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Bacardi’s strategy for category growth

Last year, Bacardi embarked on a category strategy for growth in travel retail based on passenger research. Mike Birch, MD Bacardi GTR, provided an update while at the TFWA exhibition in Cannes

Mike Birch Bacardi Global Travel Retail

"Our strategy for growth in travel retail markets was underpinned by huge investment into bespoke world class traveller research targeted in unlocking barriers to purchase. We developed a specific category vision against traveller missions to understand the biggest opportunity areas. We then aligned all of our brand/ portfolio initiatives with a clear platform to grow the category and to unlock new shoppers & new occasions. Premiumisation, advocacy and enhanced visibility across our core categories are the pillars to our ambition.

"Vodka is the second largest driver of spirits and growing Vodka will deliver total spirits growth.  In 2013 Vodka grew three times faster than spirits and three times more than its fair share. It delivered US$17m YOY. Super premium vodka grew the category +30% – Grey Goose being the main driver delivering over two-thirds of all vodka growth.

"Gin is a relatively small category with 3% value share, however is growing three times more than total spirits and is growing more than four times its fair share. Bombay is clearly the top brand in value and volume delivering over 42% of the category growth.

"Rum is performing behind the domestic market. It is the third largest spirits category representing 12% globally in domestic markets. However, it has only a 5% share of spirits in global travel retail. Additionally, 16% of sales are high value/premium+ compared to 70% total spirits. As market leader we will lead the category into growth through premiumisation and shopper education and communication.

"Bacardi is a sleeping giant in whisky with a strong ambition, supported by significant aged inventory, growth capacity and market leading shopper research investment. 

"We are presently the No.3 Scotch whisky player globally with our portfolio of Dewer’s / William Lawson’s /Malts (IWSR 2013 value). We are the No.1 Scotch brand in US domestic (Dewar’s White Label, volume); No.1 Scotch whisky company in Russia domestic (value) with William Lawson’s; No.1 whisky in Russia domestic (value) – the fastest growing whisky brand worldwide; and No.4 malt producer worldwide (production capacity basis)."

Malts Segmentation research

"Over the past two years we have heavily invested in shopper and consumer research to understand the growth potential of the category.

"We know that many shoppers are moving into the second stage of luxury wanting lesser-known brands, with strong quality cues for their whisky choices. Stage one is still important in offering the well known brands however stage two is where the incremental growth can come from.

"Malts support the emerging second stage of the luxury trend with ‘discovery malts’ growing twice as fast as mainstream, and we estimate that by 2015 half of the Scotch growth will come from malts (particularly discovery malts).

"There are three drivers that these second stage luxury shoppers need:

  1. Age statements
  2. Assured quality standards (e.g. Gold award)
  3. Engaging brand stories for them to share with friends at home i.e. ‘’show they know’’, ‘’did you know…’’

"The Bacardi portfolio will unlock this incremental category growth in three ways:

  1. Activating the second stage of luxury through permanent merchandising: The John Dewar & Sons Fine Whisky Emporium
  2. We will launch innovation bringing additional age statements in 15 and 30 years as well as additional craftsmanship in 12 years. We will launch the Last Great Malts range through five brands: Aberfeldy, Glen Deveron, Aultmore, Craigellachie and Royal Brackla
  3. We will drive advocacy and engage shoppers with the John Dewar and Sons portfolio, through a tasting flight experience of different ages, which is guaranteed conversion of a higher age statement

"To summarise, it's an immensely exciting time for Bacardi in travel retail right now. This year, we've already launched a stronger stream of innovation than ever before to further drive our performance across the category and we have further original launches to come.

"Everything we do is inspired by our insight programme and is not simply about creating ’new news’ for the sake of it but is designed to deliver genuine change and growth for the category, actions that truly resonate with the consumer. 

"The results seen so far from this strategic approach have been stunning and we're especially proud of how Grey Goose VX and the single malts are performing, particularly as customers and shoppers have responded so enthusiastically and are eager to see more from us.

"Innovation in its broadest sense will accelerate in 2015 with our range developments and new products, including further consolidation of our rejuvenation of the whisky category. We'll be delivering creative retail and advocacy solutions for airports and other markets, including cruise, to deliver category growth as we engage with shoppers and educate them by sharing the unique personality and engaging stories behind each of our brands, especially in complex categories such as rum and malts. The John Dewar & Sons Fine Whisky Emporium is a prime example of how we can bring the brands and consumer together in a new way with an experience specifically tailored to consumer needs."

10 November 2014