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Christian Porta: “We want to achieve the highest possible organic growth; we have five of the top 14 brands which we want to maximise across the world and premiumise. We are putting value ahead of volume growth” |
INTERNATIONAL. Product premiumisation and maximising value growth are among the top priorities for Chivas Brothers Chairman and CEO Christian Porta.
The Frenchman, who has been at the helm of the Pernod Ricard-owned Chivas Bros division since 2004, spoke to The Moodie Report on the opening day of the 2011 IAADFS Duty Free Show of the Americas in Orlando, where he was in town to host the Americas launch of The Age Matters Scotch whisky consumer awareness campaign.
Our 21 March meeting took place as the harrowing events were unfolding in Japan following the devastating earthquake and tsunami ten days before, but Porta said it was “too early” to assess the likely long-term effect of the tragedy on the business.
“It’s too early to say how this will impact the business, but short-term, there will be less travellers [to Japan], less visitors and less sales in duty free. It’s difficult to say how long they will need to control the nuclear incidents. Japan is an important market for us, but we have a balanced source of consumers – Korean travellers, Chinese travellers, who are growing fast.
“People won’t stop travelling [in general], but it’s too early to give a meaningful figure.”
A week after our interview came the news that Pernod Ricard had donated ¥60 million to the Red Cross Japan relief effort.
“Grow and premiumise”
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Desirable: Chivas Regal’s 12yo and 18yo collaborations with French fashion designer Christian Lacroix |
Asked about the overall strategy of Chivas Bros, a confident Porta emphasised: “grow and premiumise”.
“We want to achieve the highest possible organic growth; we have five of the top 14 brands which we want to maximise across the world and premiumise. We are putting value ahead of volume growth,” he stated.
Duty free will play an important role within this objective to sell higher-priced products, he noted, pointing to the development of the Chivas franchise, which now includes 12yo, 18yo and 25yo expressions. “In six years we have multiplied the volume by six,” he added, referring to Chivas Regal 18yo and 25yo.
The premiumisation drive has included working to improve the image of the tin boxes encasing the Chivas bottles; the “˜Live with Chivalry’ advertising campaign; premium sponsorships including Antigua Sailing Week and the Cannes Film Festival; and more upscale merchandising units and gifts.
Porta also spoke of the collaboration between the premium Scotch whisky brand and the fashion world. In October 2010, the company launched a limited-edition version of Chivas Regal 18yo created by French fashion designer Christian Lacroix and retailing at US$500. This launch followed the release of the Chivas 12yo Magnum by Christian Lacroix and Chivas Regal 18yo designed by Alexander McQueen, introduced in 2009 and 2008 respectively. Travel retail is a crucial shop window for these high-end products.
Continuing on the fashion theme, the company recently unveiled a limited-edition Chivas Regal 18yo designed by Vivienne Westwood at London Fashion Week in February 2011.
According to Porta, this focus on fashion is not a concerted effort by Chivas Bros to attract female consumers, although he added that this may become an aim in “two to three years”. “We want to establish our luxury credentials and make the product desirable,” he said. The current mix of customers is weighted 80:20 in favour of male consumers.
The international roll-out of The Age Matters campaign is also part of the emphasis on quality, authenticity and heritage of Scotch whisky. Following the 2011 IAADFS launch, the campaign is moving to key international airport hubs across the Americas.
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Porta hosted the Americas launch of ‘The Age Matters’ campaign at the 2011 IAADFS show in Orlando |
Strong rebound in 2009
Turning to the “dynamic” Asian market, Porta said he is seeing Scotch whisky consumption growing fast in Chinese airports such as Shanghai and Beijing as well as Seoul Incheon, Singapore and Tokyo, and the number of passengers increasing rapidly across the region.
“We are seeing a strong rebound in 2009 with more Chinese passengers who are spending quite extensively.”
Vietnam, he added, is showing “very strong” growth, where sales of super- and ultra-premium products are “just flying”.
Looking to the future, Porta asserted: “I am very positive about the travel retail environment. We have seen double-digit growth on all brands, particularly in Asia and the Americas, especially South America. Africa and Middle East are very strong for us, and Eastern Europe is rebounding, especially Moscow Airport.”
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Ultra-premium: Royal Salute 62 Gun Salute retails at US$2,250 |
Ultra-premium Royal Salute launch
He observed that despite the volcano ash incident that disrupted travel last year, passenger numbers were growing again and “very good” travel retail sales had been achieved. “I am very optimistic about the future barring any disasters that can’t be predicted.”
Porta has high hopes in travel retail for the company’s latest ultra-premium launch – Royal Salute 62 Gun Salute, which was introduced in December 2010. This US$2,250 product – the Royal Salute brand’s most expensive Scotch whisky – is presented in a Dartington Crystal decanter and contains Scotch whisky aged 40yo and above. Enjoying limited distribution, it will be launched in the Americas in the next few months, and has already made its debut in Asian duty free, including China, Hong Kong, Taiwan and Japan.
“Chivas Bros has the strongest presence at the luxury end of 21yo and above; we have more than 80% of the market. Our target is affluent people who want to buy special products,” Porta concluded.
