"You could argue that we are stupid to sell in Travel Retail; for us it is the right environment" - Interview, Edrington MD for Global Travel Retail, Igor Boyadjian

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In early-October, Edrington officially unveiled its new Global Travel Retail range for its The Macallan single malt Scotch whisky brand. The Macallan Quest Collection differs from its predecessor, the 1824 range, by having four SKUs instead of three. At the Tax Free World Association exhibition in Cannes, just-drinks sat down with Edrington's MD for GTR, Igor Boyadjian to discuss the reasons for the four tiers, why Edrington could exit the GTR channel and how digital is expected to transform transactions.

Edringtons MD for GTR, Igor Boyadjian, was a co-owner of FIX, a joint-venture in the Middle East with Edrington

Edrington's MD for GTR, Igor Boyadjian, was a co-owner of FIX, a joint-venture in the Middle East with Edrington

just-drinks: Most exclusive-to-GTR Scotch whisky ranges come in threes. Why has Edrington decided to do it differently?

Igor Boyadjian: In the previous range, we decided that there was too much of a price gap between the entry level and the middle expression. [Consumers] needed to double the price, basically. Now, the entry level is at US$80 and the next one up will be $100. We've created a new price point that is more affordable. It's an easier upgrade for people.

j-d: It 's also a no-age-statement range again. Other whisky companies seem to be returning to age in GTR. Why not Edrington?

IB: Age statement is always a good question. Is it easier to navigate for consumers? Yes. But, what we see from the research is that age helps and reassures but, at the same time, in GTR the consumer wants a different experience. We were the first to introduce a no-age-statement GTR range seven years ago [The Macallan 1824 Collection]. Everybody thought we were crazy, but we still sell every drop of liquid. We have enough confidence in our brand name, and consumers are happy to discover something new in Travel Retail.

j-d: I hear that you intend to have a rolling sixth expression for the Quest range. What can you tell us about it?

IB: Once the range is well-established, we will definitely think about bringing fresh news on a yearly basis, maybe with a rotating SKU, in the affordable, collectable space. However, if I want to make a new SKU today, I have to convince all my colleagues around the world that I need their liquid. We could create one from a marketing perspective but, from a liquid perspective, we also need to be conscious that we are restricted here.

j-d: How do those conversations with colleagues go? It must be difficult to square GTR's need for liquid with the continuing pressure on margins in the channel.

IB: The big message from [TFWA head] Erik [Juul-Mortensen] at the opening ceremony was about the GTR trinity - airports, retailers and brands. We are firm believers that this has to work.

Today, the profit levels we are making in Travel Retail are far below what we make in our own distribution companies. So, you could argue that we are stupid to continue to sell in Travel Retail while we have a shortage of liquid. But, for us, it is still the right environment for our brands. The exposure, the quality of the retail experience, the consumer mindset when they travel - all of these are good for our brand equity. The profitability is not as good as domestic because of the margin pressure and, if this trend continues, we might reassess in the future. If at some point, the retailers ask for 80%/90%/100% margins, we might decide to pull out because we don't have enough liquid.

j-d: Everyone is talking about cooperation, but isn't that the one thing in GTR that has always been difficult?

IB: I think it is getting better. Three years ago, when Dufry started its acquisitions, it was like they were saying to the brands: "We are Dufry, we are number one, we are going to need more money". This year at Dufry's TFWA party, the message on stage was: "We are here to help you. Without you we cannot do business".

I think the big guys realise that they need to think of the consumer first, otherwise these people will order online or go elsewhere.

j-d: Consumers will always take the path of least friction when purchasing,. In GTR, it seems that there is a lot of friction.

IB: There is, but there are a lot of operators that are trying to reduce this friction by delivery-on-arrival, for example. Is the change fast enough? Probably not. We are not yet Amazon. But, I think the awareness is here, which is a good starting point. The journey has started. 

j-d: Why has it taken so long for the mindset to change?

IB: We all believed we had a captive audience. But, if you look at the percentage now of how many people shop in Travel Retail, it is very low. I think that is the wake-up call. It is still a big number but it also means a lot of people are not buying.

j-d: How can digital help?

IB: Information, first. The average Chinese consumer might recognise our logo, but not much else. Unless you have a brand ambassador on the shop floor, then how do they know what is inside the box?

But, it goes beyond the information, there is the transactional element as well. Chinese consumers don't have credit cards, they have cash or Wechat, so DFS has started to have Wechat in San Francisco. We need to be better at the transactional digital element.

Brand-building and the transactional have to be linked.

j-d: Does the larger move towards digital erode the line between the domestic and Travel Retail markets?

IB: Yes, but you still need to offer a different experience and a physical store for browsing. I don't think it is about either being digital or physical, it is about getting this balance right.

People keep going to bars and enjoy an experience with the bartender. It is all linked together. People don't go on Amazon and have no experience of the brand. It's about multiplying the touch points, the connections with the consumers.

j-d: You took over as the new GTR head for Edrington at the start of this year. This was after you sold the Edrington Fix joint-venture that you co-owned to Edrington. Why have you not retired with all the money you've made?

IB: [Laughs] I wanted to retire but my wife said that I had to work again because she couldn't keep me at home. 

I'm probably the only one today at Edrington who has been a customer of Edrington, a partner and an employee. What I bring is a slightly different view and angles. That's what [CEO] Ian [Curle] told me when he approached me: "You've been complaining so much about us, now we are giving you a chance to add value to the company".

I'm not here for a job, I could have retired. But, I'm here because I enjoy these guys, and we are having a great time.

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