Craft Spirits
Crafting a premium offer
The prospects for craft spirits remain positive despite a slimming down of ranges among travel retailers through the pandemic, as returning travellers maintain a search for points of difference. In these pages we gather views from brand owners and retailers about the role of craft products in the channel. By Dermot Davitt.
While the pandemic has changed some elements of the consumer mindset, the need to respond to shopper demand for elements such as localisation, premiumisation and great story-telling remains the same, and has even been reinforced. That spells continuing opportunity in travel retail for craft spirits, whether they are produced by independents or the major brand houses.
That definition of craft applies equally to the international brand powerhouses as it does to smaller players. After all, many great Scotch single malt whiskies owned by Diageo, Pernod Ricard, Edrington, Whyte & Mackay, William Grant & Sons and Bacardi tell wonderful stories of provenance, authenticity or artisanal quality. They have also played a key role in expanding the Scotch category and introducing innovation across gin, vodka and other sub-categories in recent times. The future is likely to see a continued blending of the offer, with the traditional sitting neatly alongside the trendy, whoever the manufacturer is.
For this report we also assessed market trends among some leading retailers in the sector.
Addressing evolution in the spirits sector in a recent Moodie Davitt interview, Lagardère Travel Retail Duty Free Global Director Merchant Beverage Victoire Gueugnier said that driving impulse purchases “with novelties and travel retail exclusives” remains critical in the category. These drive footfall and consumer interest, and apply to brands that have a unique story, and can communicate it well across multiple channels.
Telling a story: A diverse range at Buy Paris Duty Free, Paris CDG Airport
Retail-tainment and experience play a vital role beyond the general promotional plan, she noted, with festivals across the year on trendy themes such as cocktails or whiskies of the world offering an opening for ‘discovery brands’.
The need to create Sense of Place in the offer has only been heightened through the crisis. And this push behind local means craft has the chance to shine.
“A change in 2022 is that we strongly believe that French products are core in airports such as Paris or Nice. Our customers are interested in local products to treat themselves and not only for gifting. We certainly promote French wine, but we also source French craft spirit brands,” said Gueugnier.
That principle applies to other retailers across their networks.
Aer Rianta International (ARI) recast its spirits & wines offer in the initial COVID-19 reopening phase, and reduced its craft ranges. But in core markets such as Dublin Airport – the company’s home base – local remains a prime driver of sales. Irish whiskey is the mainstay of the Irish market, and has bounced back with lots of innovation in what has become an exciting category, with investment in many new distilleries in the country. Gin continues to be a key seller though it has levelled off compared to its peak, representing another craft opportunity.
From Cyprus to Montenegro to New Zealand, that local appeal is helping to accelerate the recovery in the category.
Showing multi-category craft appeal in The Loop at Dublin Airport
For Gebr. Heinemann, local spirits in particular play a key role in its major markets. The retailer calls them “an important USP”, and targets 20-25% turnover from local products – turnover that cannot be replaced as the merchandise is relevant to one country only.
Of the evolution of the offer, Chief Commercial Officer Dr. Dirk Schneider told us recently: “It will be more sustainable, it will be more trendy, it will include more rare products, it will be more exclusive. And we need to add that room in our mix on top of what we have [already] to fulfil the promise [of sustainable and spectacular assortments].
For smaller producers (see following pages), the slimming down of ranges and retailer focus on the core ranges that drive profitability has been challenging.
Gueugnier said that although the offer on spirits “has been slightly reduced” in the pandemic, it should not reduce further. She added: “We can merchandise all in a simplified, smart way and have some space to introduce novelties.”
In a similar vein Gebr. Heinemann continues to pledge to “trial a lot, test a lot” in the search for newness to excite the traveller. “This is an important strategic direction in which we are heading,” said Schneider. “It is the opposite of making travel retail a supermarket environment. And that is great news for the travel retail industry.
A neat display for Gin Sul (now owned by Mast-Jägermeister), a Dry Gin from Hamburg with roots in Portugal, through Gebr. Heinemann at Hamburg Airport
“We have all looked at the industry and asked what is it about? Many brands have done the same and come to the conclusion that it must be special. And that has now triggered more activity and promotions.”
Although there remains some uncertainty around the market in the months ahead in a period of spiralling costs and the prospect of dampened consumer confidence, the future for the category appears bright.
Gueugnier highlighted opportunity for producers in sub-categories such as non-Scotch whiskies (especially American and Japanese), on emerging organic spirits and on flavoured products such as rums, gins and vodkas.
For Heinemann, regardless of category, the message is that “exclusive, rare, trendy and sustainable products” are central to the future.
Craft manufacturers have been responding to those calls for years now. Further innovation from the sector will help shape the continued rise of spirits as one of travel retail’s core destination categories.
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The Moodie Davitt eZine Issue 314 | 13 September 2022
The Moodie Davitt eZine is published 14 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail kristyn@moodiedavittreport.com