Interview

"All of us feel a great deal of responsibility" - just-drinks meets Hector Gorosabel, Asahi Europe CEO - Part II

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After leading the sell-off of SABMiller's European beer brands to Asahi, Hector Gorosabel was then hired by the Japanese group to take them to a new audience, as CEO of its European office. In the second of just-drinks' two-part interview (click here for part I), Gorosabel discusses how the old SAB playbook is still in use, the challenges of brewing Asahi Super Dry in Europe, and why the health & wellness trend shouldn't frighten the beer industry.

Asahis Super Dry brand is brewed in Italy for Europes beer markets

Asahi's Super Dry brand is brewed in Italy for Europe's beer markets

Eighteen months on from the birth of Asahi Europe, the new project, according to Hector Gorosabel, is going well. The CEO of the unit points to market share gains and record years for the brands in the Asahi Europe portfolio. This is despite heavy competition from rivals hoping that the new entity would trip up in its infancy. "Some of our competitors thought this would be the time that we falter," Gorosabel says.

Asked how the growth was gained against a tough European consumer environment, the former SABMiller regional director for Western & Central Europe says that although the overall backdrop is challenging, there are "pockets of growth" that Asahi can target, including in the more value-accretive channels, such as the on-premise. At the same time, the division has launched a number of new extensions such as gluten-free Peroni and the citrus fruit-flavoured Peroni Ambra. Plus, Gorosabel brought a few ideas from SAB to Asahi, not least the premiumisation strategy that helped make Peroni an on-premise success in the UK.

"When we first launched Peroni," Gorosabel says, "we had very distinct glassware, a very distinct font, and were very careful about how it was served. We never tried to grow by distribution, but by increasing the rate of sale. And, we always stayed away from price competition. We didn't participate in big-box promotions."

This ethos has now been brought to bear on Asahi's other SAB brands, and underpins the new unit's focus on value over volume.

"We don't want to grow much faster than we are creating the demand"

"We don't aim to be the biggest brewer in the world," Gorosabel notes. "We're trying to create value for ourselves and our customers. Conversations about increasing capacity at our breweries are tough and long decisions. We may have the need but we always say we don't want to grow much faster than we are creating the demand."

Super Dry's European project

When Gorosabel took on the Asahi Europe role, he wasn't just assuming control of SAB's European brands. In the package came responsibility in the region for Asahi's own Super Dry brand. Launched in the 1970s, the beer has secured domestic dominance, becoming Japan's biggest-selling lager. Outside of Japan, however, Super Dry's performance is much more limited. In the UK, for example, it was brewed for many years under licence by Shepherd Neame, a mid-size brewer, pub operator and owner of English ales such as Spitfire and Bishop's Finger.

Gorosabel, however, had bigger plans for Super Dry in Europe. The locally-brewed versions were perfectly fine, he says. But during a visit to Tokyo, he tried the original and was blown away. "I said to head office: "We need to produce Asahi Super Dry in Europe the way you do in Japan.""

That eureka moment led to the eventual creation of a Super Dry production line in Asahi's newly-acquired Birra Peroni plant in Italy, previously part of the SAB empire. Details on the equipment used to produce the beer are shrouded in Asahi secrecy, but the company claims it can brew Super Dry to the same Japanese recipe that delivers karakuchi - the Japanese word for a dry crisp taste with a clean finish.

Hector Gorosabel worked for SABMiller before heading up Asahi's European operations

Speaking to reporters last year, Asahi group president Akiyoshi Koji gave his seal of approval to the European version. "The taste was the same as in Japan," Koji told Bloomberg from the Asahi global headquarters.

With Tokyo's eyes on Super Dry in Europe, it would be reasonable to assume that Gorosabel feels the weight of responsibility. Not only was the Super Dry upgrade his idea, there is also the sense that Asahi is looking to its new European expansion to counterbalance its ongoing declines at home. Reports in the country say that domestic Super Dry sales in 2017 dropped below 100m cases for the first time in 29 years.

Is management keen to claw those sales back in the bars of London, Paris and Rome?

"I personally, and I think all of us, feel a great deal of responsibility," Gorosabel says. "Asahi made a big bet [when setting up Asahi Europe]. They recognised the areas where they could help us out and the areas where we had to fend for ourselves and, in those cases, they left us to our own devices. The team rose to the occasion and has delivered quite well. We will make this a success, there's no doubt about it."

From a technical point of view, the Super Dry project appears to be on-track. According to Gorosabel, the Italy-brewed version is "right up there" in Asahi's own internal quality rankings of its international Super Dry offerings. Meanwhile, Asahi hopes the new taste will help differentiate the brand in Europe's increasingly-competitive premium beer segment.

"There are premium and there are expensive brands," Gorosabel says of Super Dry's rivals. "Some of the expensive brands call themselves premium, but they are going to end up as mainstream, and sooner rather than later." 

There were eyebrows raised, then, when in March, UK media reported that four of the UK's biggest supermarkets had dropped the new Super Dry just months after its big launch. The official response from Asahi was that the beer had not been delisted but simply repositioned.

Gorosabel is equally bullish when asked about the reports, saying that the response from the supermarkets has been "very, very positive".

"We are actually ahead of plan everywhere," he continues. "It's early days, so the plan is not that important. But, the first steps have been positive."

Health & wellness "good for beer"

The incident highlights just how hard brands have to fight to gain attention in today's European marketplace, from both consumers and the retail gatekeepers. Add to that ongoing reports of younger consumers turning away from alcohol to embrace more temperate habits, such as going to the gym or drinking fermented green tea, and it paints a picture of a category with serious long-term challenges.

Gorosabel, however, is much more optimistic about the category, and its appeal to Millennials.

"I think the trends for health & wellness are good for beer," he says. "Beer is a natural product, and health & wellness is not about spending three hours at the gym. There is nothing better for health & wellness than sitting around a table with friends and family and enjoying a social occasion. Beer will continue to be relevant in those occasions."

He does, however, admit that the consumer backdrop has changed significantly since he first got into the drinks business 20 years ago. Back then, he says, one truism was that consumer habits change only very slowly.

"Now," he expains, "that is not the case. Consumers are changing much more rapidly than we can imagine, and we need to follow that."

To do so, Gorosabel is focussing on the latent potential of Asahi's existing portfolio of beer brands. He speaks warmly about Peroni Gluten Free and Ambra, and the new opportunities offered to beer through the success of 0%-abv lagers and the craft segment. Asked whether we can expect a zero-alcohol Peroni, however, and the CEO is more circumspect - "Who knows?" he says.

He is similarly cautious when quizzed on Asahi's future M&A plans in Europe. Fortunately, Gorosabel's superiors in Tokyo have been more forthcoming on that topic. Speaking last year, group president Koji told Reuters that bolt-on beer acquisitions in Europe were a high priority, adding that the company had "billions" more to spend following the purchases of the SAB brands now under Gorosabel's care.

On the subject, Gorosabel will only say that Asahi has made a "big bet" to grow its international presence and that the Japanese firm is "in it for the long-run". But, he adds: "If that entails bolt-on acquisitions in the future, I think they will consider it."

A year-and-a-half into his new role, and Gorosabel may be about to face a whole new set of challenges.

"At SABMiller, we went through a bit of disbelief and almost denial" - just-drinks meets Hector Gorosabel, Asahi Europe CEO - Part I


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