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“I feel strongly that those retailers who build up a point of difference, who commit to bringing the brands to life and who understand how to engage the traveller will drive performance in this business.“ |
Mike Birch Managing Director Bacardi Global Travel Retail |
Rum, especially at the premium end, has the highest potential for growth of any travel retail spirits category, and will command better and bigger space driven by innovation and consumer demand in future. So says Bacardi Global Travel Retail Managing Director Mike Birch, speaking to The Moodie Report at last month’s TFWA World Exhibition.
“If I was a retailer I would look no further than rum to help grow my drinks business. Rum is the third biggest category in domestic markets but only seventh [with a 5% market share -Ed] in travel retail. It is also the least premiumised of all major spirits categories.
“That tells you that as market leader we haven’t done the job we should have done in the past, and that our focus on mainstream products has not been mirrored in our approach to premium, aged rums.”
The company has gone some way to addressing that this year by introducing its Bacardi Gran Reserva range but perhaps more critically with its Single Cane Estate rums, launched this year exclusively in travel retail.
The Single Cane Estate range, available initially through Gebr Heinemann stores from July, is a collection of premium, aged rums from sugarcane estates across the Americas. Each is crafted at a single source in small batches. Bacardi is positioning these rums as the category equivalent of single malts, with an emphasis on quality, provenance and education.
Birch says: “Look at what we have done on Grey Goose and Bombay Sapphire on premiumising vodka and gin; our strongest category is rum and we haven’t matched that. Now at Bacardi we finally have the range and packaging to deliver. Single Cane will help people understand that Bacardi does offer a range of great rums and the interest these are already generating will help build the category too. Rum can be the game changer for Bacardi and for travel retailers.”
The striking premium packaging has helped the Single Cane range perform well straight from the shelf at Heinemann stores, adds Birch, and the brand has invested in training staff to educate the consumer about its provenance and authenticity.
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Consumers in Heinemann shops at Copenhagen and Frankfurt airports learned about the new Single Cane Estate lines in a big Summer campaign |
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Bacardi is innovating not only in rum but across its portfolio. It is placing a big emphasis on Grey Goose, with the launch of the ultra-premium VX expression last year and the unveiling earlier this year of Grey Goose Interpreted by Ducasse Рa collaboration between Grey Goose Mątre de Chai Fran̤ois Thibault and leading chef Alain Ducasse.
Birch says: “I think Grey Goose will be the next great global brand in travel retail spirits. It is driving most of the growth in super-premium and is the biggest brand in that segment. The issue is that retailers are not keeping up in terms of space allocation, and those that are giving it the space are benefiting disproportionately. That’s a key message from us to the retailers: look at what is driving your sales and match those top performers to the space you allocate.
“VX is a long-term commitment, and speaks to the Cognac heritage of Grey Goose so that is a credible story for us to tell through the Ducasse limited edition.”
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Grey Goose: The next great travel retail spirits brand, says Mike Birch |
In whisky, Bacardi’s single malt launches over the past two years (Aberfeldy, Glen Deveron, Aultmore, Craigellachie and Royal Brackla) have helped unlock incremental category growth, says Birch, and works well in harness with the continuing expansion of Dewar’s.
“The single malts have performed above expectation where they have been introduced and gained high single digit share of malts where we launched with certain partners. What has been encouraging is that we have achieved strong initial impact and consistent sales growth. Malts are growing faster than blends in whisky, and in particular people are seeking what we call “˜discovery malts’. And that is because many have entered the “˜second stage of luxury’ we talk about, where they want to show they know about malts and about luxury, and because we have a good story to tell.
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Bacardi’s ‘discovery malts’ are pointing the way forward as the company builds its whisky business in travel retail |
“We have led on travel retail and now certain brands will roll out further in certain markets. The question for us, in a market where there is intense competition, is how do you marry the insights we have into the consumer with a trade execution that can deliver our whisky offer in one slot? Our solution is the John Dewar & Sons Fine Whisky Emporium.”
This concept first opened with Aelia Duty Free at Paris Charles de Gaulle and Orly airports in April, and later expanded to Asia through Ever Rich Duty Free at Taiwan Taoyuan International.
“The John Dewar & Sons Fine Whisky Emporium allows us to build Dewar’s but also to talk about malts, and it also builds perfectly on our consumer insights,” says Birch. “It can be adapted to the needs of different parts of the world; you might lead on the malts in the cruise sector, or with a big Dewar’s presence in Middle East markets.”
Birch affirms Bacardi’s commitment to age statements on its whiskies and says Dewar’s has benefited from that commitment.
“The industry approach is too short-termist, with age statements being removed by some brands. Even if you are an experienced whisky drinker, the age statement can act as a seal of quality. Dewar’s 15yo is selling at triple-digit growth, and we have backed that up with our single malts, through which we have sought to awaken the sleeping giant that is the whisky category within our portfolio.”
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The John Dewar and Sons Fine Whisky Emporium combines the Dewar’s aged range and malts in locations such as Toronto Pearson (pictured) |
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In whisky and rum, travel retail has been a launch pad for a number of these new items, but how well does the industry tell the story of exclusives, limited editions or first-to-market launches?
“That’s a hot topic at the moment,” admits Birch. “You have limited time to get the message across so you need to instantly explain that this item is not available outside the airport. But once you start breaking it down into “˜limited edition just on sale in travel retail in Europe’ then the confusion kicks in. We need to address that better as an industry.
“I’m also hearing more retailers saying that they have too much range. Innovation in future will have to be about incremental growth rather than products being introduced for the short-term that just swap market share between brands.”
Consolidation is another critical issue facing brands in the channel today, but it’s a trend that Birch says is “natural and sensible”. He notes: “Globally consolidation is going to continue, although there will still be big regional players for the foreseeable future. It’s a unique industry and retailers need scale to pay a premium for the space they run. We cannot push back progress. Also, there’s no reason why consolidation should mean retailer thinking becomes more short-term. If anything it should mean they can plan better for the long term and that can benefit the entire business.”
So what change would Birch like to see from Bacardi’s retail partners to lay the platform for continued growth in spirits?
“My fear is that many retailers will take almost a supermarket approach, being ultra careful on ranging and merchandising but becoming too homogenous. If you go down that road, if you have a narrow range and if you don’t let sales promoters explain the product, over a period of time consumers will question what travel retail is giving them.
“I feel strongly that those retailers who build up a point of difference, who commit to bringing the brands to life and who understand how to engage the traveller will drive performance in this business.”
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Bombay Sapphire: A key brand for Bacardi in travel retail |
