of presence we have in this channel, but the way we have to go about it is by building brands and showcasing brands from a geographic perspective or priority perspective.
There are multiple channels in duty free: airports, border stores, airlines, cruises, etc. We believe the airports, as a channel and an ecosystem, provide the right platform for our brands to be showcased. Hence for us, they are a priority – for sure the number one priority. And if we need to be really focused as we start creating centres of excellence, then the top airports in the world are our targets – Changi Airport is definitely one.
There are others where we want to create scale presence and we want to show up and showcase the best version of ourselves – that’s our number one priority, and it will be across key hubs like Changi, London, Frankfurt, JFK and Sydney. Connecting the dots so that you are catering to the global traveller in those hubs, that is our number-one priority.
From a brand perspective, we’ve got two hubs – or two pillars – of our company. One is the Japanese portfolio of spirits with Japanese whiskies, Roku (gin) and Haku (vodka). But we also have a tremendous bourbon range. We can own it and say that we are the bourbon company of the world – how can we bring that to life?
I’m quite lucky to work in a company which has that breadth of portfolio. When you talk about winning in whisk(e)y, we can own bourbon, and we can own Japanese whisky. In Scotches, we’ve got some crown jewels. Just think about Bowmore and Laphroaig – these are among the first few distilleries in Islay [Bowmore, founded in 1779, is the oldest -Ed]. So we have some fantastic innovations that consumers have loved.
We have a range and breadth of portfolio that we can take to the market and be proud of. So I would say the two big pillars, the Japanese and American portfolios, are definitely my number one priority – number one and two depending on which consumer and shopper we are talking about).
You joined Beam Suntory in July 2019 and assumed your current role in February 2022. Could you share the most rewarding experience you’ve had since joining Beam Suntory, and how it reflects your commitment to your role within the company?
I’ve been in the alcohol industry for close to a decade and I would say the most distinctive part of me being part of the Beam Suntory and Suntory family goes back to the values. There’s not a single day where I wake up and say there is something that doesn’t resonate with me personally. I take a lot of comfort in that and there is a sense of calmness, there is synergy with personal values.
When I talked about the value creation model, I said the first thing is people and that’s how we look at people within the company. Through the pandemic we made no choices that had an adverse people impact, whether it was with customers or even people internally – and that resonates with me.
Businesses have to be humane if they want to have long-term sustainable growth. And really, that is the distinction: “Are we humane enough?” Because we can have great marketing campaigns which talk to the consumer, etc. The culture inside Beam Suntory is such that it always is going to be people first.
Do we get everything right? No. But the willingness to accept when you’re not right or when you’re wrong, and the willingness to constantly be listening and making things better, is something that I believe distinguishes Suntory.
Greg talked about proof-positive. If you go to Hakushu, as a distillery it’s one of the best I’ve visited after being in the industry for so many years. It’s in the middle of a nature sanctuary and Suntory is the one that takes the effort to maintain the water table, the flora and fauna, but we never really talk about the kind of efforts that Suntory makes to really make a difference to the community. I think that there is a power in that humility of not just shouting at the top of your voice, and rather just doing what we believe we should be doing.
I come from India – from a very humble background – and that’s the middle-class values that my parents gave me: “If you do your best, let the world figure out the rest.” That resonates with me and it gives me a sense of calm and confidence while I wake up and get into work every day. ✈️
