How Much Innovation is there in the Travel Retail Liquor Category?

How Much Innovation is there in the Travel Retail Liquor Category?

By: Nip M. Bibe   •   email: info@trunblocked.com

A cask-strength expression; another non-age statement travel retail exclusive; a flavoured gin; a bottle created by a fashion designer; a gift pack with tasting glasses; a bottling so rare and old it needs to be insured. Yes, at first glance, the world of travel retail liquor has never seen so many new products hit the shelves. But how much real innovation does the category offer travellers?

Consider Johnnie Walker, the best-selling spirit in duty free, with sales of over 2.4 million cases each year. At Dubai Duty Free there are now no fewer than 11 different Johnnie Walker SKU’s on sale – from the humble Johnnie Walker Red Label at $21.67, a treat for the thousands of hard-working ex-pat Indian subcontinent workers who fly back and forth from the UAE hub each month, to the crystal-decanter packaged $3,550 John Walker & Sons Odyssey, the preserve of the seriously rich.

Yes, the duty free shelves are not short of new releases. Yet I question how many of these often travel retail exclusive expressions actually strike a chord with travellers – especially those in the much-scrutinised 18-35 millennial demographic. In fairness, the past few years have registered some genuine hits, such as Johnnie Walker Double Black Label, the Glenfiddich Cask Collection and the Macallan Rare Cask Black, to name but a few.

Johnnie-Walker-Store

The-Tasting-Bar-at-the-JOHNNIE-WALKER-HOUSE-Singapore-where-consumers-can-enjoy-whiskies-from-the-JOHNNIE-WALKER-luxury-portfolio

Glenfiddich-Cask-Collection

Macallan-Rare-Cask-Black

However, these successes are outweighed by the many forgettable, over-priced, me-too releases, which all too often come and go, completely failing to register with travellers.

Right now the shelves of major duty free stores are dominated by a handful of heavyweight brands owned by the multinationals – the likes of Johnnie Walker, Absolut, Chivas Regal, Hennessy, Glenfiddich and Bombay Sapphire, with each brand boasting a long ladder of line extensions. Until recently, travellers looking to try something different from these household names will have been sorely disappointed.

Craft spirit brands are now finally appearing on duty free shelves. However, many of these products have been snapped up by the multinationals – from Sipsmiths gin (Beam Suntory) and Bruichladdich single malt whisky (Remy Cointreau) to US craft bourbon producer Woodinville Whiskey Company (Moet Hennessy) and Pier​d​

e Almas mezcal (Diageo). New, independently-owned labels that have surmounted the daunting obstacles needed to gain a meaningful presence in global duty free, such as Tito’s vodka, are few and far between.

Bruichladdich

woodinville-whiskey

Does any of this matter? Well, the latest Generation figures seem to suggest the category is doing rather well, growing over 9% in 2017. Yet, taking a closer look, its overall market share at about 16% has remained stagnant for the past five years. In contrast, beauty has grown its share of the pie from around 18% to 24.5% over the same period, growing by nearly 14% in 2017 to total $24.5bn.

Now there are multiple reasons why the beauty category has grown so much in recent years while liquor has stood still. But I believe liquor’s relative lack of genuine innovation has played a part, as has buyers’ general unwillingness to broaden their assortment to include a more diverse range of spirits.

Where is the next Bailey’s or Absolut vodka coming from? Building a global spirits brand takes years and millions of dollars to achieve, but are the industry’s big players actually up to the challenge in an era when it’s easier to pay big money for a hip craft label, whose founders did all the hard yards, making it fashionable and aspirational in the first place?

Of course, the spirits sector needs its big hitters. The likes of Johnnie Walker, Jack Daniels, Bacardi and Bombay Sapphire are the mainstays of the category. But it also needs to grow and nurture new brands to capture the attention of millennials bored with the brands their parents grew up with. New brands are being incubated – Diageo’s decision last January to launch a new Irish whiskey brand, Roe & Co., for instance, was a welcome breath of fresh air – but it’s an outlier to the prevailing industry trend.

The truth is that many of the stock-listed multinationals no longer appear to have the patience or appetite to brand build over the long term.

They seem too eager for short term returns. Yet acquiring brands is often a costly hit-and-miss affair, and for every success – such as Bacardi’s purchase of Grey Goose in 2004 – there are failures, such as Diageo’s 2005 acquisition of Bushmills Irish whiskey. The spirits industry is in danger of losing its creative mojo. Another line extension or limited edition bottle is not real innovation in my book.

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