just the Answer - United States Distilled Products CEO Pedro Caceres
By Andy Morton | 12 September 2012
United States Distilled Products CEO Pedro Caceres
Pedro Caceres was appointed CEO of United States Distilled Products, the owner of UV Vodka, last November. Since then, Caceres has ramped up the global expansion plans of the brand's classic and flavoured lines. UV Vodka launched in Spain earlier this month and last month in China, where Caceres is trying to gain a foothold in the south of the country. Here he talks to just-drinks about those developments.
just-drinks: What's behind your expansion?
Pedro Caceres: For the past five years the international markets haven't been our main target. We are changing gears this year and we are making our international expansion a significant part of our strategy. We are very focused on the global brands as they can be successful for global consumers, with UV Vodka being one of them. We also have Revel Stoke spiced whisky, Prairie Organic Vodka, Phillips Union whiskey, Trader Vics Rum and our French brandy, Matiz.
These six we are very focused on. In all the markets we have been entering we are building a very strong distribution footprint in major metropolitan areas. We are very focused on our marketing and we'll take it from there
j-d: Are you using UV Vodka as an entry to these markets?
PC: I think that is correct in some countries. In a number of regions, 90% of sales are brown products. So in these places we see an incredible growth opportunity for white spirits like UV.
j-d: Which markets?
PC: China is a brown spirits country in the south. Our portfolio for brandy and whiskey is very strong. And the opportunity for UV with the new upcoming consumer, the younger generation is very, very strong too. So we are combining the forces of our strong platform of brown spirits together with the global appeal of UV Vodka.
j-d: Are you marketing to younger people in China?
PC: For UV Vodka, yes. The generation that goes from aged 21 to 35, and then some labels that go over that. It'll be a good transition into other brands that we own. Our marketing is to position UV Vodka in those emerging markets in the same segment that we do in our domestic markets.
j-d: How successful have you been so far in emerging markets?
PC: Demand is very strong and the appetite is really high. Our products simply taste better and they like them.
j-d: What problems have you come up against so far in China?
PC: It's not a Big Bang approach. We have significant personal relationships and they have given us a space for our products. We are promoting in those places to make sure the sales happen and it's working. We are eating China one bite at a time and every bite is being chewed properly. I'm very happy with the traction we are getting with our products.
So far we are working very heavily in to Guangdong province. We also have really good access into Hong Kong and Macau and we will go up through the east coast of China in the years to come.
j-d: How do you make any headway in China against baijiu, which accounts for most of the Chinese market?
PC: We have proved to be very patient with our brand. We are not speculators, we are in it for the long-run. The non-Chinese market is close to US$8bn. There is $1bn in non-Chinese liquor.
We know that we are not going to displace baijiu and all those brands, but we have a tremendous opportunity to get our products to be significant also in those markets.
j-d: Will baijiu's grip on the market lessen in the future?
PC: There's no doubt in my mind that China is evolving. Already the strength of the brandy, Cognac and whisk(e)y categories are growing at a pace that is incredible. Brandy has doubled in five years to become a $10bn business in China. So there is an appetite for Western products and there is a stronger connection to the culture. “Made In The US” is important to the branding of our products, so we are building on all those elements of an aspirational society. I do think we have all the elements to produce stable growth.
j-d: Will you focus on your flavoured range or straight vodka?
PC: Flavours will significantly outperform straight vodka initially, and then through our Prairie Organic Vodka, which we think can be very very appealing for northern China. We have just tested the market and we created a version of Prairie Organic called Luxuria. It has a very rich packaging and is 100 proof. In the area to the north of Shanghai going into Beijing, they won't drink anything that is less than 100 proof.
j-d: Because it's so cold?
PC: Yes, probably. And probably because they are not too keen on drinking so much Russian vodka.
j-d: Has your range of flavoured vodka helped to increase interest in vodka in the US?
PC: It's amazing that vodka has market share of over a third in the US. There is a need to innovate in the category and maintain interest. Our company has been a pioneer of new extensions and I feel we have a responsibility to continue to drive that growth and success.
j-d: Who are your main rivals?
PC: Everybody is in (the flavoured vodka market) now. Because we were so successful it makes sense. And it helps grow the category. I like competition so we all grow the market and UV Vodka flavours will benefit from that, because we still have an incredible amount of room to grow into.
j-d: What other innovations are in the pipeline?
PC: Consumers are now creating content and creating life for different brands and they bring in a lot of ideas about where the innovation can go. Innovation in flavours is one important thing, along with innovation in cocktail creation and in RTDs. Even in flavour, your should segment those things. You have had for some years the fruity flavours, then there was the innovation into the dessert flavours. Now I'm saying that there are other flavours that have not been tapped yet.
j-d: For example?
That will be part of our secret. What I can tell you is we are really looking into that, and we have the third wave of flavours coming.
j-d: Is the US vodka bubble about to burst?
PC: No, the one-third will remain. With the population expansion and the growth of Hispanic and Asian populations there will be a growth in brown spirits. But I don't think it will take away from the absolute numbers on the vodka category.
j-d: Where do you see your next area of opportunity?
PC: After the launch in Spain, the next logical market is Portugal. Then we aim to move into Sweden and the UK. Europe is more challenging than Latin America and Asia. But we think our brand can be successful and we just go in one country at a time. Those countries have expressed real interest in our brand.
The first thing that we have to do is to ensure strong partnerships in those countries that can work the brand locally.
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just the Answer - United States Distilled Products CEO Pedro Caceres