“I’m an optimist about travel retail. I feel that we haven’t got moving at 100 miles an hour yet. There is still some missing momentum, and I want to fuel that a little bit faster.”
So says Rémy Cointreau CEO for Europe, Middle East, India & Africa, Asia Pacific (excluding Greater China) & Global Travel Retail Ian McLernon, speaking to The Moodie Davitt Report about how brands and retailers can jointly tell a more compelling story about wines & spirits to travelling consumers.
“We spoke to many retailers in Cannes about the challenge for all of us being penetration and conversion,” he says. “Sitting here ten years ago, we were saying the same thing, and it hasn’t really improved.
“We have to do the basics well, execute and ensure availability. Then you look at how other categories, led by beauty, sometimes do a better job on visual merchandising, with travel exclusives and creating something different and viable. We can do that in spirits but we need to bring the experience to the traveller.”
In addressing this challenge, how the category presents itself to consumers, alongside a strong focus on people and training, can help drive the agenda.
McLernon says: “People need to be rewarded for what they purchase. And you can trade people up in an airport environment, through a promotion or more especially by what the front-line teams do on the ground. The staff can make a big difference in an airport environment.
“Secondly, merchandising makes a big difference. If you walk into an airport and the first thing you see is a big red sign showing -30% off, that sets the tone for the shopping mission. You will ask yourself whether you have gone to a discounter or to a premium retailer? The first message you see gets you in the mood, it sets that tone. In beauty that is often done with the hero brands right up front.
“If you lead on price, then you are not going to go anywhere other than price. It is very hard to start off with the discount bins and then have premium at the back.
“I sometimes feel we hold ourselves back as an industry. I see many retailers moving to generic fixtures, which I think is a mistake. You either need clear category signage that brings all the brands together in a world of Cognac or tequila or rum or whisky, or you allow brands to express themselves individually. We need to set the shopper’s mind on the fact that we represent premium but not inaccessible luxury.”
Taking on the challenge McLernon sets requires multiple brands to act, and perhaps even a rethink across the eco-system.
“If we are not increasing penetration, maybe what we are doing today is not working. Do we need a reset, a version 2.0 for the liquor category? If so it requires all of the major players to do it. And we are very open to working our retail partners to get there.
“We should raise our voice more and call out that challenge. Rémy Cointreau was among the pioneers of the industry in creating its own GTR division. We can be more bullish and be among the pioneers of the future too.”
That approach frames what McLernon says is the company’s broadly positive view of the channel today, even amid a recent tough trading period.
“Global travel retail is core to our strategy. We are excited about the channel and we are investing in it. We had around 50 people from our global teams in Cannes and a record number of meetings.
“If anything we want to do more in travel retail. I still feel that the channel has not got its fair share within our total business and can be even higher.”
To make that happen, McLernon and the team led by Global Travel Retail CEO Fida Bou Chabke are doubling down on Louis XIII Cognac. The ultra-prestige expression took centre stage in Cannes, where the Maison showcased new releases, immersive activations and elevated gifting concepts following the success of its Lunar New Year and Hong Kong bespoke editions earlier this year.
“Louis XIII is our priority,” says McLernon. “It’s the jewel in our house. And there is a big opportunity for ultra-high-end expressions in travel retail that isn’t yet fully exploited. But of course I won’t settle for limited visibility. I need Louis XIII to be on show in good space that allows for education to the shopper. So airports are vital but there are also airline lounge opportunities and we can do more in the cruise channel.”
He adds: “We know we can sell super-high-value products in the airport. The issue is always [retailer] margin expectations. I can sell these products directly in local markets and make more money. But sometimes to sell these very rare or high-value collector items helps to position airports and make a statement that is positive for the channel.”
In Cognac but across the portfolio, creating a point of difference for the consumer is also a key agenda item.
“Travel exclusives are more important today than they ever were,” says McLernon. “We need to create products that are only available in our channel. It creates excitement and expectation.”
And expectations among consumers are changing, notably as younger demographics take their place as the shoppers of today and tomorrow. Against this backdrop, travel retail can and should be a vital recruitment arena for brands, says McLernon.
“In this industry we have great stories to tell about who we are and about our authenticity. Give people reasons to buy the product but also reasons to consume the product. Today it’s about versatility, and for many consumers is more about cocktail-making than drinking a spirit neat.
“In many markets I see the Margarita trend growing. We believe that Cointreau is in a good position to leverage that as we explain how you make the original Margarita. And airports have a part to play through duty free, F&B and lounges.”
Amid a wider moderation of spirits consumption, there remains strong opportunity to entice legal-drinking-age consumers into the categories that Rémy Cointreau plays in.
“We see less consumption in terms of spirits volume, but consumers are trading up to higher-quality products today.
“As consumers moderate their consumption, they are much more aware of what they put into their bodies. They want to know where it comes from, how is it made, what’s added or not. Spirits are natural products that have been created for centuries from the land by local communities. That is among the benefits that the category needs to talk about, while also educating on responsible consumption.”
And while macroeconomic and political uncertainty has an effect on consumer confidence and discretionary spending, the travel market represents a vast opportunity if our sector can seize it.
“Despite volatility in many places, travel has not collapsed; in fact it is growing and forward bookings are very encouraging,” says McLernon.
“What is happening is consumers are thinking about what they spend their money on, and so we have to give them value. So my message is, let’s work together to create experiences that are meaningful for the traveller.
“They are still spending money, they are just spending it on different things. In Asia the days of jumping on a plane with shopping as the core focus of your trip are over.
“We have to be realistic and understand what people want and ask how we can provide it for them? Wines & spirits is in a good position to do that, because you have this authentic heritage and history that we can bring to life, and people can buy it as a gift, as a treat, and it’s quite accessible price-wise.”
McLernon also homes in on some of the travel markets that the company sees as priority investment targets.
“The Gulf is a real opportunity, which also links to the huge potential we see in India. Clearly India is also a brown spirits market but also there, gin is booming and that is a category to watch.
“We also continue to see very positive numbers from Southeast Asia and Singapore Changi in particular, and we see some signs of a return to growth in Australia. Japan is very interesting with GTR tracking a robust domestic business, and also with ever-greater personalisation in the stores. We are investing more in Japan today than ever.
“We see a lot of room for Cognac to grow. It’s not established as a category really in India or in say, Latin America. That can change.
“And China has so much more potential. There, 95% of spirits sold are local spirits with imported spirits only 5%. So despite the challenges there we have plenty of room to grow, and the way to grow is through education.”
On China in particular, Rémy Cointreau was especially hard hit by the impact of the Ministry of Commerce’s anti-dumping investigation into brandy imports from the EU since October 2024, a situation resolved in July, with shipments to China duty-free now resuming.
McLernon says: “With the anti-dumping issue behind us we look forward to rebuilding the duty-free business in China. There is still a job to be done in terms of merchandising. We haven’t really got going after the pandemic in China, but can accelerate now.”
Issuing a final message to the industry about Rémy Cointreau’s view of and positioning within the channel, McLernon says: “Our first thought has to be about the end consumer. How do we excite them? How do we get them into the store? How do we get them to purchase? How do we get them to repeat-purchase?
“Our answer will be driven partly by our focus on Louis XIII, our wider portfolio plans, and an emphasis on the airport channel supported by airlines and cruise.
“We want to reinforce the message that Rémy Cointreau is different. We are 100% committed to the channel, and have an ambition to double the size of our business in GTR in the years ahead.” ✈
*Click here for more on Rémy Cointreau’s first-half financial results and how new CEO Franck Marilly aims to “rethink, reset and reignite” the wider business at the French drinks company.
