Taking Stock. Ian McLernon, CEO – EMEA, APAC & GTR, Rémy Cointreau On The State Of The Industry and Rémy Cointreau’s Place Within It. The Future Is Positive.
18 minutes read
Introduction by: Peter Marshall
This is one of the interviews of the year on TRunblocked.com. I chatted at length with Ian at TFWA Cannes. As ever, he speaks very directly about the travel retail channel and the challenges and opportunities it provides.
And these are challenging times.
The scope of our interview is broad – industry dynamics and what can be changed – here Ian is quite provocative – as well as cover Rémy Cointreau’s success stories to date, the company’s strategy for the next 18 months, new products, sustainability, No/Low Alcohol, RTD’s and, of course, talk through the brand portfolio in detail.
Ian is quite clear about the direction the company must take: “I think we need to be one of the pioneers. We need to be more agile, we need to regain market share, and we need to be a bit more radical in our thinking and also be more grounded in the basics”.
Expect things to happen.
Peter Marshall (PM): Ian, welcome back to TRunblocked.com. It’s really been quite a tough time for the Spirits Sector hasn’t it? But there are some silver linings coming through, though. Can you briefly walk us through your take on the current business dynamics?
Ian McLernon (IM): Great to see you, Peter, and here’s to a successful Cannes, which appears to be very busy after the traffic we saw in the Palais and on our Rémy Cointreau stand. Our schedule suggests we will set a new record for guests to our stand this year, and TFWA Cannes remains the one key event for us to meet with our TR and also Domestic partners.
I am positive about GlobalTravel Retail as a channel that can be a relay of growth for the spirits category and for Rémy Cointreau into the future. We have only just recovered from the pandemic pax declines, however the fundamental challenges for TR remain and, in fact, are more magnified. For example how do we get passengers into the stores (penetration) and convert browsing (conversion) into a physical transaction.
For spirits I believe this is imperative, as we as a category have lost some ground to P&C and Fashion, where brand-led personalisation and higher levels of well trained staff are the norm.
TR is a show window for spirits brands, where we can build awareness, provide access to a wide range of products and animate through staffing and sampling in a way that off premise retailers rarely offer. And ultimately as we can sell our products We also see a major opportunity in developing the spirits offer in food and beverage outlets airport lounges and cruises and that we will increasingly work with our partners to maximise the opportunity.
PM: So how, exactly, is Rémy Cointreau adjusting its travel retail commercial strategy for the next 12 to 18 months, particularly in Asia and the US?
IM: We want to – and will – work with our retail partners to drive penetration and conversion as our raison d’être. And with our unique portfolio of exceptional spirits we can help maximise average transaction value. All of our merchandising (which was visible in our stand) is designed to deliver these 2 objectives and we want to work with our partners to accelerate this and help drive shopper excitement and satisfaction and ultimately value in the spirits category.
Travel Exclusives and Limited Editions are increasingly important in creating excitement for travellers who discover brands and expressions that are only available in travel retail, and you can see this across our portfolio. Trust me, price is not the only differentiator and value can also be manifested in shopper satisfaction and/or excitement by discovering a new expression or exclusive product that they can add to their collection.
PM: Staying on strategy, how is Rémy Cointreau leveraging AI and digital solutions for more personalised and seamless travel retail experiences, and what results have been seen from these efforts across key hubs like Changi and Charles de Gaulle?
IM: I am always impressed by Changi from the last two times I went through its touchless. It’s a very seamless experience. I still think allowing people to spend more time in retail at the airport is a good thing. You know, the stress point is when you have long lines.
PM: I agree. The operations side is very impressive there. Because of their efficiencies, the dwell time in departures is definitely improved by at least 20-25 minutes.
IM: Yes. The last time I was there we had the robot making cocktails. I remember posting it on Linkedin, you may have seen it.
PM: I did, and made a somewhat tart remark.
IM: You did, I remember. Well, it was really interesting, and I think it caught the attention of 12000 people within the sector on Linkedin. And I think we need to do more things like that, to animate.
It’s the same again in Charles de Gaulle. The retail offering is constantly evolving. I don’t fly through CDG that often, but the last time I was there I was really impressed by the look of high end fashion and wines and spirits. It feels closer to boutiques than to big retail concepts. I think the fact that they’re keeping brands separate is a good thing.
And then the other point is that we have just recently started working with Air France and their Première lounge, where we’re doing tastings with LOUIS XIII for their top clients. For me, I think lounges are still a big opportunity, where you have an intimate moment with the right people in a smaller environment to be able to introduce and educate about our brand.
PM: I have to say that I think your activations really do stand out. Do you have any results that you can share of any of your activations, such as the immersive Rémy Martin pop-up celebrating the brand’s 300th Anniversary in Paris, or the one for Bruichladdich?
IM: For us the 300 Years was a big moment. I don’t think you or I would be sitting here in 300 years unless something changes in technology or medical care. But I think for travel retail, I was really proud of the animations we created. And what we had in CDG was stunning. The results were equally impressive. You always assume that, when you do big animations, you might not get a return on your investment. We had high quality traffic, but what we saw was that we were also able to track who the consumers were and who was buying the product.
And on the Coupe 300 travel retail activation, we attracted a lot of African and American consumers. These were the two major areas of consumers. One would assume that it would be more Asian, but it was actually more African, withNigerian and South African in particular.
It felt to us that we were actually getting closer to the consumer. We see new consumers / nationalities coming into the cognac category, which is good as well. You’re not so reliant on the Chinese consumer that perhaps would have been there more in the past.
And if we look at the other animations, we’re indeed very proud of our activations on Bruichladdich. I think in terms of the aquamarine colour we are able to drive distinctiveness and standout.These types of animations are playful and, I think, catch attention. And, again, it’s all about driving people into the store and then hopefully driving through to purchase.
But the one that worked the best was Cointreau’s City Editions. So here we’ve enjoyed real success with limited Cointreau editions. And, again, there’s something more that needs to be done with personalisation. And this is where technology can be the enabler to help us do things that would have been super expensive, or would have required large minimum runs in the past. I think we can do things far more personalised. We have some adaptations of luggage tag, for example, where we’re able to print labels in the stores in an airport. Such personalisation is important to the traveller, I think. They want something unique.
PM: You’ve also done something along similar lines on Metaxa haven’t you?
IM: Yes, Metaxa is a regional hero brand within our portfolio focusing on Europe., it’s the number one brand for us in many markets: Poland, Czech Republic, Greece (obviously the home market) and Germany. In each of these markets the common industry denominator is that they are difficult markets – yet we are able to grow market shareWe have launched a Metaxa RTD over the summer and we’re really pleased with the results that we see.
But the intrinsic and very essence of the brand is that it starts with really good quality liquid. And that is what you get from all of our brands – we believe the quality has to be of permanent importance. There are no shortcuts in terms of how we do it.
PM: Just staying on RTD’s, you also recently launched Cointreau Citrus Spritz. Is this the beginning of a chain reaction for you with other inspired cocktail mixes?
IM: I think that the Spritz occasion is clearly a big moment in many markets. It was launched in the US first in domestic, and we’ll be launching in the UK and other markets when we’re ready. It’s about taking our time. You test and learn with these types of concepts to see whether the proposition is understood and works. You can test all you want with market research, but the best market research is launching to market. And I think that, for Cointreau, it will bring new consumers to the brand.
Ready to drink or ready to serve? What we are trying to do is replicate the bar quality experience at home and make it as convenient as possible. These are cocktails in a pack that you can enjoy at home as you would in your favourite bar.
PM: You’re clearly looking for real growth there, aren’t you?
IM: We see it as incremental and I think it’s a new way to recruit younger, legal drinking age consumers.
PM: OK, let’s move onto LOUIS XIII, your signature luxury spirit and the brand that, arguably, has been hit the hardest. Now, with premiumisation continuing to drive the spirits sector, how does Rémy Cointreau balance inclusivity alongside high value positioning for luxury SKU’s in airports and duty free to counter the challenging headwinds that you are facing? Yes, there’s some good news for you on tariffs in China, but the key question remains: what’s the plan?
IM: We have a very clear plan which, if you’ve seen from today, the very first thing you see from the outside of our booth here in Cannes is the Mathusalem 6 Litre Decanter of LOUIS XIII.
Louis XIII is our priority number one within travel retail. And, as you enter our booth, you see the classic – the 70cl Decanter of LOUIS XIII.
We’ve also created some limited editions in terms of being able to personalise – whether for airports or for cities where you can have the coffret embellished with gold leaf, for example.
But, to answer your question, in terms of the future, we genuinely believe that Louis XIII is more than just alcohol, it’s more than a spirit. It’s an experience. But it needs to be done the right way, which is consistent execution that needs to be the best. To do that, we need to have the right space and location. We need to have the right people who are trained. Again, you will see here that the investment we’re making on LOUIS XIII is about making sure that the image of the brand is always at the right level, but also making it accessible.
So that’s why we’re opening up to do tastings with VIP’s or first class guests with Air France in the Première lounge. And we would like to do more with other airlines. That’s a discussion we have at TFWA- not necessarily in terms of inflight, but in lounges where they’re hosting their top tier loyalty members. How can we create experiences for them?
PM: Yes, it’s all about being a luxury brand. Just look at Armani and their café’s. Or what Louis Vuitton created at Hamad International Airport. And, recently, Lancôme with the Rose Café, also at Hamad. You seem just a small step away from that if you’re looking at a lounge-type experience.
IM: Look, I think the brand has potential to extend. But I think we want to maintain the heart of who we are. Which is that we are from Cognac and everything we do will have to come back to the terroir of a Cognac, family-owned business. We don’t do something for a short term, quick win and I think other brands may choose to do that. We’re doing something that will be sustainable in terms of building over the next 20 or 25 years. It’s a generation play.
I’ve been with the Group now for nine years – and in the past our challenge has been product availability vs demand and allocation on.
And I think that cognac as a category goes through these cycles. I’m optimistic for the future. But you have to educate, you have to recruit new consumers into the category and brand and ultimately have to make the brand more relevant and desirable to a new generation of consumers.
PM: Let’s move on to sustainability. I mean, what direct actions or initiatives has Rémy Cointreau taken or is about to take that you can share?
IM: Look, the first thing I would say is that sustainability is the heart of our business has always been when you say that terroir and time is part of your DNA. You have to look after the land, you have to look after the people, you have to take a long-term view in terms of building the business.
So there are no shortcuts. And I think that’s still there. We’re very transparent and it’s something that is distilled in everything we do. Certainly we don’t go around shouting about things. I think we’re quite humble and I think that’s a better position to be in. The one thing that we do with all of our employees is we make sure they’re fully informed of what we’re doing. The choices we’ve made, particularly the brand launches.
We have very limited air freight and the Group partners with Neoline, being among the first companies to ship its products to the United States aboard a wind-powered cargo ship. Another example is the fruitful collaboration with glass maker Verallia, which benefits many of our Maisons. We also have removed single use plastics from our business. That’s for a number of years. This stand in Cannes is pretty much reused every year. I really believe, and again, this is one of the things that we should do better as an industry, is to reduce throw away point of sale material.
We do a lot and have an ambitious CSR roadmap we call Sustainable Exception.
PM: Okay, so as consumer expectations for in-store experiences rise, how does Rémy Cointreau work with retailers to enhance service, education and brand storytelling on the shop floor? And what training investments are currently being made for brand ambassadors and frontline staff?
IM: I’ll be provocative. I think generally compared to cosmetics, the wine and spirit sector doesn’t get the same space, gets a lot of generic merchandising, lots of gondolas and a higher level of promotion. I don’t think that when you visit airport X, the first thing you need to see is a price off in liquor and a gondola with the cheapest product in the store at the front. In cosmetics, it works the other way around. You generally have the luxury brands at the front. They’re not advertising on price. They’re just advertising to, say, get people in the mindset of shopping. And I don’t believe that by having the premium luxury brands of wines and spirits in the front is off putting at all ratherI think it draws people into the storeThe basics of retail is to get people into the shop and then get them to purchase and leave satisfied.
PM: Yes, discount boards or banners in red and white are not actually necessarily an invitation to walk in.
IM: That’s my point.
PM: The colour of what spirit offers is a more dynamic invitation.
IM: Yes, spirits can look like a library or they can look really engaging. But I think we should see more brand personalization of their backwalls and retail spaces. You saw this again on our stand. There’s a lot of really good initiatives on personalization, but we’re not at the stage where the cosmetics brands are. They’re 15 years ahead. Premium P&C brands are very much about personalization – clear merchandising that allows the consumer to explore the range of products and this is combined by really well trained staff. And I still think that’s the recipe for wines and spirits – it’s securing good space and locations, using personalization.Then create an easy way to navigate the category and brands and having knowledgeable staff on hand to assist.
PM: I would also argue that there’s a lot of clutter in the space, and that it doesn’t give any kind of travelling passenger enough room to breathe, to really get to grips with the whole product offer. It’s just too much. There’s too much gin, arguably too much scotch. There are brands that are not moving and yet they’re still on the shelf. Would you agree that needs to be addressed?
IM: Yes, look, I can go full circle from many years ago. I was saying there are too many travel exclusives, but they were never differentiated in terms of why they’re different or adequately communicated, just saying: ‘you can only buy this in duty free at airports’. I think travel retail offers a really good way to premiumize and also get people excited about being able to get that product that’s only available in whatever airport. And I think it’s about communication, I don’t think it’s about price. Clearly you want value for money. There should be a saving. So we know that duty is going up in most of the domestic markets. You expect to have a saving, but I don’t think you need to see a minus 30%. I’m not sure that gets you to buy more.
What it does, I think, is down trade because you can only buy a litre or a litre and a half depending on the country. So why would you want somebody to take 30% off the planned purchase that they already had? I don’t think it helps. And I think it’s once again going back to the retailing basics, Peter, that is really important. And brand owners and the retailer and the landlords all have to work together. We talk about the Trinity, but I don’t think it really works.
PM: I have to say I agree. I think we’ve gone past that and I’m not entirely convinced that the pentarchy is actually a fully workable model either, because it only seems to work in a few unique locations. But it’s a very good idea, nonetheless, because all stakeholders are involved. Okay, we haven’t talked about The Botanist. You want to say anything about The Botanist or leave that for the last question about what’s happening next year?
IM: Well, The Botanist is a good example of a travel exclusive. So we know that the gin category is mature in most markets except for the US. In the US, you have to remember, in domestic gin is 1%, I think, of total spirits. If you go to the UK, domestic is 17%. We have Hebridean strength, which is a higher proof product. So you know, the concentration is there. It’s not that you’re drinking higher proof product, but for your cocktail you need less of it to be able to have the same strength. It’s a concentrate.
So again, this is one of the ways I think we have to educate on higher proof ABV strength, which we have in mind. These products are more efficient. You need less of it to make the same cocktail or The Botanist and tonic that you love. And there’s a value for money message built into that that needs to be communicated.
But I think the gin category is at an impasse – there’s too many brands, too many flavors. And I think that, if I was a retailer, I’d be looking for brands that really can add value or point of difference. I think travel exclusives are the way forward on gin. I don’t think flavours are necessarily the right solution. Look at vodka over the last 15 years. Vodka flavourisation was not a good thing for vodka as a category. It didn’t grow the overall market share.
PM: Moving on, what is your view on No/Low Alcohol?
IM: I think low and no alcohol is a good thing. It gives more consumer choice. People who are choosing not to drink alcohol or don’t drink alcohol to get the same flavour and experience what spirits can bring. And sometimes we’re driving, sometimes we decide we don’t want to drink – it gives you choice. And I feel that the world is a much better place now with more choice for alcohol or other adult beverage occasions.
So I think No/Low is good for beverages, and I think it’s good for the consumer. I think in terms of travel retail, again, there’s an opportunity for low and No as well. I know some retailers have allocated some space. I know when I travel quite frequently, quite often you don’t want to have an alcoholic drink. Quite often you just want to have a soft drink. Historically, only carbonates was your choice. Now you have British Airways, for example, offering a range of mocktails which are great And I think, again, it’s just giving more choice and allowing consumers to enjoy that taste or experience without any alcohol.
PM: One last question, Ian, actually it’s two. In the next year, what can the industry expect from Rémy Cointreau? And what three things would you like to communicate to the industry? Surprise me.
IM: For Rémy Cointreau, we were one of the pioneers of Duty Free. We had a separate team, Peter Sant, who you know well, was the one who created it 15, maybe 20 years ago. I think we need to be one of the pioneers. We need to be more agile, we need to regain market share, and we need to be a bit more radical in our thinking and also be grounded in the basics. Rémy Cointreau I think can be the most agile and I believe we can add value to retailers and all landlords in terms of the experience – whether it’s with LOUIS XIII, in terms of the experiences we just talked about, which are much more intimate and small, or our other brands.
It’s imperative that we secure the right space and visibility in GTR- making sure that alcohol and wines and spirits in particular, secures the right space and visibility, has the right merchandising to help the consumer navigate , to bring it to life, and have great people selling the products who can talk knowledgeably. Because the biggest problem comes back to your final question for the industry is the industry, once for all, has to find a way of getting shoppers to want to go into the store and then convert to purchase. And I believe we can be good long term partners for the GTR sector to make that happen. You know, for me, success is when everybody in the category is doing well.
I think that we’re at a turning point as an industry. The world has changed. We have to define where we want to go together and we want to make sure that the consumer is not just given a choice, but also given a reason to buy. If you give somebody a reason to buy, they’ll buy. Our products are generally within reach in terms of price point and we know that people have dwell time in an airport where they want to enjoy things. They don’t always want to purchase, they want an experience. But if you can give an experience with one of our products, the chances are you’ll convert to sale. If it’s a good experience, you’ll want to buy the product as you go back home or if you go somewhere else, you’ll purchase the product there. But that’s the role of GTR – it’s creating the experience but also getting the conversion to purchase.
PM: So what are we going to see from Rémy Cointreau next year and your key priority?
IM: Well, LOUIS XIII is priority number one, the jewel of our business. As you saw when you entered from the front door of our booth here, you see the 6 litre of LOUIS XIII through to the first stand that you face when you come in. We should start every conversation with LOUIS XIII and end every conversation with LOUIS XIII. It’s more than a spirit brand. We’re super proud to have this in our portfolio and, again, I want to make sure that everybody knows about it.
PM: What else?
IM: We have Cointreau. You have Cointreau Spicy coming, which is perfect for the spiced margarita or as a single serve on the rocks.
The whisky range again is broadening but we’ve tried to make it easier to navigate in GTR. We have a Black Art from Bruichladdich which will be exclusive to travel retail. Within Rémy Martin, we have a strong Chinese Lunar New Year programme, and an end of year gifting programme as well. And also we’ve got some pretty cool LED electronic shelf edging that we’re piloting and we’d like to test with retailers. Again, a different way of providing product information on the shelf. So where, perhaps, there isn’t staff, you can provide brand information as well as pricing information. Again, you can see examples of where we’re investing in retail. And again for us, we see ourselves as a good long term partner for retailers because we’re focused on retail.
PM: A suitable point to close this conversation, Ian. Thanks for your time.
IM: Cheers, Peter.
