“Travel retail represents a ‘one-two punch’ for us. It’s a great showcase for our brands, an exciting channel in which we can target the most desirable shoppers in the world; it’s also a profit driver – it’s a region in itself and a top six market.” Marketing Director Global Travel Retail Eric Helms signals just how vital travel retail is to Brown-Forman as the company prepares to celebrate 20 years in the business at TFWA World Exhibition next week.
As reported, senior executives from the group will visit the Cannes show, where Brown-Forman will reveal an updated product range – including Scotch and Irish whiskies alongside its America whiskey portfolio – and a new-look stand.
The event marks two decades since executives at corporate headquarters in Louisville, Kentucky, decided to formally engage in the global travel retail business in 1996. At the time, veteran duty free executive Richard Ferne was hired to spearhead the company’s development in the channel, with other far-sighted leaders such as Patrick Moran and Jim Perry following as the Jack Daniel’s owner built a powerful presence among the world’s airports.
Until that point, almost all of Brown-Forman’s business was in the USA. Twenty years later over half of its sales are now overseas, with travel retail making a strong contribution.
Helms, who was appointed to his new role in April, says: “For Jack Daniel’s alone, it has been a great story of growth. The brand was ranked number 20 (by sales) in duty free when we began dedicating resources to this channel, and now it is number two worldwide.”
Jack Daniel’s Old No. 7 is the core of the American whiskey range but travel retail offers the opportunity for experimentation and up-selling to consumers, a critical aspect, notes Helms. “Because of the level of shoppers that go through these outlets and their desire for more premium items – from our Jack Daniel’s Sinatra expressions to Jack Daniel’s Gold – the earnings per case in duty free climbs compared to the core brands. That is enticing for us and we value the channel therefore very highly.”
His comments come amid a tough period for the global business – it appears that total spirits & wines sales in travel retail will decline for the second year running in 2016, with Brown-Forman also affected.
In the last financial year (to 30 April 2016), the company’s underlying net sales in travel retail decreased by -12% (-18% reported). Those results were “pressured by the decline in spending from travellers, as well as continued volatility in foreign exchange, which resulted in weaker consumer demand and a reduction in the historic price gap between travel retail and the local economy,” stated the company in its results.
However, the picture has brightened since. Helms says: “Underlying net sales are up about +12% year to date in duty free. Part of that comes from comparisons with a down quarter a year prior but it is still very positive. On top of that, despite the challenges of the strong Dollar and new passenger dynamics, Jack has continued to climb and performed [ahead of] other brands in the top ten.”
“Premium lines such as Sinatra and Gold (the latter aimed principally at Asian travellers) continue to perform. We have found that Jack Daniel’s Tennessee Fire has also added scale. It turns more rapidly even if it doesn’t earn as much per bottle as other premium lines, but it does introduce new consumers to the trademark who might not have come through Old No. 7.”
The American whiskey business will be a big focus of investment in the months ahead, as the company seeks to “ride the wave” of the Jack Daniel’s distillery’s 150th anniversary, notes Helms, with some key goals in sight in travel retail.
“We want to get our assortment and visibility right in key outlets to drive results for our retailers. We want to secure permanent space where we don’t have it, and to brand it well. Having that allows us to drive engagement with our core shoppers 365 days a year and we haven’t always been able to do that. Tied to that will be activity around Woodford and Old Forester, expanding those on the back of Jack Daniel’s.”
Helms adds: “We will also be thoughtful about how we launch our new ranges in duty free. The new Scotches are there already so we need to ensure we don’t interrupt the distribution but also maximise their presence. We are thinking about how we push (new expression) Coopers [soon to appear in US duty free -Ed] forward but for this year the plan is two-fold: Jack Daniel’s leading our American whiskey discussion and getting it right with our Scotch and Irish ranges in the channel.”
The next wave of in-store investment will be highly selective, with a focus on hitting the right audiences in the high-volume airports.
Helms notes: “The strategy today is all about being focused. All of our leading customers and airports are onboard and we’ll be doubling down on those big strategic airports worldwide, though of course our marketing push will be across the channel. We want to make sure we get it right at certain select airports and attract the most desirable shoppers.”
To maintain the Brown-Forman momentum in travel retail means deepening retail partnerships in an era of consolidation and ensuring the digital engagement with the consumer is effective.
Helms says: “We have made tremendous strides in how we relate to consumers. 20 years ago we were trying to understand the channel, now we have fully embraced it. Jack Daniel’s has gone from 20th to second place in the sales rankings in this category in our channel. That’s partly down to the foresight of the company in Louisville but we haven’t done it by ourselves; our retail partners have been key. We have been able to plan out programmes with them, hearing what they have achieved and what their expectations are, and then bringing to life the brands in partnership with them. We have come a long way but there is more to do, especially as some of these retail customers consolidate and enhance their own internal marketing. We need to make sure we align with those as much as possible.”
He adds: “We are happy with retailer consolidation. We believe that as the major retailers expand their presence in more airports, it facilitates our sales and we can improve our presence with those strong relationships. We are as focused as they are. That [consolidation] won’t change how we resource internally but it may change how we focus brand-wise in particular outlets. We need to be absolutely targeted in scoring with the right brands in the right locations through the right kinds of promotions, tailored for each retailer.”
Digital reach will assist that drive. “There are two aspects to this,” notes Helms. “One is our engagement with the consumer, through our experiential work in the store, enabling them to feel as if they have been in Lynchburg itself and really savoured where we come from. We are excited about the experiential spaces we can create to do this in travel retail.
“The other is the commercial side. It’s about inserting ourselves into retailers’ marketing strategies at a time when they are focused now on pre-purchase. There is more decision-making about purchasing among consumers before they come to the airport. So it’s about how retailers advertise and use their digital tools to reach those consumers who are planning their trips and purchases. We want not only to drive impressions but make sure our brands are top of mind when they do that.”
Looking ahead, what does Helms see as the big priority for the business in this channel?
“We want to figure out how best to bring American whiskey to life. That means being smarter in how we promote, not just relying on price and discounting, but also adding value, tapping into the digital purchase opportunity and ensuring we play with specific SKUs or liquids for particular outlets that suits the shopper profile there.”
And all of that will resonate at Cannes next week.
“We’re going to anchor on our whisky expertise at Cannes this year. We will lead with an American whiskey discussion but we’ll acknowledge the growth of single malts and Irish, about which we have great stories to tell. We’ll be sampling Slane Castle as well as talking about our three distilleries in Scotland, BenRiach, GlenDronach and Glenglassaugh. We’ll present a balanced conversation at Cannes about our portfolio.
“It is special too because it’s a year of anniversaries for the company. We mark 20 years dedicated to global travel retail but we are also celebrating 150 years of the distillery in Lynchburg, 20 years of Woodford Reserve and 70 years of our cooperage. We have a lot to talk about in the channel. Cannes 2016 will be one of our most exciting shows yet.”
Note: Brown-Forman will host only its second ever Cannes press conference next week, on 3 October. There, Brown-Forman Vice president and Managing Director for Global Travel Retail Marshall Farrer and Old Forester President Campbell Brown will discuss plans for the business.
Farrer and Brown joined the Brown-Forman Board of Directors this year and are members of the Brown family. They will be joined in Cannes by their cousin, Robinson Brown, Brown-Forman’s Regional Director India, Middle East and Africa. All three are among the fifth generation of Brown family members to work at Brown-Forman. Brown-Forman was founded in 1870 by George Garvin Brown, their great, great grandfather.
Also attending the news conference will be Billy Walker, Master Distiller for BenRiach, GlenDronach, and Glenglassaugh distilleries, Alex Conyngham, founder of Slane Irish Whiskey, and Chris Morris, Brown-Forman Master Distiller and recent inductee into the Whiskey Hall of Fame.
