The Wehring Interview - William Grant & Sons
By Olly Wehring | 27 January 2011
The inaugural Wehring interview sees the CEO of William Grant & Sons, Stella David, field the questions
Every month, managing editor Olly Wehring turns his spotlight into the eyes of a senior drinks executive. First up in 2011 is the CEO of William Grant & Sons, Stella David.
It's taken a while to nail down Stella David. Having logged a request with William Grant back in April last year, it's only this week that David has finally managed to find time to meet me for half an hour. Considering the year the UK-based spirits firm had in 2010, though, it's little wonder that I had to wait until January 2011.
The first 18 months of David's tenure as CEO have certainly been lively. Since joining the company from Bacardi in June 2009, David has overseen an acquisition, a divestment, and weathered the ongoing economic travails with which we are all familiar.
Looking back on the last calendar year, David is full of the joys of Spring – and it's only January. “I'd say we had a great year in 2010,” she says. “All of our core brands did really well. I do think you have to caveat that with the fact that 2009 was a difficult year for everyone, so most people had some level of bounce-back compared to 2009, particularly in sectors like travel retail. But, if you compare our performance in 2010 to 2008 – which is a more relevant comparison - all our core brands did really well.
David is happiest with the performance of William Grant's single malt Scotch brand, Glenfiddich, which “had its best year ever” in 2010. “We put a lot more money behind the brand last year, meaning we could up our focus,” she says. Subsequently, the brand recorded a healthy rise in sales, reaching 950,000 cases, compared to 804,000 in 2009.
Trying to find any brands that David was disappointed by in 2010 is fairly fruitless. “I'm very happy with everything we did last year, actually,” she says. “The Balvennie had record sales, we broke the 200,000-case barrier with Hendrick's, and Sailor Jerry sold over 750,000 cases. Meanwhile, Grant's was just shy of 5m cases.”
While going through the volume numbers, I mention the disparity between Grant's - at almost 5m cases – and the rest of the company's 'niche' brands. Woah there...
“I don't think it's fair to call them niche brands,” David argues. “Take Glenfiddich – it's the biggest malt whisky in the world. I would call it a key brand, not a niche brand. It has high value assigned to it, and it's known throughout the world, with excellent distribution.”
William Grant & Sons' CEO, Stella David
I re-word, then ask if such a large gap in volumes provides a challenge for her focus when she looks at the William Grant stable. Hats off to David for her non-marketing reply: “I've never really thought of it like that, so I don't really have an answer for you,” she says. “I don't see it as a problem. You've given me a problem I didn't know I had!”
One problem I'm sure David must have, however, is how William Grant's family-ownership must strip any pressure away from her position. After all, as she admits: “One of the things that differentiates us from the likes of Diageo and Pernod Ricard is that, as a family-owned business, we don't use short-term targets as the real driver for us.”
Does she not crave the pressure that comes with working for a public, limited company? “It's not about a rhythm of the business based on the next quarter's performance,”she concedes. “With many companies, it's always about that quarter-to-quarter rhythm. But, the rhythm of spirits brands is either in years or decades, or even longer.
“When you talk about being committed to the long-term, people think that means you're slow. The opposite is true, though – we do commit to the long-term, but we act with a huge amount of agility and pace.
“One of the benefits of being the size that we are and the type of organisation that we are is that personal connections are still important,” she continues. “The companies that try to be mini-me's to the likes of Diageo and Pernod always struggle: they (Diageo and Pernod) do what they do very well. We have to try to do things in a different way. If you don't do it differently, then there's no point existing, is there? You'll just be sucked up and absorbed. But, I think there is still room in the industry for players of our size.”
Considering William Grant's relatively small size in the global spirits landscape, the company still managed to dominate the M&A headlines last year. In April, the company bought C&C Group's spirits and liqueur brands for EUR300m (US$399.4m). The purchase was followed, five months later, by the divestment of the whole portfolio, minus Irish whiskey brand Tullamore Dew, to Campari for EUR129m.
“It was done very quietly,” David explains. “We really liked the idea of Tullamore Dew and, fortunately, when we asked C&C if it was for sale, they said: “It could be.” So, we had a discussion and then it happened very quickly.” David maintains that William Grant didn't buy the brands with a view to selling on all bar one of them.
“Campari offered us a very attractive price,” she says. “The jewel in the crown for us was Tullamore Dew – we were less interested in the other brands.
“So, everybody did well, and it all kind of worked, and within 12 weeks – we didn't have the disruption of integrating the other brands into the business, so it was one of those happy coincidences, when it all fitted together nicely.”
The company is particularly chuffed to have an Irish whiskey, a category that David feels, is “very interesting and undeveloped”. Tullamore Dew is the number two brand, ahead of Diageo's Bushmills and (very far) behind Pernod's Jameson.
David is not worried by the latter's market domination, however. “Tullamore Dew is pretty strong in markets where Jameson isn't,” she says. “It's the number one Irish whiskey in Germany and Czech, for example. So, there will be room for more than one player to be successful.”
She is, of course, quite pleased to have a brand bigger than one of Diageo's. “Yes,” she laughs, “I like that!”
After last year's buying and selling activity, then, one would expect William Grant's to stay away from the market stall for the foreseeable future.”We certainly have the headroom to do more if we wanted to,” counters David. “It depends on the right brand coming along at the right time for the right price. There aren't that many opportunities out there, but we obviously look.”
While William Grant may not be front of mind when it comes to M&A in 2011, then, the company will still be one to watch this year. With colourful brands like The Balvennie, Hendrick's and Sailor Jerry, the firm already shouts louder than its size would suggest. Add in its future hopes for Tullamore Dew, and we can expect a lively 12 months for William and his Sons.
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