The Wehring Interview - Remy Martin CEO Patrick Piana - Part II
Earlier this week, we ran part one of our interview with the CEO of Remy Martin, Patrick Piana. Here, in the second and concluding part, Piana looks at the emerging markets as well as the mature markets of the US and Western Europe, and argues for value over volume in the Cognac category.
Beyond China, Piana is as aware as the rest of the spirits industry where the 'next big thing' will occur. “We still have a lot of markets in the world where we could perform well in the next ten to 15 years,” he says. “Look at India, or Brazil: These are reservoirs of consumers who are waiting to be converted to our brands.”
Returning to China, however, I put it to Piana that, as Pernod Ricard regularly flags up, the reason it leads the imported brown spirits category in the country stems in part from the company's ability to get into China first. Is this the key to snaring the Indians and Brazilians?
“Anyone saying that it's too late (to tap these markets) is taking too short a view on the cycle of our business,” Piana counters. “We do have places around the world where we have to do more. But, we're not Diageo and we're not pretending to be Diageo: we're not playing a volume game, we're playing a value game. It will take time for us to do it everywhere at the same time. We're progressing well in Mexico, for example, but Brazil is at an early stage for us.”
“The whole story is that you walk before you run,” he continues. “We're running in Vietnam and in Mexico. Our performance in Russia is also extremely good. But, yes, in some markets we are coming from behind. But, coming from behind doesn't meant that you're not going to get closer and closer.”
Throughout our time together, Piana strikes me as a glass-is-half-full kind of guy: When I posit that Remy Cointreau is too heavily reliant on the Remy Martin unit, and that Remy Martin itself is too heavily reliant on China, he's quick to tell me how little concern these matters may be to him and the group. Indeed, he barely stops himself from telling me that I'm plain wrong!
Let's head to safer ground – somewhere that we can agree on. The US has been a troublesome market of late for Cognac, hasn't it?
“Our performance in North America is good,” he says. “We're able to generate the value we're looking for.”
Patrick Piana, CEO of Remy Martin at Remy Cointreau
“During the worst of the downturn, we decided not to move away from investment,” Piana continues. “The economy was down, business was difficult, but we made a conscious decision to continue to invest. It's when you invest in the downturn and innovate and establish new communication campaigns... I think the economy's better; it's not as good as it was before the downturn. But, knock on wood, we hope it's going to continue. We're clear about where we're going.”
Rounding off the major Cognac markets, we look at Western Europe, another region that has not been without its problems. “You can look at it two ways,” says Piana. “You can say it's been difficult and that you haven't seen major growth. Or, you can look at what we've done in the last 20 years to attract new and younger consumers to our brands. When we ask ourselves that, I feel that we probably haven't done enough.
“We have not walked away from Western Europe. We have to be strong here if we're going to be strong elsewhere. If you walk away from a region, you may regret it someday.”
Another reason Piana gives for maintaining a strong presence in the region is down to the way consumers communicate nowadays. “The world is getting smaller,” he says. “The 25- to 30-year-old consumers of today are much more in touch with the 25- to 30-year-old consumers around the world. What is happening in the cocktail culture, in cities like London, influences many other parts of the world.”
Within the Cognac hierarchy, Remy Martin is running neck and neck with Pernod Ricard's Martell brand, each accounting for around 14% market share globally. LVMH's Hennessy leads the pack at 34%, while Beam Inc's Courvoisier comes in fourth with 11%.
Surely, I suggest, Piana would prefer to be nearer the top than the bottom? “Our strategy is not volume share,” he argues. “It's about the value we generate for our business and the quality of the experience we give to our consumers. Our game is not in the VS area. We start at VSOP and we go up.
“Also,” he adds, “we only work the two best crus. We limit ourselves in terms of volume deliberately. But, this is not new news: we decided to do this about 50 years ago. That's how we're able to have a company and a brand in such great shape. It doesn't concern me at all, and it would only concern me if I could not generate value growth year-on-year on the overall business.”
A quick squizz at Piana's biog, as our time together draws to a close, shows that, prior to his time at Remy Martin, he has also worked for LVMH and Pernod. Is he not tempted, I ask, to make it a clean sweep of the major Cognac houses, and let Courvoisier feel the cut of his jib some time soon?
“No,” he smiles, “I'm pretty happy where I am. I see many opportunities in the decade to come. We're having fun at doing what we do, and I think that's important. “
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