Blog: Tax Free World Association - Day two: Diageo defends Haig Club as Pernod Ricard backs Jameson
Andy Morton | 21 October 2015
The TFWA ends on Friday
just-drinks is in Cannes this week for the Tax Free World Exhibition. Here's the second part of Andy Morton's blog, which will keep you up-to-date at one of the most important dates in the Travel Retail calendar.
- The day got off to an early start for a breakfast seminar on South Korea. The country is the world's biggest Travel Retail market, accounting for 12.3% of total sales, and acts as something of a bellweather for the industry. At the moment, business is not great, mainly because Chinese tourists, which make up 40% of total consumers and 69% of total sales, are visiting - and spending - less. The MERS virus has hit tourist numbers hard, especially those from China, we were told. Yang Soung-Hoon, a professor at Silla University in Busan and an expert in Travel Retail business, said the challenges have made operators in South Korea aware that the country has been too dependent on the Chinese tourist and needs to look elsewhere for further growth.
- Someone else looking elsewhere for growth is Marco Ferrari. A year ago, he left his job as CMO at Stoli Group to join Italian spirits and liqueur maker Montenegro Group. This week, he is in Cannes to help spearhead the company's activity in the US, where sales of its Amaro Montenegro brand has jumped to 10,000 nine-litre cases in the space of a couple of years, helped by new interest from bartenders in Italian digestifs. Ferrari is a familiar face in Cannes from his years with Stoli, but he previously worked for Bacardi in Italy on the Bacardi Breezer, back when the RTD was going through a tremendous ramp up in sales. The experience taught Ferrari that while you may plan for success, if it hits it can be entirely unexpected. After just four years in market, Bacardi Breezer was selling 2.5m cases in Italy alone and about 25m cases worldwide. As Ferrari says: “No one plans for that kind of success.”
- Heineken is justifiably proud of the yacht it has hired to serve as its water-bourne headquarters for Cannes. It's the biggest boat on the TFWE marina, and an apt showpiece for Heineken's James Bond partnership. On board, Heineken's Global Travel Retail head, Sean McNaughten, is excited about getting his hands on Lagunitas, Heineken's new craft beer partnership, although he admits logistical issues may challenge distribution. What's the best way for Heineken to get beers brewed in California out to the rest of the world? The company has just invested in a craft brewery at its Scottish subsidiary, Caledonian Brewery, so could it move some production there?
- Heineken has also taken ownership of Diageo's Red Stripe lager brand, and with McNaughten keen to continue growth in the cruise ship channel, he sees plenty of opportunity on Caribbean passenger routes. McNaughten says he is also being helped by Heineken's lightweight plastic kegs that can be filled with any of Heineken's brands. According to McNaughten, cruise companies love them because they can be easily stored and disposed of. Because of the kegs, McNaughten says, Heineken has even managed to replace a well-known rival brand on one cruise account.
- Last year, Diageo flew David Beckham in for the exhibition, thus dominating much of the after-hours conversations in Cannes bars and restaurants. This year, the company brought Italian actor Giancarlo Giannini, who appeared in two Bond movies, Casino Royale and Quantum of Solace, and now the new Johnnie Walker campaign alongside Jude Law. At the press conference, however, Beckham still dominated, and Diageo's Travel Retail head Doug Bagley was forced to defend apparent price drops for the Beckham-backed Haig Club. Bagley said price changes have occurred because Diageo launched a 70cl bottle in domestic markets to differentiate from the 1-litre version in Travel Retail. “We had to adjust the prices so we can differentiate the two packs,” Bagley said.
- Bagley said Haig Club has sold more than 250,000 bottles in Travel Retail and generated sales over GBP10m (US$15m) since its launch. “Our market share is exceptionally strong,” he added. “We're still in the launch phase and investing a lot behind it.
- Pernod Ricard's big announcement came last night in the shape of a Travel Retail-exclusive range for Jameson. The three Deconstructed expressions are Bold, Lively and Round and are rolling out to all GTR markets from next year. It is an interesting play from Pernod - three-piece launches in Travel Retail are usually the reserve of Scotch whisky. But, you could argue that if any Irish whiskey is going to pull it off, it will be Jameson. Simon Fay, international brand development director for Pernod's Irish Distillers, however, maintains that Jameson is still small when compared to the mighty Scotch brands. There are, of course, many small brands that would love to have the weight of Pernod behind them.
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