IRELAND. Changing consumer tastes, a focus on promoting value and the rise of local and regional brand popularity – these are some of the key factors influencing the wines & spirits business for Irish travel retailer ARI in 2024.
Speaking to us for the May edition of Category Insight, a supplement to The Moodie Davitt Magazine, ARI Global Buying Manager, Liquor and Tobacco Shane O’Sullivan says the category is enjoying a strong year so far after a healthy performance in 2023.
“All locations are performing well, with Canada and Ireland standing out with a strong start to the year,” he says. “Portugal Duty Free is doing well overall year to date with passenger numbers strong and travellers responding well to our offers there.
“Cyprus Duty Free is having a solid start to 2024, with particular emphasis on the local offering under the Kypriaka brand with brandy, whisky and gin, among others in the range. The passenger mix in Cyprus has seen the return of British passengers to the region, which is creating a broader mix and greater opportunity.
“The impact of inflation and the cost of living crisis are causing consumers to seek out value, resulting in an increase in our promotional sales in the overall category.”
On the consumer trends driving the spirits sector in particular, he notes that worldwide there are more ‘value hunters’ that seek promotional offers and deals.
“We can also see a consumer preference for some smaller, more niche categories, such as tequila or premium rums, which have started to get a lot of traction and as a result are experiencing strong growth, albeit off a small base.”
In ARI’s home market of Ireland, the surge in distillery openings and emergence of new whiskey brands has delivered “phenomenal growth”.
“We have collaborated with many of our supplier partners on some very exciting world exclusives that launched at Dublin and Cork Airport. At ARI this is something that we pride ourselves on, from single casks to small batches and beyond, our business [champions] exclusives in the Irish market.”
In other markets too, such as Cyprus, localisation is a key trend, one in which ARI has invested.
“Cyprus Duty Free has had superb success with its Kypriaka range, which delivers a very strong sense of place for travellers and gives a taste of local to visitors to the region. This range was created specifically to meet the needs of our customers based on consumer feedback and demand. Listening to our customers we can ensure that we deliver the best range and selection to meet and exceed their expectations.
“Likewise in Portugal, we are seeing the same trend, with a strong sense of place represented by premium port. The extensive range that we have in our Portugal Duty Free locations, curated in collaboration with premium Port houses, delivers the best range and variety to give shoppers a true taste of Portugal.”
The shifting category mix is partly a result of varying traveller demographics, and ARI is adapting with the input of its global insights team.
O’Sullivan says: “While so-called Generation X and Millennials make up the majority of our customer base, we are seeing the emergence of Gen Z customers more recently. The oldest Gen Zers are currently in their mid-20s, which means they have started to shop the liquor category.
“There is a difference in how they purchase the category. Unlike other generations, Gen Z adults are more likely to abstain entirely from alcohol, or else drink in moderation, and they are more likely to explore new types of drinks. Instead of sticking to traditional high-volume beers or wines, they are more likely to gravitate towards ready-to-drink options, cocktails, light spirits and trendy aperitifs. For example, we see that Millennials lean more towards whiskey-based cocktails, and Gen Zers prefer cocktails made with clear spirits. The Margarita is their go-to cocktail, which explains the spike in tequila sales of late.”
O’Sullivan notes though that buying habits among Gen Z are not yet fully formed as they enter the category.
“We work closely with our global insights team to ensure that as a key part of our category strategy, we embrace emerging trends for all of our customers, and always keep ahead of the curve to meet their needs.”
As noted, tequila and rum are among the emerging categories to watch, though these perform well from what remains a small base for ARI.
Of greater significance business-wise is the continuing rise of Irish whiskey.
“Exciting new innovations are emerging within this sub-category. We are working closely with our brand partners to enhance our offerings, ensuring that we continue to maximise growth opportunities and provide our consumers with the best variety and appealing selection across our global estate,” says O’Sullivan.
Among the highlight launches and campaigns that have fed off this trend are the recent introduction of ARI-exclusive Redbreast Cuatro Barriles Edition – part of the Redbreast Iberian Series – with Pernod Ricard Global Travel Retail and Irish Distillers.
“So far, sales have exceeded expectations and we look forward to watching it develop over the coming months. This has been the first Redbreast from single cask that has ever been produced, outside of permanent lines, and it has been a really exciting addition to our Irish Whiskey Collection portfolio. The success of this launch is a testament to the strong relationship we at ARI have with Pernod Ricard and Irish Distillers.”
Deepening collaboration with brands across the board to lift the shopper experience is a core plank of the ARI category strategy. With that in mind, the company says it is seeking more channel exclusives, gift sets and value packs “to give passengers more of a reason to shop in travel retail”.
“Our range in travel retail needs to be distinctive from the domestic market, in order to incentivise our customers to shop when they travel,” says O’Sullivan.
“Experiential activations in our stores such as the Drumshanbo Gunpowder Brazilian Pineapple or Gunpowder Dragon Edition Ceramic are examples of recent hugely successful collaborations.
“These types of activations prove to be strong contributors to the overall customer journey, bringing joy and excitement to the category for travellers. We can see the impact on sales when our supplier partners support us with activations across our estate, so it has a positive impact on the whole category. At ARI we are proud of our long-standing relationships with our brand partners, we continue to work together to deliver the best offering to meet our customers’ needs.”
Finally, we ask, how does the rest of 2024 look from a category viewpoint at ARI?
O’Sullivan concludes: “We are expecting mid-single-digit growth this year due to being up against a very strong 2023 in all regions. We remain committed to always raising the bar and working closely with our partners to provide the right product mix, best value and unrivalled range for our customers.”
*This feature first appeared in the May edition of Category Insight, a supplement to The Moodie Davitt Magazine. Click here for access and go to page 43 for the full story. ✈
