The Macallan Boutique in Hainan that opened late last year, is Edrington’s largest boutique in global travel retail
There’s no question that the alcohol consumption landscape is changing. For both economic and health reasons, consumers are choosing to drink more moderately —and this is even more the case with Gen Z — but that trend does not portend gloom for spirits companies. Another clear trend is toward premiumization; as people become choosier about when and how much they drink, they also tend to become choosier about the quality of that drink.
Given the increased interest in learning about premium spirits and sophisticated cocktail making during the pandemic, plus the unfortunate closing of many locations and now the overall economic uncertainty, on-trade consumption remains low. Home consumption has grown, however, and this, combined with the continued increase of travel, bodes well for the sale of premium, super-premium and luxury spirits at duty free locations.
We’ve also witnessed the rise of low- and no-alcohol spirits, sales of which have now reached well over US$10 billion, expected to continue to grow at a rate far outpacing spirits growth over the next three years, arriving at sales of US$13 billion by 2025/2026. This offers spirits companies a whole new avenue for sales and marketing, and is clearly a premium item.
Hainan, ever important
The Chinese traveler has long been the main target market for luxury items globally, and luxury spirits are no exception. Hainan as a duty free shopping location has become incredibly important — first, as virtually the only duty free shopping location globally and then, as the rest of the world opened up, the only duty free location Chinese residents could shop until the Chinese border finally opened earlier this year.
Jeremy Speirs, Edrington Regional Managing Director, Global Travel Retail, says Hainan will continue to be a major focus for the company. “We don’t see the incredible growth there being a short-term phenomenon, but a long-term play backed by the Chinese government willing to invest in the region. Of course, we are delighted that increasing numbers of shoppers will be travelling internationally, given their affinity for The Macallan and typical propensity to shop in duty free. This will be good news for Hong Kong and Macau, as well as a range of other locations within Asia but also internationally.”
The Macallan Boutique in Hainan, opened late last year, is Edrington’s largest boutique in global travel retail. Speirs says the boutique gives Edrington plenty of scope for storytelling and engagement. “We have focused on offering an incredibly powerful retail experience which conveys The Macallan’s history and craftmanship through the overall design concept. We also have several other pop-up and shop-in-shop spaces in Hainan which bring to life the heritage of our brand. This storytelling element remains central to our strategy for engaging with Chinese shoppers moving forward,” he adds.
China is also a crucial market for Diageo Global Travel, according to Andrew Cowan, Diageo Global Travel Managing Director. “This is not only in terms of passenger numbers and a taste for Scotch, but also in value terms. The Chinese traveler likes to buy luxury items in the prestige segment, recognizing the rare quality and heritage of many of our brands. The scope for innovation, gifting and design is huge.”
“Hainan, China’s giant travel retail hub, is a hugely exciting place to showcase our incredible portfolio of rare Scotches. We’ve found a new home in Hainan with our new whisky boutique there – an experience like no other in sampling, gifting and more and it’s brilliant to follow this opening with our recent launch of Johnnie Walker Blue Label Cities of the Future Hainan limited edition. We're delighted to see Johnnie Walker Blue Label launching in Haikou, Sanya and other locations within Travel Retail with this beautiful and exclusive bottle design, giving travelers and shoppers an exciting glimpse of a future Hainan.”
Diageo showcases Johnnie Walker Blue Label Cities of the Future Hainan limited edition in Hainan
Premium, rare and unique
Hand in hand with the desire for drinking premium liquid is the desire to see, experience and own something unique, new or rare. William Grant & Sons recently released Glenfiddich’s Grand Yozakura 29-Year-Old. This whisky is a unique fusion of the finest flavours from Scotland and Japan. Only a limited number of Grand Yozakura bottles are available globally; within travel retail, the release is available at only a handful of key strategic airports, for a limited time only.
With the release comes an installation celebrating the fleeting beauty of Hanami, Japan’s renowned cherry blossom festival. The installation can be experienced at Taiwan Taoyuan International Airport from June 2 until August 31.
A whisky that is premium, rare and unique also offers the sometimes elusive “experience” sought by virtually all travelers. The installation features an eye-catching back wall with a digital screen that showcases different works of art by Japanese artist, director and designer, Fantasista ‘Uta’ Utamaro, which portray the cherry blossoms illuminated at night. In addition, VR sets are available to allow passengers to fully immerse themselves in a one-of-a-kind virtual gallery, that also features exclusive behind-the-scenes-videos with Uta.
William Grant & Sons Managing Director Global Travel Retail David Wilson says “As the first single malt scotch whisky to be finished in Japanese ex-Awamori casks, this exceptional liquid has an unforgettable taste – and we have created an equally memorable digital art activation to support it.
“The innovative, immersive installation delivers an exceptional shopping experience for this region’s discerning and knowledgeable travelers. This limited edition release, and its corresponding marketing campaign, is yet another example of Glenfiddich’s commitment to innovating strongly within the single malt category, to drive excitement and further satisfy the strong consumer demand in Asia.”
For Edrington, premiumization is compulsory. “Premiumization informs every part of our portfolio, from the core travel retail exclusive range to limited editions and ultra-premium bottlings,” says Speirs. “Our goal is to recruit new consumers and then offer them compelling reasons to trade up within the portfolio while also ensuring we cater to the collectors and aficionados who are already looking to purchase at the higher price points. Our innovation pipeline reflects this, so you’ll see plenty of news around ultra-premium offerings such as The Macallan Red Collection, with some very high-aged statements being added to the range, as well as some new launches which will contribute to our reputation for driving significant value for retailers.
“If you look at The Macallan’s track-record in travel retail I think it would be fair to say that we have really led premiumisation in both single malts but also more widely in the luxury spirits category. It has been a cornerstone of our overall approach for many years and is something which lies at the heart of The Macallan’s appeal to retailers.”
Reaching Gen Z
The generation born from around the mid-90s until 2010, is savvy, wise, and grew up in a digital landscape.
“For the most part, Gen Z shoppers will be relatively new to the spirits category, so this is where our recruitment strategy is key. Education and storytelling really matter, particularly with a lot of research pointing to the fact that Gen Z shoppers find heritage and provenance particularly important,” says Speirs. “Digital engagement is also crucial, whether that is through e-commerce and social platforms or through instore elements, so we continue to sharpen our focus on delivering a first-class experience online and on screen.”
We note that this digital engagement is also crucial for Edrington in its messaging to the Chinese consumer, as Chinese are extraordinarily digital-savvy.
For The Macallan, price promotion and discounting is at odds with the company’s overall premiumization strategy so doesn’t play a part in Edrington’s approach to reach Gen Z, says Speirs. “Instead, you will see us looking to engage and recruit Gen-Z shoppers with instore activations and pop-ups as well as affordable collectibles and limited editions that bring excitement and innovation.”
