In the second part of our interview William Grants Simon Hunt discusses the growing craft spirits segment

In the second part of our interview William Grant's Simon Hunt discusses the growing craft spirits segment

In the second part of this week's just-drinks interview, William Grant & Sons' chief commercial officer, Simon Hunt, discusses the growing role played by craft spirits, the group's core markets and future targets, and the thinking that allowed The Glenlivet to overtake Glenfiddich as the world's biggest-selling single malt Scotch whisky brand.

One of the fail-safe questions to put to a spirits company representative has been about category gaps. So, come on, Simon: Let's have it. "We're very confident in the portfolio we have," he says. "We're proving we can punch above our weight in categories that we haven't really operated in before. If you look at what we've done with (gin brand) Hendricks, we've created a category, by being disruptive. Ten years ago, people would have said: 'You're out of your mind. That category's dead.' Today, we've got in the region of 200-300 craft distillers desperate to get into the gin market.

"We're very confident in taking a long-term view and nurturing our brands," Hunt continues. "We can go after different categories and come up with disruptive plays. That doesn't mean we won't explore opportunities to make acquisitions. But, we've got the right skills, the right understanding and the right market capabilities to go after opportunities when we see them."

For part one of this interview, click here

Flagging Heaven Hill's purchase of Deep Eddy Vodka in August this year, I suggest that, rather than go for established brands – as the company has done in recent years with the likes of Drambuie and Tullamore Dew – William Grant would do better focusing its spend on the newer, upcoming craft spirits offerings that are out there. "With Drambuie," Hunt explains, "we weren't buying the brand to break into a new category, we're buying it for the potential we see. With the Heaven Hill guys, good luck to them: It's an emerging category, but that's not the way that we work. We don't want to buy into a category that way, we'd rather build a brand gradually over a period of time and build something that will be successful for many years to come. So, it's a different approach.

"That doesn't mean we wouldn't look at acquisitions," he continues. "We always have a look. But, unless we see what magic we can bring to it and unless there's sustainable value in it, then it's not for us."

As we head into craft territory, I ask Hunt where William Grant prefers to position itself – as one of the bigger players, which, in size and portfolio terms, it would be justified in claiming to be, or as a more nimble entity with craft tendencies of its own? "We feel very much closer to the craft movement than we do the multi-nationals out there," he says.

"If you look at the brands that we all get excited about, most of them start off as a family, making the choice to get into a category, build a distillery and make it happen. That's pretty much our approach as well. From that point of view, I don't think there's anything new in terms of craft, what we're seeing now is a return to some of the values and to the patient approaches that have built some of the brands we all admire. It's kind of gone full circle."

The company's craft leanings have actually helped foster good relations with the newer segment. "Because the craft distillers out there don't really see us as a big multi-national," Hunt explains, "we have some very good relationships with some really exciting and innovative people around the world. We get to see some of the new trends and ideas coming through. We have a look at them, we think about them. But, it's more on that basis than wishing we had an 'X'.

"It's quite an exciting time for the industry with all these new ideas coming through."

Acquisitions: tick. Craft: tick. What's next? Ah yes; markets.

"The US is a huge opportunity for us," says Hunt. "It's our biggest market, but we still see it as an emerging market. Today, we're about 1.3% of a 200m-case premium spirit market. There's still a huge opportunity for us to grow in the US. France also continues to be an important market for us, particularly with Grant's. The UK is also still important.

"What we've looked to do over the last few years is to build on our strength in some of our core markets, but also to put down the platforms for future growth in emerging markets. We've got acceleration plans in Africa, India, South-East Asia, and we are working out what we want to do and how we want to win. Again, we take a very long-term view - this isn't a one- or two-year payback, we're thinking ten, 15 even 20 years out."

But, all the while that you're planning, your competitors are already making hay in these markets.

"In some cases, some of their brands are producing encouraging results in emerging markets, but it is costing them a lot of money to achieve that," Hunt says. "The downturn in China is a good example of that. Conversely, where we're seeing some companies establish their western-style spirits in emerging markets, that is a great opportunity for us to sit above them in some of those categories and see people trade up, for example from Scotch into single malt, and really enjoy Glenfiddich or The Balvenie. Yes, there are some good platforms out there, but it comes back to the way we think about it: If they're going to help build this market, that's fantastic. We would actually like to sit on top of them."

Could this template be laid atop the Irish whiskey category? After all, is Tullamore Dew riding the coattails of Pernod Ricard's Jameson brand, which has around 60% global Irish whiskey share? "I think Jameson has done a really good job of building the category in a number of markets," Hunt concedes. "But, that also gives us a real opportunity. The positioning of Tullamore Dew differentiates it from Jameson. Having a strong number one player, it's always good to have someone chasing you. In some markets, Jameson is chasing us."

Our coffees have been finished and the restaurant wants to prepare for lunch. But before we head back to our respective offices...

Only a few weeks before we meet, The Glenlivet overtook Glenfiddich to become the world's biggest-selling single malt. I check Hunt for a wince as I ask him about this.

Nothing.

"This is about wanting to make the best dram in the valley, not being the biggest," he says. "From our side, I understand that it's a milestone, but our goal isn't to be the biggest, it's to be the most awarded and to be the best. On that, we don't see any change. Internally, we're very relaxed about it, we're very confident in our position and in the strength and quality of the product."

Come now. There must be a part of you that wants to seize back the top spot? No-one wants to be number two. "People are looking at this from a volume basis," he counters. "The way we think about it is more from the value basis. It's been a conscious decision on our part - we see the future of the single malt business continuing to go to the higher-aged variants. As a result, we limited the supply of some of the 12-year-old. It's not the case that something has gone wrong, this has been the choice we've made to ensure we have the right maturing stock for the consumer we see in five, ten, 15 or 20 years time.

"As a family business, that long-term outlook is absolutely crucial to that. It would be hard to make that sort of decision in any other company that I've worked in."

Right, then. Back to work.

Postscript: Earlier this week, William Grant announced plans to increase the size of the Glenfiddich distillery in Dufftown.