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Beam Suntory Sets High Ambitions for India

After the lull comes the storm as Beam Suntory launches it first Truly International Indian Whisky Oaksmith and the The House of Suntory portfolio including Yamazaki, Hibiki and Roku Gin.

Oaksmith is a premium Indian whisky, crafted by Suntory’s Chief Blender, Shinji Fukuyo, the creator of iconic Japanese whiskies Hibiki and Yamazaki, marks Beam Suntory’s entry into the Indian whisky segment and combines the finest Scotch Malts and American Bourbon using Japanese blending craft to bring the best of East and West for Indian consumers. The global premium spirits company brings its finest and the most popular Japanese whiskies – Yamazaki and Hibiki – and Japanese craft gin – Roku – to India with the launch of The House of Suntory portfolio.

Beam Suntory, the global premium spirits company, has launched a range of four premium spirits in India, signaling its commitment and strategy to grow in India in line with its ambition to reach USD 1 billion in revenue by 2030. The highlight of the launch is the introduction of Oaksmith Indian whisky – created by world-renowned blender Shinji Fukuyo, Chief Blender, Suntory – using traditional Japanese craftsmanship, blended with the finest Scotch Malt whiskies and American Bourbons to make a whisky unique and authentic to Indian taste. In addition, the iconic Japanese whiskies Yamazaki Distiller’s Reserve and Hibiki Japanese Harmony, along with Roku® Japanese Craft gin have also been launched from The House of Suntory portfolio.

The launch of Oaksmith and Oaksmith Gold whisky in India is key to Beam Suntory’s growth strategy and signifies the importance of India to the company. Along with the introduction of Yamazaki, Hibiki and Roku, it reinforces the company’s commitment to lead the growth and premiumisation of the Indian spirits market.

The launch event of The House of Suntory was graced by Shinji Fukuyo, world-renowned Chief Blender at Suntory, the creator of the luxury and iconic blends of Hibiki and Yamazaki whiskies, and Neeraj Kumar, Managing Director of Beam Suntory India, along with George Kumekawa, Representative, The House of Suntory. The event highlighted the exceptional legacy of The House of Suntory, the art of making delicate whiskies, and the importance of India for Beam Suntory globally. The House of Suntory brands are being launched across all major cities including Delhi, Mumbai, Pune, Hyderabad and Bangalore. Yamazaki Distiller’s Reserve will be available in the range of INR 10,900 to INR 20,000 across different states; Hibiki Japanese Harmony for INR 10,900 to INR 20,000 and Roku® gin for INR 5,500 to INR 7,100.

“We are thrilled by the appreciation that Hibiki and Yamazaki have received from consumers worldwide, and their popularity among spirits aficionados in India. The growing premiumisation of the Indian market and the appreciation for finely crafted spirits made this the right time to launch these brands, along with Roku gin. Indians today are well-travelled and exposed to global trends, which inspired the creation of Oaksmith for whisky lovers in India,” says Neeraj Kumar, Managing Director of Beam Suntory India. On Oaksmith and Oaksmith Gold, he said, “The beautiful blend incorporates years of tradition that the Beam Suntory family upholds while showcasing Shinji-san’s award-winning blending capabilities making it a whisky that, quite simply, no one else could possibly create.”

Oaksmith is a celebration of mastery and global collaboration, combining the best of East and West in a bottle. Blended by Shinji Fukuyo himself, Oaksmith is a harmonious blend of matured Scotch Malts that adds a strong flavour profile and American Bourbon whiskey, aged for at least four years in American Oak barrels which lends it an unmatched smoothness. That gives the brand its unique name and also inspires the round bottle labels celebrating its distinctive craftsmanship. Befitting the unique and distinct flavour palate, the exquisite six-sided bottle with beveled edges and a tall neck has an equally unique and ergonomic design that is an ode to the finest Japanese craftsmanship and makes it stand tall in this category. The company is celebrating its international pedigree with the use of the world map in all its creative expressions.

Much like The House of Suntory, Oaksmith blend is made using the finest ingredients and sincerity of process that is a hallmark of Beam Suntory’s Japanese heritage which is unique to this brand in the entire Indian whisky category. From seed to sip, the whisky is meticulously crafted to achieve a blend like no other resulting in a bold spirit that is rich on the nose yet approachable and well-balanced on one’s palate with a bright, smooth and unexpectedly long finish. The unique offering will be available at the price of an Indian whisky and the flavourful palate will be well suited to both beginners and connoisseurs alike. There will be two variants of the product – Oaksmith and Oaksmith Gold – which will launch on 19th December 2019 in the state of Maharashtra, followed by the rest of the country in due course. Oaksmith Gold will be priced in the range of INR 800 to INR 1,300, while Oaksmith will be priced in the range of INR 600 to INR 900 depending upon the state of launch. Both the variants will be premium in their respective categories due to the international quality of blend and craftsmanship they offer.

A relentless quest for perfection and commitment to using only the highest- quality ingredients encapsulates Suntory’s philosophy to create the finest spirit possible. Shinji Fukuyo, Chief Blender at Suntory, said, “My travels across the world have helped me understand and appreciate sophisticated flavour profiles. Blending spirits is about creating a harmonious flavour by weaving culture and tradition along with one’s own form of self-expression. This is an art in itself and I am very grateful that people globally have appreciated the quality and artistry of Hibiki and Yamazaki, and hopefully now, Oaksmith.” On Oaksmith®, he added, “While making this blend, I wanted to ensure that it resonates specifically well with the Indian audience while being truly international in its spirit. I travelled across the country to understand the different food cultures and flavours. Eventually what I saw, heard and tasted, helped me explore a variety of flavour profiles and finalize this harmonious blend which has the best of America, Scotland and Japanese craftsmanship. I am extremely proud as the final product completely reimagines what the future of Indian whisky can be.”

On the rising popularity of gin in India, George Kumekawa, Representative, The House of Suntory, said, “In recent years, we have noticed a strong trend among Indians to opt for premium and craft gin as their spirit of choice as it has a softer flavour profile which is easier on the throat and refreshing in its appeal – perfect for brunches and refreshment occasions. With the introduction of Roku gin in India, we are looking to further build the market for both gin as well as craft spirits to help enthusiasts discover new tastes and experiences.”

THRIVING TODAY AND READY FOR TOMORROW

As many of the speakers at the TFWA Conference and workshops this week have suggested, the way to tackle the challenges the industry faces may lie in technological advances. We in duty free and travel retail have the opportunity to create outstanding customer experiences that online retailers can only dream of. When this physical experience is enhanced by the best technology, it can only get better.

As TFWA President Alain Maingreaud pointed out in his opening address at the TFWA Conference, accelerating the adoption of digital and mobile technology will ensure the duty free and travel retail industry keeps pace with traveller expectations and enrich the in-store experience.

Christina Lu

At the Innovation in Action workshop, Alibaba Group’s Christina Lu detailed how the strategy behind their organisation was to “make it easy to do business”.The company’s travel platform Fliggy, which is not only about transaction but also about brand building, provided a huge opportunity to connect Chinese consumers with business.





Julie Menville

But the customer must come before the technology. Julie Menville of Amazon Pay explained how her organisation “started with the customer and worked backwards to create new products and services”. The launch of Amazon Pay meant that shoppers can have the same experience on other websites as they have on Amazon.





Valéry Méary

More innovation came under the spotlight at the next day’s Inflight Focus workshop. Valéry Méary of airfree detailed how technology is transforming the inflight shopping experience. His platform allows passengers to access an online portal, browse and pay for thousands of products, and then collect their purchases at the airport when they arrive.





There’s plenty of scope to build sales, and Elina Jamaluddin from AirAsia explained that her company’s Ourshop inflight platform is performing strongly, despite the fact that AirAsia is a low cost carrier.

Aldric ChauAs ever, solid knowledge of the customer is a key to success, and again use of sophisticated technology can help. Aldric Chau of Cathay Pacific stated that data-driven personalisation leads to customers spending over 40% more than they had planned. This is surely evidence, if it were needed, that investment in technology can pay handsome dividends.

The Impact of E-commerce on Alcohol Trading

IWSR research indicates that 1.8% of the value of all global beverage alcohol is now Sold through E-commerce

Like others, the drinks industry has recognized what a critical medium the digital environment is to interact with consumers, inform them, learn from them and ultimately to sell to them. Regulation has made the online retailing of alcohol more complicated than other sectors and this has stifled development, but this is changing.

IWSR Drinks Market Analysis’ global database now captures just how effective drinks players have been at selling digitally. Although variances inevitably exist between markets, the results for 2018 show that 1.8% of the value of all alcoholic drinks traded around the globe is now sold through e-commerce.

It is wine that has best harnessed the selling power of the online retail environment. Last year as much as 3.6% of all wine value sales stemmed from e-commerce outlets, a figure that translates into nearly US$8bn of sales.

The rapid expansion of wine sales online has even threatened the viability of independent “bricks and mortar” wine stores in the UK. Online wine sales in the country have reached 6.5% of total sales value, prompting one leading wine retailer, Majestic, to announce that they are to sell off much of their retail estate to concentrate on their online business, Naked Wines.

The extensive number of wine producers and the diversity of choice has meant that a culture of experimentation has always existed within the wine sector. The online environment has proved to be well placed to service wine drinkers’ curiosity and to educate and inform consumption choices. The dramatic expansion of online wine marketplaces like Vivino, which after just nine years of trading now claims to have 10 million different wines and as many as 35 million users, has illustrated just how compatible wine selling is within the digital space. Sales of spirits through e-commerce may not be as pronounced as wine, but IWSR research shows that around US$6.5b of spirits were sold online in 2018, a figure that represents 2% of all global spirits’ value sales. For example, ecommerce is reported to now be Pernod Ricard’s fastest growing channel.

Direct selling on owned online platforms has proved less effective for spirits operators than partnerships or acquisitions with established online retailers and delivery services, perhaps because it compromised choice to exclusively sell their own brands. The recent trend has been for operators to partner with existing online platforms to maximise exposure and to showcase their brands from a different angle to consumers.

The development of the online marketplace is happening at different speeds with drinkers in some markets quicker to adopt new purchasing practices and habits than others. The reported 800m Chinese internet users have been quick to embrace the advent of e-commerce. The explosion in smart phone use, social media apps and mobile e-commerce has facilitated this shift in buying habits and meant that 6.5% of off-premise sales of all alcoholic drinks are now ordered online in China.

The e-commerce channel has proved particularly popular for wine sales in China. Encouraged by fierce competition, which has ensured low prices and fast delivery, online sales now account for 9% of sales value – that is a fifth of all off-premise wine sales, as well as online spirits sales of almost 4%.

Even in markets like China where e-commerce penetration is already comparatively high, it can be assumed that the e-commerce channel will continue to take share from “bricks and mortar” retail. The development of the channel will be fuelled by convenience, competitive pricing, a quickening speed of delivery and by rising digital competence.

The shift to digital platforms will change the alcoholic drinks landscape forever, providing a marketplace for a plethora of brands and concepts that are no longer reliant on winning shelf space from a few major retail chains.

The future alcoholic beverage market will be a more diverse and interesting place as a result.

Spirits Producers & Producer Organisations formally unite as the World Spirits Alliance

Global spirits producers unite to get a global voice.



Spirits producers and producer organisations from across the world joined forces recently in Geneva for the formal creation of the World Spirits Alliance (WSA), an international trade association dedicated to representing the views and interests of the spirits sector at the international level. Following many years of successful cooperation, members decided to set up a dedicated, formal organisation to act as the common global voice for the distilled spirits sector.

WSA will act as a representative partner and interlocutor before international organisations, such as the World Trade Organisation (WTO), the World Health Organisation (WHO) and the United Nations (UN). WSA and its members will continue to pursue the elimination of tariff, non-tariff barriers, and discriminatory taxes, fair, transparent and evidence-based regulation, adequate excise tax structures, proportionate evidence-based public health measures for distilled spirits and ambitious strategies to combat illicit alcohol.

“Many of us have been working together for nearly two decades, hence setting up a formal trade association to act as a united global voice on the integrity and social responsibility of our spirits industry is a natural and important step forward. Distilled spirits are a vibrant and highly dynamic sector with a unique diversity of products and producers across the world,” said Marie Audren who will act as Secretary General for the WSA.


       

“The aims of the WSA are to create a common platform for exchange and have a representative body that will allow us to comment on issues of global relevance, particularly in the areas of trade and regulatory policy, and help develop a positive environment for the sustainable success of the sector,” said Rodolfo González González (Camara Nacional de la Industria Tequilera) who was elected as first President of the WSA.


         

WSA members represent producers of products such as Baiju from China, Tequila from Mexico, Brazilian Cachaça, Indian IMFL, Cognac and internationally traded whiskies like Scotch Whisky, Irish Whiskey and American Bourbon (to name but a few).

“Distilled spirits are celebrated and responsibly enjoyed around the globe and generate jobs, economic growth and tax revenue in the countries where they are produced. At the same time, in many markets around the world, distilled spirits are heavily taxed and regulated, and we face trade barriers that are only applicable, or applied more excessively, to distilled spirits. This situation needs to be reviewed and addressed,” said Amrit Kiran Singh (International Spirits & Wines Association of India) who was elected Vice President.



       

“We want to demonstrate to national authorities that we are committed to responsibility and that advancing fair treatment of spirits products in the marketplace will have a positive impact on their economies,” concluded Chris Swonger, President and CEO of the Distilled Spirits Council of the United States (DISCUS).

WSA and its individual members are committed to responsible production, advertising and marketing practices and to encouraging adults who choose to consume spirits, to do so responsibly and in moderation.

The WSA membership includes trade associations and producers of distilled spirits from across the world:

• spiritsEUROPE
• Asia Pacific International Wines & Spirits Alliance Limited
• Camara Nacional de la Industria Tequilera
• The Scotch Whisky Association
• Association of Canadian Distillers
• Pernod Ricard
• DIAGEO
• International Spirits & Wines Association of India
• Japanese Spirits Liquor Makers Association
• Brown-Forman
• Distilled Spirits Council of United States
• Spirits New Zealand
• Rémy Cointreau
• Beam Suntory
• Spirits & Cocktail Australia
• Campari
• Edrington

Budget sets a clear action plan for making India $5 trillion economy

 

India is cruising towards becoming a $5 trillion economy. Indian alcobev industry stalwarts add credence to FICCI’s take on the budget.



Commenting on the Union Budget 2019-20 recently presented by the Finance Minister Ms Nirmala Sitharaman, Mr Sandip Somany, President, FICCI said, “Directionally the budget is good, and it takes forward the plan that was laid out by the government during the Interim budget. There are several positives in the budget, and it provides a set of benefits for most segments of the society. We see a clear action plan for realising the vision of making India a US$ 5 trillion economy over the next few years with a focus on ease of living.”


Anand Kripalu



“A balanced budget that draws from a long-term vision for the country! Through policy reforms to rejuvenate investment, ‘Make in India’ and Ease of Doing Business, as well as measures to tackle the country’s water shortage and climate change, the budget lives up to the government’s vison of a New India that aims at inclusive growth. The acknowledgement of India Inc’s role as the nation’s job and wealth creators is heartening. Operating with the high standards of compliance, in a sector that is in urgent need of regulatory reform, we are delighted at the Government’s vision of ‘Minimum Government Maximum Governance’, which we hope the Centre will encourage States to adopt towards the alcoholic beverages sector,” points out Anand Kripalu, Managing Director and CEO, Diageo India.

The budget maintained its focus on infrastructure development. While the government would continue with its existing major national programmes like Bharatmala, Sagarmala, Rural roads, Udan and Inland waterways scheme, the vision of taking connectivity to the next level through ‘One Nation One Grid’ for electricity and a similar plan for gas grids, water grids, i-ways and regional airports is indeed ambitious and would be transformational in its impact. “FICCI has been advocating the need for such networks and would work with the government on realising this vision. We are also encouraged by the Minister’s focus on promoting public-private partnership for modernisation and upgradation of the nation’s railway infrastructure,” added Mr Somany.

The MSME sector also got its due focus in the budget. Availability of finance and delay in payments are the two key issues faced by MSMEs. The government has attempted to address these through allocation of `350 crore for interest subvention scheme for GST registered MSMEs and creation of a payments platform to enable filing of bills and payment thereof on the platform itself. Also noteworthy is the suggestion to set up a social stock exchange for listing of social enterprises and voluntary organisations. This is expected to open up new avenues for funding for entities working in the social sectors.

Neeraj Kumar



With the Indian economy poised to become a $3 trillion economy in 2019, the Union Budget balanced prudently between focus on enablers for near term growth with a visionary 10 year road map to sustain and scale this growth.

Closer to our category, the announcement to develop 17 iconic world-class tourist sites is good news. We continue to expect greater transparency and ease of doing business in states and central regulatory framework to enable sustainable and compliant growth for our sector, says Neeraj Kumar, MD Beam Global Spirits & Wine India.      

Abhishek Khaitan





The industry sees a confident and clear articulation to boost growth by reduction in corporate tax and sops to housing sector and startups. The focus on sustainability with electric vehicles and water is visionary but enabling infrastructure needs to be implemented.

“The budget is focussed on vision and inclusive growth,” believes Mr Abhishek Khaitan, Managing Director, Radico Khaitan Limited. The new government till date has pursued pro-growth initiatives and, I believe, this budget will continue the impetus to further boost economic growth and investor confidence. The government is well positioned for a swift and efficient execution of progressive initiatives. Smt Nirmala Sitharaman’s maiden Budget – the first to be presented by a female Finance Minister — emphasises on infrastructure development, freeing up liquidity to troubled NBFCs, generating jobs in the MSME sector, and generally enhancing the ease of doing business. As a listed corporate, we believe that having a 35% public float is positive in terms of better corporate governance standards and valuations and carries a potential of increasing India’s weight in the global indices.

The budget is equally focused on welfare, health, sanitation, water, transformation, standard of living and support to farmers.

Nirmala Sitharaman ji stressing on the ‘Gaon, Garib and Kisan’ aims at enabling the rural economy through multiple schemes. With the aim of boosting the agricultural sector in the country, the government’s plan to reassess the implementation of zero budget farming has the potential of nearly doubling farmers’ income. Additionally, 10 thousand new farmer producer organisations will be set up for ensuring market reach for the farmers. The other schemes announced in the budget such as Pradhan Mantri Matsya Sampada Yojana, cluster-based rural industrialisation for promoting 50,000 artisans, 75000 skilled agri entrepreneurs and overall focus on dairy sector are all very laudable.

The vision of each house having water, electricity and cooking gas by 2022 is commendable and there is a very close interdependence between water, sanitation, health, nutrition, and human well-being. We view water as a central resource for a sustainable India and the thrust to provide piped water to all rural households by 2024 is what inclusive growth is all about.

To conclude I commend Ms Sitharaman for appreciating the contribution of India’s private sector in the fantastic rise of the country’s economy. While the fiscal balance has been managed well with the deficit aimed at just over 3%, the overall, the budget is pro-poor, pro-rural and pro-ease of doing business. The simplification of the GST, the simplification of tax reforms and indirect taxes and the support to startups not only will help in bringing in more capital and employment, it will significantly benefit society at large and help achieve aspirations of millions of Indians.

“I would emphasise that the government has taken due cognisance of the funding needs of a growing economy and this is reflected in a series of measures announced to deepen the country’s capital markets as well as help increase inflows both through the institutional investment and direct investment route. In our pre-budget consultation, FICCI had suggested the need to look at FDI norms in sectors such as insurance, animation, gaming etc. and we are glad this found a mention in the budget,” said Mr Somany. Additionally, to attract cross border investments, the statutory limit of FPI in a company is proposed to be increased from the current 24% to the sector foreign investment limit.

The announcement to further provide `70,000 crore for capital infusion into public sector banks along with measures to strengthen the governance processes within the banks should help in improving the credit flow to the industry. “The NBFC sector has been in focus on account of the stress being faced due to liquidity crunch in the last few months. Acknowledging the important role played by NBFCs, some key measures have been taken which should help ease the liquidity situation for the fundamentally sound NBFCs going ahead. As this happens, we hope to see greater amounts being sanctioned and disbursed by the para-banks particularly in the MSME and retail segment,” said Mr Somany.

Another novel feature of the budget is to marry the benefits of rural infrastructure development with sustainable livelihood opportunities. Having achieved tremendous success over the last five years in terms of promoting connectivity, housing, provision of electricity and clean energy in rural areas, the focus now is to promote traditional resource-based industries and create avenues for self-employment and entrepreneurship. “From the point of view of the farm community, the decisions to set up 10,000 farmer producer organisations and fully leverage the benefits of e-NAM for getting fair and remunerative price are welcome. In FICCI’s Agenda for the New Government, both these points were highlighted, and we had urged the government that these are essential components of any strategy aimed towards doubling income of our farmers over the next few years,” said Mr Somany. To strengthen the education system in the country, FICCI had suggested that the government finalises and implements the National Education Policy, sets up a National Science, Technology and Human Research Foundation; and hasten the setting up of Higher Education Commission of India. FICCI would like to thank the government for having incorporated these suggestions in the budget proposals.

On the disinvestment front, FICCI welcomes the government’s decision to enhance the target for the current year to `1.05 lakh crore. We had of course suggested that given the demands on exchequer, government should look at a target of `1.5 lakh crore. Additionally, the government’s decision to consider divesting its stake in select public sector units to below 51% is interesting and we look forward to details on this subject. “On the taxation front, while we are happy to note the decision to raise the turnover limit from `250 crore to `400 crore for companies that would attract a corporate tax rate of 25%, we had hoped that this rate will be applicable to all firms. Given the way tax policies are evolving globally, we need to be competitive if we are to attract and retain investments at a high level. With the Economic Survey also highlighting the critical role played by private investments in addressing concerns related to growth and employment, a bigger boost to the corporate sector was expected,” said Mr Somany.

Enhanced deduction for interest payments on loan taken for affordable housing, clarification on Angel Tax and the thrust on speedier resolution of legacy tax disputes in the indirect tax segment are some of the other important announcements on the tax side.

Finally, government has remained focussed on making India a ‘cash-lite economy’ and once again we saw in this budget a couple of suggestions that would help the country move ahead on this track.

The Industry Today And The Opportunities Of The Future

The first guest speaker at the TFWA Asia Pacific Conference was Andrew Ford, President of the Asia Pacific Travel Retail Association. He detailed the four areas of his organisation’s activity – advocacy and helping the industry to defend itself, research, (including a report on young China produced in partnership with TFWA), training, and events. With more and more issues facing the industry, and the policy changes that have been taking place in Europe coming to Asia, airports are, he said, more engaged and more aware of the need for advocacy. The association’s Economic Impact report will, he stated, provide valuable insight into the scale and scope of the industry in Asia.

Copyright: TFWA Press Office

A thought-provoking keynote address from The Economist’s Foreign Editor Robert Guest looked at how the geopolitical climate is affecting trading relationships between the world’s superpowers. He spoke of how societies can be ‘open’ or ‘closed’. Travel, he said, can only be good for the world as it broadens the mind. When you let people in, he concluded, you get the benefit of their ideas and culture – and that makes the world more prosperous.

Next on stage, Kate Ancketill, CEO of GDR Creative Intelligence offered fascinating insight into how ‘new retail’ (combining online, offline logistics and data across a single value chain) will define the retail landscape of the future. Multi-tracking, which sees the same retail space adapted and regularly updated to suit a wide range of consumers, is one of the most important movements that is shaping today’s retail.

3Sixty’s Executive Vice President Roberto Graziani spoke of the retail revolution that started with e-commerce and accelerated with the development of smartphone technology. With 25% of all e-commerce sales in the US already being carried out on a mobile, online channels will soon overtake offline. Effective partnerships to leverage data, strong use of data analytics and innovation are essential for omnichannel to truly elevate travel retail.

Offering an airline’s perspective, Campbell Wilson, SVP of Sales and Marketing at Singapore Airlines said that the airline is usually the anchor in any data consortium. He said that sales can no longer only take place on board, and airlines must go online to give travellers what they want, when they want it.

Copyright: TFWA Press Office

Przemyslaw Lesniak, CEO of Lagardère Travel Retail Pacific stated that in the current travel retail market, being a superb retailer is no longer enough. He outlined how he had adopted the welcoming and fun characteristics of the local culture within his own business. More than a brand or retailer, we should actually strive to be ‘an unforgettable host’, he said.

Dong-ik Shin, Director of Concession Planning Team at Incheon International Airport explored the role of retail in the airport of the future. He described a virtuous cycle, in which revenue from travel retail is used to improve facilities and maintain lower charges. This helps airlines to become more competitive and bring in more passengers, which in turn increases retail revenues. Already enjoying duty free revenues which are growing much faster than passenger traffic, his airport’s vision is, he said, to become the world’s best for shopping and dining by 2025.

Duty Free World Council’s President Frank O’Connell took to the stage to announce the launch of an industry-wide training platform, created in partnership with the Institute of International Retail. While face-to-face training can be costly and takes staff off the sales floor, the new programme is a cost-effective way to deliver an internationally recognised educational programme. It will provide clear career pathways which will help to improve staff retention, and build a community of loyal staff which will positively impact returns.

Moving on to the highly pertinent subject of sustainability, Vanessa Wright, Group Vice President of Pernod Ricard stated that increasingly consumers want to work for and buy from companies that ‘do the right thing’. There are a number of simple measures that the travel retail industry can take, such as offsetting, but sustainability should be the responsibility of all in an organisation, not simply that of one department. Her own company’s action plan detailed a commitment to strive for sustainability ‘from grain to glass’.

Gemma Bateson, JTI Worldwide Duty Free Corporate Affairs Director examined the challenges arising from the legislative constraints encroaching on brands’ capacity to market themselves effectively. While regulation is not per se a ‘bad thing’, that regulation, which is often designed for the different circumstances of the domestic market, must be proportionate and sensible. The demand for regulation relating to product labelling will affect all categories, and she called for a united approach in combatting the threat.

Nestlé International Travel Retail’s General Manager Stewart Dryburgh said that there was plenty of room for growth in his category, and confectionery & fine food could be worth US $10 billion in 10 years’ time. Key to this growth is meeting consumers’ three core needs, which are Deeper Connections (meaning how connected consumers are to friends and family); Better for You (the ability to choose healthier products); and Elevated Experiences (which means enjoying a bigger and better experience).

The day concluded with a look into the future of technology from Alan Brennan, Managing Director at creative commercial tech agency dcGTR. He said success within the duty free and travel retail industry will be affected by our ability to research and establish what our customers want. Virtual reality technology can enable us to understand how customers would behave in a store, and what choices they would make, without the need to invest in a physical building.

Worldwide Alcohol Consumption Declines -1.6%

IWSR 2018 Global Beverage Alcohol Data shows growth in spirits, but beer and wine volume is down; market expected to grow by 3% over next five years.
Beverage alcohol drinkers across the globe consumed a total of 27.6bn nine-litre cases of alcohol in 2018, but while that number represents a decrease of -1.6% from the year prior, new data from the IWSR forecasts that total alcohol consumption will steadily increase over the next five years, to 28.5bn cases in 2023. In terms of retail value, the global market for beverage alcohol in 2018 was just over $1tn, a number which the IWSR expects to grow 7% by 2023 as consumers continue to trade up to higher-quality products. These figures – and more than 1.5m other points of data – are included in the just-released IWSR Drinks Market Analysis Global Database, which also shows:
Gin was the Leading Global Growth Category in 2018, and Forecasted to Reach 88m Cases by 2023
The largest gain in global beverage alcohol consumption in 2018 was in the gin category, which posted total growth of 8.3% versus 2017. Pink gin was a key growth driver, helping the category sell more than 72m nine-litre cases globally last year. In the UK alone, gin was up 32.5% in 2018, and the Philippines (the world’s large

st gin market) posted growth of 8%, fueled by a booming cocktail scene and premiumisation of the market. By 2023, the gin category is expected to reach 88.4m cases globally, with particular strong growth in key markets such as the UK, Philippines, South Africa, Brazil, Uganda, Germany, Australia, Italy, Canada and France. Notably, Brazil has emerged as a new hotspot for the categ ory, with volumes there more than doubling last year and forecasted to grow at 27.5% CAGR 2018-2023, as the gin-and-tonic trend has increased in upmarket bars of São Paulo and Rio de Janeiro.
Consumption of Whisky and Agave-Based Spirits Continues to Increase
Spurred by innovation in whisky cocktails and highballs, the global whisky category increased by 7% last year, driven in large part by a strong Indian economy (whisky grew by 10.5% in India, as consumers continue to trade up in the category). The US and Japan posted 5% and 8% growth, respectively. The IWSR forecasts whisky to grow by 5.7% CAGR from 2018 to 2023, to almost 581m nine-litre cases. Also, continued interest in tequila and mezcal (especially in the US), and innovation in more premium variants and cocktails, drove the agave-based spirits category to 5.5% global growth in 2018 – and is expected to post 4% growth over the next five years (2018-2023 CAGR).
Mixed Drinks and Cider Grow
The mixed drinks category (which includes premixed cocktails, long drinks, and flavoured alcoholic beverages) grew 5% globally in 2018. By 2023, it is projected that more than 597m nine-litre cases of mixed drinks will be consumed across the world. The growth is backed by continued strong gains in ready-to-drink (RTD) cans in the US an d Japan, the category’s two largest markets. In Japan, most RTDs are locally made and almost exclusive to Japan. Their popularity is partly due to the fact that they are relatively dry, which makes them more food-friendly and sessionable. In the US, the popularity of alcohol seltzers has been a tremendous engine for growth in the RTD market. In the cider category, as investment levels in those products continue to rise, almost 270m cases are expected by 2023, a 2.0% CAGR 2018-2023. Both of those categories (mixed drinks and cider) are taking share from beer as perceived accessibility increases (less bitter, easier to drink).
Vodka, Liqueurs, and Cane Spirits are in Decline
Vodka lost volume in 2018 (-2.6%) as the market for lower-priced brands continued its decline in Russia and the Ukraine (two of the largest markets for this spirit). Higher-priced vodkas, however, showed a more positive trend last year. Nonetheless, the outlook for total vodka over the next five years remains sluggish as the category is forecasted at -1.7% CAGR 2018-2023. Also in decline is the flavoured spirits category (liqueurs), which dropped by -1.5% globally in 2018, and is expected to continue to slip in 2019 before rebounding slightly in 2020. Cane spirits (primarily Brazilian cachaça) was down -1.6% last year, and is forecasted to lose another 4.5m cases by 2023.
Beer Continued to Lose Volume in 2018, but is Expected to Rebound
Global beer declined -2.2% in 2018, impacted greatly from volume decreases in China (-13%). Other large markets such as the US and Brazil also fell (-1.6% and -2.3%, respectively), while Mexico and Germany saw growth (6.6% and 1%, respectively). The future outlook for beer, however, paints a more positive picture, as the category is expected to show a slight increase in 2019 and post a 0.7% CAGR 2018-2023.
Wine Volume Declines, but Value Increases
Wine, which had posted strong global growth in 2017, lost -1.6% in volume in 2018 as wine consumption declined in major markets such as China, Italy, France, Germany and Spain (the US market was flat). However, though consumers are drinking less wine, they’re increasingly drinking better – pushing wine value to increase. Globally, the retail value of wine is projected at $224.5bn by 2023, up from $215.8bn in 2018. The one bright spot in wine volume is the sparkling wine category, which is expected to show a five-year CAGR of 1.17% 2018-2023, driven in large part by prosecco.
Low- and No-Alcohol Products on the Rise
Low- and no-alcohol brands are showing significant growth in key markets as consumers increasingly seek better-for-you products, and explore ways to reduce their alcohol intake. Growth of no-alcohol beer is expected at 8.8%, and low-alcohol beer at 2.8%. No-alcohol still wine is forecasted at 13.5%, and low-alcohol still wine at 5.6%. Growth of no-alcohol mixed drinks is predicted at 8.6%. (Above figures are all CAGR 2018-2023.)
Top Ten Performing Global Markets, 2018-2023
A look at the world’s fastest-growing beverage alcohol markets shows an emergence across a variety of developing countries. A combination of growing legal-drinking-age populations and healthy economies is driving some of this growth, which is expected to continue over the next five years. “Every year our analysts spend months traveling the world to speak with suppliers, wholesalers, retailers, and other beverage alcohol professionals to assess what is happening market by market in this fast-changing business,” says Mark Meek, the IWSR’s CEO. “The raw data we collect is enormously valuable, but equally important is what that data tells us in terms of trends, challenges, and opportunities facing the industry.”

When to bottle craft beer?

Craft beer which is available mostly in kegs is now moving to the retail shelf. A look at some of the compelling reasons.


As the craft beer demand continues to grow, the more successful craft beer produces have a happy dilemma when growing organically, is moving on from the first phase when the start-up microbrewery only kegs the beer to bottling beers. The margins created by retailing your beer instead of selling it wholesale have sustained the growth of microbreweries. This successful approach has succeeded in generating phenomenal growth in the industry.

Wholesaling only has downsides, mainly for those micro breweries that do not have their own direct chain of distribution. Those without direct distribution have struggled in the past and are the micro breweries most likely to disappear. Microbreweries without their own direct outlets are those that have tended to fail first over the years. The need to have a substantial distribution network was recognised immediately for example by BrewDog in Scotland, and Whitewater Brewery in Northern Ireland.

The important initial capital outlay required to open a microbrewery needs a rapid growth of sales and margins to sustain the business. You have to have a guaranteed high margin from your own distribution from the very start, or you will need deep pockets to sustain the start up from zero. Many of your clients will also want to enjoy their favourite beer at home or on a picnic. And you need to serve them, or they will buy their tipple from the competition. Therefore you need to satisfy this type of consumption by offering bottled beer, pretty soon after starting your brewery. Initially the quantities to be bottled are relatively modest – maybe only 500 or 1000 bottles at a time for each of your various recipes. Initially, therefore, the easy way, although an expensive way, is to contract bottle outside the premises. This seems the way to go. Contract bottling has many disadvantages and could eat into your margins because of extra logistics cost and scheduling. In-house bottling could be the solution. Bottling in-house requires generally more money than anticipated.

More and more fancy craft beer is also showing up in aluminum cans. Five years ago, just a few dozen craft brewers in the U.S. were canning, while today there are more than 500. The beer in a can cools faster. The can protects from beer-degrading light. Beer cans are portable and take up less space, advantages both for retailers and for consumers who want to take them camping, hiking or fishing. There’s also more space on a can for wraparound design and decoration.

While glass bottles take longer to cool down, they also stay cold longer once they come out of the cooler. Plus, glass producers and plenty of brewers will tell you translucent amber glass has been working fine to protect beer from light and air. The biggest selling point for the bottle, though, is flavour. There’s at least a perception that cans impart a metallic taste, whereas liquid stored in a bottle comes out tasting pure. The metal touching your lips is still a factor in terms of flavour, but most craft brewers suggest pouring out beer into a glass before sipping, whatever package it comes in. It may be coolness, or it may be convenience, but the bottom line is, cans are getting cheaper. Bottling in-house remains a simpler, cheaper process. The Brewers Association estimates just 3% of craft beer on the shelves is in a can. Sixty percent still goes out in bottles, and the rest is sold in kegs. Glass has been a very reliable package and tradition will prove itself well that glass is not going anywhere.

In India quite a few microbreweries plan to launch bottled beer brands to cash in on rising demand for India’s craft beer. So far, India has seen just a few craft beer brands such as Bira, White Owl and Simba, sold off shelves despite nearly 170 microbreweries that opened over the past decade. Karnataka government does not allow brewpubs to distribute in-house beer and are permitted to produce a maximum of just 1000 litres a day. Windmills Craftworks will start producing cans of craft beer from their newly-acquired 2000-litre production brewery in Goa. India’s craft beer industry accounts for 2-3% of the country’s beer market which is largely skewed towards the stronger version. The surge of interest in craft beer has been driven by millennials, many particularly interested in this form of beer that is more authentic, premium and has a complex flavour compared to regular lager sold by MNCs.

But making and selling craft beer at a larger scale isn’t easy. Besides licenses and distribution, brewpubs have to wrestle with cold chain supply infrastructure, short shelf-life of craft beer and smaller budgets compared to United Breweries, Ab InBev and and Carlsberg that together control 90% of the market. As a result, many are planning to roll out variants such as hefeweizen, stout and light golden ale – that can survive better in these tough conditions. And some are opting for pricier cans to package their products instead of glass bottles. Cans are lighter, unbreakable, carry more branding information, have little oxygen uptake and do not allow light to enter easily, unlike bottles. International craft beer brands can collaborate and set up bottling plants in India to retail now. Big commercial beer brands are also waiting, and will hop on the craft brewery segment in the next two-three years. Perhaps herein lies the opportunity for Praj, Krones, Alfa Laval and KHS.

Australian Wine Exports Continue To Grow in Value

With premiumisation on the rise value of exports is going up.
The total value of Australian wine exports increased by 5% to $2.78 billion in the 12 months to March 2019, with the average value per litre climbing to $3.41, the highest level since 2009. Wine Australia Chief Executive Officer Andreas Clark said that the continued growth in the value of exports was an extremely positive trend for the sector.

Mr Clark said that while the volume of exports had declined slightly by 3% to 814 million litres (90 million 9-litre case equivalents), the increasing value overall and on average was overwhelmingly positive. “What we are seeing is a drop in volumes in the lower value categories and this places Australia well as the global consumer premiumises and drinks less but more expensive wines,” Mr Clark said. In the China market we have grown our value again and we are outperforming competitors, with the Global Trade Atlas figures showing that in the year ended February 2019, Australia had a 29% share of the imported wine market – up from 26% a year ago

“We are also seeing positive trends in the USA off-trade market where sales of Australian wine grew 3% in value to US$521 million in the year ended December 2018. Even more encouraging is that Australian wine priced above US$15 per bottle has also grown by 3% according to market monitor IRI Worldwide.” Mr Clark said Australian wine supplies would remain tight in the short term with much of the 2018 vintage yet to hit the market and the expectation that 2019 vintage would be below the long-term average. In the year ended March 2019, there was robust growth in most price segments (see Figure 1) with exports in higher priced categories recording the most significant growth, reflecting global premiumisation trends. In the 12 months to March 2019, the value of wine exported in glass bottles increased 3% to $2.22 billion and decreased in volume 5% to 355 million litres (39 million 9-litre case equivalents). The combination of the increased value and lower volume means that the average value of bottled wine increased 9% to $6.24 per litre FOB, a near-record.

Other packaging formats include soft pack, which increased 12% in value to $15 million and 9 per cent in volume to 7.7 million litres, and other alternative packaging, which decreased by 2% in value to $6.2 million and 10% in volume to 964 thousand litres. Shipments of unpackaged wine increased in value by 11% to $541 million and decreased in volume by 2% to 450 million litres (50 9-litre case equivalents). The average value of unpackaged wine exports increased by 14% to $1.20 per litre FOB. Nearly all destinations imported more Australian wine in the year ended March 2019 than the previous period. North America is still the exception, with excellent growth in exports to Canada unable to outweigh the decline in exports to the United States of America (USA). The regions in growth are: • Northeast Asia, up 8% to $1.2 billion, • Europe, up 3% to $612 million, • Southeast Asia, up 7% to $170 million, • Oceania, up 15% to $107 million, and the Middle East, up 16% to $32 million.

Australian wine exports to China (including Hong Kong and Macau) increased by 7% in value to $1.11 billion and decreased by 14% in volume to 154 million litres (17 million 9-litre case equivalents) in the year ended March 2019.

The volume decline in the China market is confined almost exclusively to exports in the below $2.50 per litre value segment, reflecting both a tightening of Australian supply in this segment and also the increased supply availability from competitors such as Chile. There were 2603 active exporters in the period, a 16% increase from the previous year. During the year, 1786 companies either started exporting or increased the value of their exports, contributing $374 million to the growth in overall value. This growth was partially offset by 1328 exporters whose export value decreased or they ceased shipment altogether; their exports declined by $246 million.

Volume and value growth rates by exporter size illustrate largely positive performances (see Figure 3). While volume decreased by 4% for the largest exporters (those exporting more than 100,000 9-litre case equivalents), all other exporter segments showed healthy growth rates in both volume and value, with the smallest exporters exhibiting the strongest growth.

Scotch Whisky makes strong Economic Impact

With the Brexit debate dominating British politics, the fate of Scotch, the money spinner for Scotland will be closely watched.

The Scotch Whisky industry is strategically important to the economies of Scotland and the United Kingdom. This report – building on work by the Centre for Economics and Business Research (CEBR) – explores Scotch Whisky’s direct contribution to GVA, international trade, employment, supply chain and revenue through excise duty. The contribution of the Scotch Whisky industry to the UK economy has grown by 10% since 2016 to £5.5bn.

A new report by the Scotch Whisky Association, building on research carried out by the Centre for Economic and Business Research (CEBR), also reveals Scotland’s national drink generates two-thirds of all spirits Gross Value Added (GVA) in the UK. The industry has been buoyed in recent years by record exports, reaching £4.7bn in 2018, and several new distilleries beginning production and opening their doors to tourists.

This success comes despite the industry continuing to pay the fourth highest duty rates in the EU, and one of the highest of spirit producing nations globally. Recent freezes to UK duty have helped the industry to reinforce its vital importance to the UK economy. Karen Betts, Chief Executive of the SWA, said:“This research shows the huge contribution that our industry plays to both the Scottish and UK economies.

“Significantly, the research shows that our industry’s GVA increased by 10% to £5.5bn between 2016 and 2018, as a result of Scotch Whisky companies’ continued export success and the industry’s consistent investment – over £500 million in the last 5 years – in production, distribution, marketing and tourism.

“Despite the challenges of Brexit, this is investment that continues to flow, with more projects planned and more distilleries set to open – a sign that the Scotch Whisky industry remains confident about the future. This is great news for our many employees, our investors, supply chain and, of course, for our consumers all over the world, who love Scotch. “This report also highlights the high rate of domestic tax that Scotch Whisky faces in the UK. In the US, Scotch and other whiskies are taxed at just 27% of the rate that HM Treasury taxes us here at home. We will continue to press the Chancellor for fairer treatment of Scotch Whisky in our domestic market, which reflects the vital economic contribution the thousands of people who work in whisky make to the UK economy every day.”

Scotch Whisky provides £3.8bn in direct in GVA to Scotland – helped by regulations in place that requires all Scotch Whisky to be distilled and matured for at least three years in Scotland. This means Scotch Whisky contributes more than double than life sciences (£1.5bn) to the Scottish economy, supporting more than 42,000 jobs across the UK, including 10,500 people directly in Scotland, and 7,000 in rural communities.

The sector was found to perform a crucial role in driving productivity across Scotland. The manufacturer of beverages in Scotland – dominated by Scotch – produces £210,505 GVA per employee. Comparatively, the industry is more productive than the energy sector (including renewables) at £173,511 per head, life sciences at £93,735 per head, and creative industries at £60,712 per head.

Exchequer Secretary to the Treasury Robert Jenrick MP said: “I’m delighted to see how this important sector is thriving. “We are supporting the Scotch whisky success story by freezing duty on spirits again this year. “Our record of reductions and freezes to alcohol duties have provided more than £4bn of support to the drinks sector here in the UK.” Rural Economy Secretary Fergus Ewing MSP said: “I welcome the contribution that the Scotch Whisky industry makes to the Scottish Economy. “The industry’s performance is testament to the hard work of those who work in this important sector, making Scotch Whisky one of Scotland’s greatest global exports.”