Delighted to share my recent interview with Alasdair – it’s very transparent, informative and inspired in many parts. We cover key spirits market trends, premiumisation, SGS’s curated approach to immersive shop-in-shop boutiques and activations, the state of the current market for Scotch, the performance of key brands like Laphroaig and Bowmore and sustainability. Importantly, and in spite of current market conditions, the company continues to invest in driving all its brands, with an emphasis on Maker’s Mark and Hibiki this year – strategically identified as key growth brands. Hope you enjoy the read.
Peter Marshall (PM): Alasdair, welcome to TRunblocked.com. Let’s kick off this conversation by first asking you what you see as the key trends in the spirits business currently. Is there anything other than premiumisation and experience-driven shopping for you?
Alasdair Dickinson (AD): Thanks for having me here, Peter, it’s always a pleasure. We are seeing a few new current trends coming through on top of Premiumisation and experience driven shopping. This includes some polarized consumer spending coming to the fore with 56% of sales coming from entry level and prestige categories – highlighting a shift towards both affordability and indulgent consumption.Purchasing has also started to shift from gifting to self treats, with strong engagement amongst both new and high spending customers. This should open up a new raft of opportunities to engage new shoppers and new purchase motivators into the channel.
PM: But premiumisation is evolving for you, isn’t it? It’s not just about pushing expensive products. What’s the Suntory Global Spirits perspective?
AD: Correct, premiumization isn’t about just pushing expensive products or increasing the price. It’s about the whole shopper journey, from the experience we can give them in store, the engagement they have with our BA’s and our ability to drive increased ATV through engaging brand stories, having the right assortment in the right locations and also ensuring we are at in tune with what our shopper is looking for in terms of range, pricing and gifting. Premiumization has many facets and it’s important we take all of them into account. Not just price.
PM: Developing the experience-driven element, you are investing heavily in immersive shop-in-shop concepts, branded activations and digital displays. Please walk us through a couple of examples of each that demonstrate how your approach differs from what we have seen before.
AD: I’d like to share 2 examples, one our recent House of Suntory Boutique we have opened in Hainan with CDFG and also our multi brand experience we have just opened with Ospree Duty free in Mumbai.
I’ve highlighted these as they are 2 very different approaches to a shop in shop/boutique experience. In Hainan, we are intensely focused on storytelling through experience, with sampling, exclusive aged expressions and a secret sampling bar all part of the experience. We are using this location to help build the Japanese whiskey category and expect high dwell times and an outstanding shopper experience. I would want the shopper to have the same experience in this boutique as they would get in a high end luxury fashion boutique.
The second example is the multi-brand approach we have taken with the opening of our largest ever GTR shop-in-shop at Mumbai airport. For this, as stated, we chose a multi-brand, cross category concept designed to showcase the entire breadth and strength of the portfolio. The idea here is that a shopper can find it easy and enjoyable to find everything they need in one space. This space will be animated regularly, depending on the season and campaign that we run. This gives us the opportunity to flex our diverse portfolio and give the shopper a new experience every time they pass through the shop-in-shop.
We have a strong commitment to curating spaces that cater for the needs of the shopper and working closely with our key retail partners to ensure we are listening to them and creating spaces that are fit for purpose for their shopper.
PM: So there’s clearly no cookie-cutter approach, is there?
AD: Absolutely not, Suntory Global Spirits prides itself in partnering closely with retailers and really trying to understand what is required in each location space. A great example of this is at Changi, where we have opened 2 shop-in-shops for House of Suntory (Terminal 1 and Terminal 4). Both of these locations, although there are some common themes showcasing House of Suntory, are also designed in different ways to engage the shoppers coming through each space – because we know the shopper demographic will be different. Whereas T1 is slightly more intimate in space and perfect for luxury shopping the T4 space is a larger experiential zone allowing us to really story-tell and showcase and introduce Japanese spirits to our shoppers – including a large movable bar for sampling experiences and gifting.
PM: They are excellent executions. Moving on, it’s been a tough 12 months for many players and I suspect we will see a lot of closures or takeovers of smaller businesses as the year progresses. Like others, Suntory has been affected, but to a lesser degree. Trumpian Tariffs do not ease the load. But here you are, actively investing in Maker’s Mark and Hibiki this year- strategically identified as key growth brands for you. Just walk us through what you are showcasing here at TFWA Singapore and the activities around each of these respective brands.
AD: A tough 12 months for the market indeed. But for Suntory GTR the past year has been one we are very proud of, and the recent IWSR results have been favorable. With Hibiki and Makers, as you correctly state, these are brands with huge potential and ones that SGS will be focused and investing on in the coming years.
For Hibiki we will be rolling out the brand as the crown jewel of gifting. We see huge potential in this space and want to ensure Hibiki is the token for special occasions via our art of gifting program, which is coming to the GTR market very soon. As a brand where historically our investment levels have been relatively lower scale, I’m really excited to see the full potential being unlocked through these campaigns and our ongoing commitment to boutiques and shop-in shops.
For Maker’s Mark, expect to see something a little more disruptive and bold. We have the opportunity to have a lot of fun with a brand that is steeped in character and history but also has a unique personality that many shoppers and consumers (including myself) fall in love with. If I reference Changi specifically, we will be travelling to the U.S soon with the Lotte team to specifically select some casks to roll out the entire Lotte estate as part of our City Specific customization. So keep a close eye out for that coming round the corner in 2025.
PM: Ok, so let’s move onto Scotch. What ‘s happening in the marketplace is that it has clearly polarised. The higher-end whiskies are holding their own – I’m not including rare and fine whiskies here, which are not – and the lower-priced value brands are also doing well. Everyone in the middle-priced range is feeling the pinch. And it’s hurting many – especially those companies that have no other spirits interests, like gin or vodka. How are your brands like Bowmore and Laphroaig affected?
AD: I’d be lying if I didn’t see we hadn’t felt the pinch in the overall decline in fine and rare Peter, although we are seeing some turnaround and are actively investing into shopper engagement and digital media to accelerate this price segment again.
However, Bowmore and Laphroaig have been incredibly resilient. Bowmore gained 1st place in the IWSR ranking this year and both malts remain in the top 10, with Laphroaig also gaining market share. We have really doubled down our focus on Bowmore, being relentless on our execution and shopper engagement and it’s really paying off. Out of the top 10 single malts in GTR, Bowmore has the strongest 5yr historical CAGR, growing at 14%. I’d attribute a lot of this to the aforementioned focus we have on perfecting our execution, including our BA storytelling, ease of access to shopper and experiential activations. All of which have added to our success.
PM: And so to sustainability. Your Proof Positive strategy has highlighted important achievements like peatland restoration and regenerative farming. In difficult economic times, how do you prioritize between environmental impact, cost and business growth when these goals can often conflict?
AD: A fine balance needs to be adopted, Peter, but our strategy sits at the core of the Suntory DNA and we recognize that sustainability is not just a responsibility but a strategic imperative. In challenging economic times, we prioritize our Proof Positive strategy, which focuses on significant environmental initiatives like peatland restoration and regenerative farming. To balance environmental impact, cost, and business growth, we adopt a two-fold holistic approach:
Integrated Decision-Making: We ensure that sustainability considerations are integrated into our business strategies and decision-making processes. This means evaluating projects not only on financial metrics but also on their environmental and social impacts.
Long-Term Vision: We understand that investments in sustainability can lead to long-term cost savings and brand loyalty. For example, practices like regenerative farming can enhance soil health and yield, ultimately supporting both the environment and our supply chain resilience. Reference James B Beam Distilling and Berheim
PM: Just developing this point, how does Suntory measure the impact of its sustainability measures, such as your responsible drinking campaigns or important replenishment projects beyond internal reporting and marketing claims?
AD: Suntory employs a variety of metrics and methodologies to measure the impact of our sustainability initiatives beyond internal reporting and marketing claims:
Key Performance Indicators (KPIs): Here we establish specific KPIs for each Proof Positive Pillar and, such as the reduction in alcohol-related harm for our responsible drinking campaigns or the amount of water usage rate at our own operations. This data is collected, analyzed, and reported to gauge effectiveness and inform future strategies.
Stakeholder Feedback: We actively seek feedback from consumers, community members, and other stakeholders to understand the real-world impact of our initiatives. This qualitative data complements our quantitative measures and helps us refine our approach going forward
PM: And what of packaging and bottle weight? What new, sustainable actions have you taken in this respect?
AD: Suntory is committed to reducing the environmental impact of our packaging and bottle production through several innovative actions:
Rightweighting: We have made significant progress in reducing the weight of our bottles without compromising quality. This not only decreases material usage but also reduces transportation emissions. Recently Sipsmith went through a right weighting exercise. https://www.thespiritsbusiness.com/2023/10/sipsmith-unveils-sustainable-redesign/
Recyclable and Renewable Materials: We are increasingly using recyclable materials in our packaging and exploring the use of renewable resources, such as plant-based plastics, to minimize our reliance on fossil fuels. Laphroaig new cartons
Circular Economy Practices: We are implementing initiatives that promote recycling of packaging materials. This includes partnerships with recycling programs and encouraging consumers to return bottles, thereby reducing waste and promoting a circular economy.
Suntory and Workwell Industries: https://www.glassonline.com/workwell-industries-launches-recycwell-initiative/
PM: If you draw all the strands together, Alasdair, if there are three things you want to share with our readership, what would they be?
AD: Keep pushing the boundaries when it comes to experiences for our shoppers. We have some of the most incredible opportunities to engage our shoppers, but we know the next generation will need us to take a different approach. We don’t settle for what we have done in the past and expect the same results. Be bold, embrace new technology and move our channel forward together.
Keep faith in our wonderful channel. There is so much positivity and investment around GTR, that even when the overall economic landscape is tough, we need to think much further out and not make short term decisions. Keep investing into new initiatives, keep innovating and keeping the channel exciting and have faith that we have the brands and the talent to overcome anything that gets thrown at us. If this resilient channel can bounce back from COVID, we can do anything.
We need to get better at sharing our sustainability initiatives, there are so many wonderful initiatives being used across our channel and I’m sure we can learn from each other every step of the way.
To subscribe free, please enter your email address:
