A Word with Wilmore - Beam Inc EMEA president Albert Baladi - Part I
Albert Baladi joined Beam Inc last year
It's nearly a year to the day that Beam Inc was officially born, making it the world's only publicly-listed pure-play spirits company. Progress so far has been solid and instrumental in that has been the group's well-travelled Europe/Middle East/Africa (EMEA) chief, Albert Baladi. Just-drinks caught up with the softly-spoken Baladi during a recent visit to London.
Soft drinks, restaurants and now spirits; Albert Baladi's 25-year career has, for the most part, had some connection to refreshments. Prior to joining Beam in March last year, or Fortune Brands as it was then, the 47-year-old was South Pacfic MD for restaurant group Yum! Before that, he had a 13-year stint at PepsiCo. All thirsty work, no doubt.
Beam Inc's EMEA president, Albert Baladi
Clearly, the Lebanese-born father-of-two likes a challenge. Which is lucky, considering the lively region that Baladi currently oversees for the US-based spirits group, as president of Europe/Middle East/Africa (EMEA). One day, Baladi could be sitting down with his team to discuss the on-going struggle that is Spain, while the next he could be plotting how to crack Africa's markets.
Growth, understandably, is Baladi's watchword. "I'm spending a lot of my time looking at where the future lies," he tells me, as we lock horns over coffee at London's Claridge's hotel. "More than two thirds of our growth is coming from the emerging markets and Germany and that takes the lion's share of my time right now," he says.
"The future is very much anchored there and that's where we're making a lot of our investments." As with many a global drinks company there are the familiar themes of stodgy, developed markets and sprightly, emerging markets.
Russia is key for Beam as a market for the future. Baladi says the region is at the "core" of its emerging market strategy, followed by other Central European markets, such as Poland and Hungary.
Meanwhile Germany, in particular, is giving Baladi plenty to purr about. It may seem odd mentioning the country in the same sentence as the word "emerging", but the Beam man says it is displaying the same growth levels as other upcoming regions.
"It's growing at very high level double digit rates," says Baladi. "Bourbon is very strong there; it's the world's third largest Bourbon market and we have a 37% share of the market."
Beam is benefiting from a "big shift" currently happening in Germany's spirits market. "Spirits have always been large in Germany. More than 80% of the market is in local spirits, but there is a big shift happening right now to international brands," says Baladi.
And how does he explain this trend? "Premiumisation and the discovery of new things is in a trend in the spirits category and we have the tools in our armoury for that," says Baladi.
Germany sits within Beam's Central, Eastern and Northen Europe unit - one of three clusters the group split the EMEA region into a year ago. It is one of 11 countries within its cluster, which also includes the Nordics and the Baltics. But, one of the three clusters stands out: Spain and the UK.
Why do these two countries get their own unit? "We've divided the markets by level of importance and Spain and the UK is where the bulk of our business is today in Europe – around 45%. The centre of gravity is between these two countries," says Baladi. “I wanted these two markets to be very close to the management.”
As well he might. Spain is “the one big challenge” he admits as the overall market is in decline. However, Beam is still “outperforming” the market in the country. Tackling the region requires two different skill sets, he explains. “On one hand, you are focusing on organisational efficiencies: On the other hand, you have to keep your eye on the consumers and the brands.”
The UK, meanwhile, offers its own set of challenges. The market and volumes are flat, but again he insists the group is “outperforming” the market. “We are investing behind Jim Beam and getting fantastic results.”
The drag from these two key markets no doubt explains the 9% drop in EMEA's operating profits in Beam's H1 results, announced in August. But, as any corporate executive worth his salt is effective at doing, the point is deftly deflected with unglinting optimisim. “From a top-line perspective, I'm happy with results. On the bottom line, there was the cost of restructuring in Spain and the UK and organisational efficiencies and innovations.”
We turn to the future and, in particular, Africa. The likes of Diageo and Pernod Ricard are jostling for position in the continent, so where does Baladi see Beam making inroads? “South Africa is a big focus, number one. Behind that is Nigeria, Ghana and Angola.”
But there's a sense it's still early days for Beam in the region. “Historically, we've had a very minor presence in Africa, but now we are looking at strategies to enter the market,” says Baladi.
“We are in the process of actively evaluating the route to markets opportunities, alliances and partnerships.”
This means possible JVs, I push for clarity. “Everything is possible at this stage,” he says.
He acknowledges the logistical issues involved with entering African markets. “Unless you have the routes to markets it's a very difficult region to operate in,” Baladi says.
But he adds: “Lots of our brands have a good cache in this part of the world and we have a good portfolio to allow us to enter the market. Africa is the long-term growth opportunity”.
In part two of this interview, which can be found here, Baladi discusses Beam's innovations with its flagship Bourbon brand Jim Beam, the group's current star performer Skinnygirl and his idea of a good weekend.
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