Spearheading premiumisation in spirits
Led by flagship brand The Macallan, Edrington is playing a key role in attracting spirits shoppers to the prestige end of the drinks category. Edrington Global Travel Retail Regional Managing Director Jeremy Speirs talks about recent performance, the innovation agenda and raising the bar for travelling consumer experiences.
The Moodie Davitt Report: How would you describe trading in travel retail across your key markets to date this year and especially through the summer period? What have been the highlights by region? Any surprises?
Edrington Global Travel Retail Regional Managing Director Jeremy Speirs: Trading has been strong, with a particularly encouraging bounce back in the Americas, Europe and the Middle East. While Asia, and especially Greater China, remain suppressed by covid restrictions, where these have been relaxed, we have seen impressive passenger growth, most noticeably in Singapore and Bangkok. This gives us great hope for later this year and early 2023 when we anticipate further lifting of restrictions in China.
As far as surprises go, it is well documented the challenges airports and retailers have faced in retention and also rehiring of staff alongside rebuilding inventory amid extraordinary global supply chain challenges. This has been the largest obstacle we have faced alongside many of our competitors through an extraordinary set of circumstances. The irony of empty shelves after months of empty airports is not lost on us though we believe the worst is past and are gearing up for a strong end to the fiscal year. As we move away from ‘just in time’ supply chain to ‘just in case’, I hope this mindset is replicated by our retailers and airports alike.
How has The Macallan in particular performed through the pandemic and what is its role in driving recovery for the company but also for your retail partners?
The Macallan was really a beacon throughout this challenging period, demonstrating just how strong the brand is. Sales were certainly impacted at the height of the pandemic, but not by nearly as much as many other brands. That’s a testament to the long-term investments that have been made in the brand and also a validation of our premiumisation strategy, where we are not necessarily as dependent on volume.
The performance of The Macallan Boutiques in travel retail really supports this. We’re delighted at just how resilient they proved to be, but then ultimately, we never saw them as being hugely reliant on footfall. The entire experience we aim to deliver in these spaces is about offering a more intimate and personal engagement with our customers, not playing a numbers game.
I strongly believe that The Macallan is playing a key role in helping retailers drive recovery. Not only does it spearhead premiumisation in the spirits category but is also one of a handful of brands which is truly sought out in travel retail, so from that perspective I think the brand carries significant weight in the broader landscape. When you have whisky collectors planning their travels around the availability of new expressions of The Macallan, you can genuinely claim to be playing an active role in getting shoppers engaged and spending.
Jeremy Speirs: Premiumisation strategy validated
What principles have led the recent and current innovation agenda? What are the key brand introductions and what will we see coming down the track this year and into 2023?
Our focus on a prestige-led strategy remains unchanged. We tirelessly work to stay true to our roots and origins, which is why so much of our innovation links back to our founders who worked on the Estate and set the foundations for what our brands stand for today.
We also recognise the importance of being transparent about our social and environmental credentials with our consumers and we continue to lead in this field as demonstrated by our recent, highly successful launch of Harmony Fine Cacao, recycling the husks of chocolate beans for our packaging. I expect a stronger focus on packaging to be front and centre in the coming few years as we seek to further reduce our carbon footprint.
This is well showcased by our latest product previewed recently at the Monterey car show – The Macallan Horizon. Created through extensive joint development between Bentley Motors and The Macallan, this prototype encapsulates a joint ambition to build a sustainable future from the rich heritage of both brands, fusing traditional craftsmanship, recycled materials and an exclusive horizontal design.
The Macallan Horizon: Innovation for a new generation
How do you expect Harmony to chime with consumers given the boxes that it ticks around cross-channel innovation, sustainability etc?
Based on the results of the first travel retail exclusive launch in the series – Fine Cacao – it is resonating extremely well: being able to talk for the first time about the steps we are taking towards sustainable packaging is an important message.
The series also continues The Macallan’s long tradition of collaboration with innovators and visionaries from outside of the world of whisky, with the Roca brothers collaboration underpinning Fine Cacao and future iterations also featuring compelling partnerships.
Sustainable approach: Harmony Fine Cacao, which blends chocolate and whisky craftsmanship
What is the role of annual releases such as the Home Collection?
Annual releases have a long track record of success in travel retail, where The Macallan is actively sought out by collectors and aficionados. The brand is so rich in heritage and history and so active in seeking out unique collaborations that there is huge scope for product innovation and a wealth of stories to tell. Given the draw the brand has and the huge appeal with collectors, they will often go to great lengths to complete a series which clearly has huge appeal for retailers.
Annual releases also fuel the in-store engagement and activations for which The Macallan has forged an incredibly strong reputation in the channel. The travel retail exclusive Concept Series epitomised this, with a series of three launches at scale bringing to life the playful stories and collaborations behind these annual releases.
What will be the Edrington GTR major focus for Cannes?
Personally, I am most looking forward to reconnecting with my colleagues and partners in the industry, many of whom I have not seen in over two years. Of course, we will be showcasing some exciting new innovations as well as unveiling plans for 2023, but mostly, this is about reconnecting, in person and celebrating our industry recovery. We are looking forwards, not backwards and we have an exciting pipeline ahead of us.
We’ll be doing this from our new home at the show on board a beautiful yacht in the Harbour Village and are really looking forward to welcoming our partners onboard. The additional space and configuration will allow us to offer an experience and environment befitting our brands.
Giving free rein to creativity in the airport space with The Macallan Harmony Fine Cacao (above and below)
Can you outline the strategy to drive further growth in luxury spirits across the group?
Our long-term vision hasn’t significantly changed: for everyone at Edrington our business is underpinned by our ethos of giving more by growing our portfolio of exceptional brands. For the Edrington GTR business that means leading with The Macallan to spearhead our premiumisation strategy. Our confidence in what this channel offers in terms of brand building and shopper engagement through incomparable experiences remains unwavering.
While prestige remains the fastest growing segment of our category, we recognise there remains significant scope for further growth. Scarcity and desire as with any luxury product, remains the key to building our brand equity and our position on this has not waivered throughout the pandemic.
We continue to challenge ourselves on where our product is available to purchase, how widely it is distributed and in what retail environment. We also remain passionate about leveraging partnerships and collaborations to challenge ourselves and champion true craftmanship, to remain fresh and relevant.
How in particular is Edrington positioned to take advantage of evolving consumer purchasing trends and curiosity about premium spirits?
The Macallan has built a huge amount of equity with consumers as perhaps the name in premium single malt, which puts us in a very strong position when shoppers first start to explore the category.
There’s a lot of talk today about authenticity as well, with consumers looking to engage with brands that have genuine tradition, quality and provenance. The Macallan’s reputation was forged centuries ago and our quality credentials speak for themselves – from our industry-leading cask management and sourcing program to our state-of-the-art distillery.
This quality story also ties into a broader consumer trend towards ‘drinking less but drinking better’. This inherently leads consumers down a premiumisation path that we have been leading as a brand in travel retail for many years now.
In terms of digitalisation, we are certainly advancing on our journey. I led a three-month global project on digital commerce for Edrington last summer, which was initiated by our Board in response to the changing purchase demands of consumers in lockdown. I quickly realised that alcohol was somewhat lagging in this area, primarily because consumer demand really hasn’t been there in the past. We’ve made a number of changes internally and brought in additional expertise to pivot in response to this opportunity and have delivered some exciting results, particularly in the Americas and China.
Outside of digital as a sales channel we’ve also really stepped up our game in terms of digital engagement: launching Concept Number 3 during the height of the pandemic forced us to really accelerate this part of our strategy and major in the online components of the launch. Our goal was to bring the launch alive for those who couldn’t travel and experience it in-store, and I think we really delivered on that.
The Macallan Boutique at New York JFK T7 (with Duty Free Americas). The Boutiques offer access to rare and prestigious expressions of the brand in an environment that encourages exploration and discovery.
How can your retail partners play an even greater role in building the premium spirits category?
Our partners, whether they be retailers, airports, airlines or cruise operators, all have a key role to play in our future growth aspirations. Creating unique shopper experiences lies at the heart of our strategy. If delivered, this provides the opportunity for all parties to share in the additional value generation that prestige brands offer.
The pandemic has provided a window for change – away from the rigid, margin-focused pre-covid model and towards a more flexible, value creation-led model which I believe is the future. We all have a responsibility to work harder and more collaboratively to compete for and inspire our travellers to spend in travel retail.
The foundation lies in us providing best-in-class and engaging shopper experiences, with access to scarce or limited-edition products playing an important part in this. Wouldn’t it be exciting if we re-imagined travel retail to be a place where purchase decisions were made on criteria far more substantial than price alone?
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