The just-drinks Interview - Chivas Brothers' CEO, Christian Porta
Chivas Brothers confident on single malt growth
While our paths have crossed on an almost monthly basis over the last six years, just-drinks has never interviewed the chairman and CEO of Pernod Ricard's Chivas Brothers unit, Christian Porta. So, when Olly Wehring was invited to the official opening of The Glenlivet's distillery extension last month, he took the opportunity to finally pin Porta down for a chat on all things Chivas.
As he settles into his armchair, Christian Porta looks a contented man. Outside, the final touches are being put to The Glenlivet distillery ahead of the opening of a GBP10m (US$14.6m) extension by His Royal Highness Prince Charles. Tomorrow, Porta will show the heir to the throne around the distillery and assist in the unveiling of a commemorative sculpture.
Well might Porta be happy – the extension will see The Glenlivet's capacity leap by 75%, from its current 6m litres of pure alcohol per year to 10m. Things must be going pretty well for the single malt brand, which comes under Chivas' stewardship along with Chivas Regal, Ballantine's and Beefeater.
“In our business,” he says, “you have to have a very long-term view and look at ten to 15 years from now, which is a very difficult thing to do – who's capable of forecasting what's going to happen ten years from now?
“When we took The Glenlivet over in 2001, it was selling in the region of 350,000 cases per year. Last year, we broke 600,000 cases and have seen growth of around 10% per year over the last five years. Even in the difficult year – for the world and the industry - to the end of June 2009, the brand grew by 5% in volume terms.”
Porta has high hopes for the single malt, which currently lies in second place behind Glenfiddich. Not only is he aiming to overtake the market leader in the future – no mean feat, as The Glenlivet has 9.3% global market share to Glenfiddich's 14.8% - but: “We know that this is a brand that, in years to come, will break 1m cases a year in sales”.
Normally, these would be seen as brave words for a drinks brand in the current economic climate. But single malt whisky has historically behaved very differently to the rest of the spirits industry. Could the category be – dare one say it – recession-proof? “I don't know if it's recession-proof,” Porta says, “but we have done well during this recession. Is that because it's a single malt? Is that because it's The Glenlivet? Or, is that because of the strength of Pernod Ricard in the markets we operate in? I think it's a combination of all this, but it's true that it has resisted very well as a brand. And, generally speaking, as a category, single malt has continued to show moderate growth.
“The trends behind Scotch whisky generally are very positive, we believe, and for single malt in particular even more so,” he continues. “Single malt is a big category in the US, the UK, France, Japan and a little bit in Taiwan. But, it's virtually non-existent in China, India, Korea and South America – all of these are big whisky markets.”
Chairman and CEO of Chivas Brothers, Christian Porta
Based in London, Chivas Brothers is responsible for Pernod's Scotch whisky and premium gin portfolio. Of Pernod's 14 'strategic brands' – more of which later – Chivas is responsible for the production of The Glenlivet, Chivas Regal, Ballantine's, Beefeater and now Royal Salute, which was added to the strategic brand portfolio earlier this year.
Firstly, what does the term 'strategic brand' mean in Pernod? “It means that they get more attention,” Porta explains. “They get the highest level of attention, commitment, time, energy and A&P investment.”
The timing of Royal Salute's addition to the first XI – or 14 – demands query. The ultra-premium blended Scotch has an entry level 21-year-old variant, which retails here in the UK for around GBP90 (US$135) per bottle. By promoting the brand to the company's front line, Pernod appears to be putting its faith totally in the strategy of premiumisation.
“When you look at the results,” Porta says, “you can see that premiumisation has worked for us between 2001 and 2008. With Chivas Regal, for example, it was at less than 3m cases when we took it over – the highest we achieved was in 2008, when we sold 4.5m. In 2009, it was 4.2m because we lost about 5% of volume, which wasn't such a bad result.
“Premiumisation has also worked very well for Royal Salute. When we took it over it was selling between 70,000 and 80,000 cases a year – in 2008, we took it close to 150,000 cases.”
In the first three months of this year, Porta notes, Pernod has seen a “very strong” rebound for the likes of Royal Salute 21, Ballantine's 17 and Chivas 18. “We have seen a good trend back to super- and ultra-premium products in the last few months. So, yes, premiumisation has worked and, yes, we still believe it has a lot of potential.”
In this day and age, six years in the same position in the drinks industry qualifies as veteran status. Yet, Porta is still happy with his lot. “We acquired Allied Domecq in 2005, and took control of Ballantine's and Beefeater,” he notes. “We've had tremendous growth since we took over Chivas (in 2001) – lots of new products, lots of new projects. 25% of total volume for the company comes from Chivas Brothers. There's never a dull day in the life of Chivas Brothers.”
Prior to his six-year tenure at Chivas, Porta spent four years in Australia heading up Orlando Wyndham, Pernod's wine business in the country. Surely, having been away from France now for 12 years, he's looking to return home soon? “Being in London is not that far from France,” he says. “There are a quarter of a million French people living in London. I have my French newspaper at 0800 in the morning, if I want a good croissant I know a good boulangerie not far from my home and my three children go to the French lycee in South Kensington.”
Looks like we'll be bumping into him for a few more years, then.
In this, the final part of just-drinks' review of 2010, Olly Wehring takes a look at what made the wine headlines this year....
Our penultimate part of the 2010 review of the year affords our spirits commentator, Richard Woodard, to look back at the last 12 months for his specialised subject....
With the end of the year looming, just-drinks is running a series of 'Top Tens of the Year' in the run-up to Christmas. Here are the ten most read interviews on just-drinks in 2010....
With the end of the year looming, just-drinks is running a series of 'Top Tens of the Year' in the run-up to Christmas. Here are the ten most read comment pieces on just-drinks in 2010....
- Will Tequila Learn from Scotch Whisky's Mistakes?
- Comment - Beer - Does 'Craft' Work?
- Solving the diet drinks dilemma in the US
- Comment - How to Target Cognac's Mok Generation?
- Is Marketing Twisting the Meanings of Words?
- Whyte & Mackay takes on Flor de Caña in UK
- Diageo opens Johnnie Walker House in Singapore
- Emperador overhauls Whyte & Mackay labels
- SPI Group US, Canada sales chief departs
- Soaring Prosecco sales good for Champagne
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Global rum insights - market forecasts, product innovation and consumer trends research
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Africa: The Final Frontier for Beer