Brown-Forman VP unveils strategy for travel retail alcohol growth

Brown-Forman Travel Retail: A Key Summary

• Brown-Forman is focusing on standard and premium alcohol segments, which are growing faster than super-premium categories in travel retail.
• Exclusive travel-retail launches, such as The Glendronach House Editions, are central to driving spending and differentiating airport purchases.
• Hybrid retail that blends airport foodservice and shopping is emerging as a major trend, particularly among Gen Z consumers.
• Brown-Forman is targeting emerging high-value traveller groups, including consumers from Vietnam and Myanmar, to boost passenger spending.

Since the COVID-19 pandemic hit the world in 2020, travel retail has undoubtedly been one of the sectors undergoing the most changes at the most incredible speeds, seeing rapid ups and downs in the years since international borders reopened for travel.

Unfortunately, it has since become clear to food and beverage companies that have a stake in this space that recovery is not an automatic process, particularly with the added pressures of geopolitical tumult and economic inflation hitting many markets.

As a result, survival and competitiveness in the post-COVID era of travel retail has very much called for companies to be able to adapt to changes as quickly as possible, including multinational heavyweights such as alcohol firm Brown-Forman.

“Travel retail has seen quite a few changes, two of which I find the most striking: One is the transcendent growth across categories in standard and premium products rather than super premium; and the other is a boom in hybrid retail which is a crossover between airport F&B and retail,” Brown-Forman Vice President and Managing Director for India, Middle East, Africa, Global Travel Retail (GTR) and Eurasia Matthew Hodges said at the Tax Free World Association (TFWA) APAC show in Singapore.

“What we need to realise is that nowadays, most consumers who are buying liquor while travelling are not usually frequent travellers who know the airport backwards and forwards, they could be travelling just once or twice a year, and we need to be able to cater for them in terms of accessibility and convenience.”

Brown-Forman has several well-known global brands under its belt such as Jack Daniels, Woodford Reserve and Gin Mare, which the firm is tapping on to ensure it has a sustainable presence in the categories that matter most to consumers today.

“An example of a product that plays in the standard section is Jack Daniels, and to meet current trends we launched Jack Daniels Blackberry last year in a handful of markets. This has definitely paid off as it is performing really well and bringing new people into the brand who were not consuming it before,” Hodges added.

“As for premium, we’re focusing on a premium launch in Asia of The Glendronach House Editions, which are first being exposed to consumers as a travel retail exclusive range.”

The House Editions are single malt Scotch Whiskeys that are themed based on different cities. There are three products in this range: The Sevillian Room, The Venetian Room, and The Parisian Room.

“Asia is a big focus for this range due to particularly strong growth in standard and premium products and interest in accessible exclusivity,” he said.

“Several traveller nationalities are popping up on our radar for increased high value purchases, nationalities that are relatively new to us, such as Myanmar and Vietnam, so we are hopeful that as passenger numbers grow back, we see the growth here as well. Our key challenge now is of course to get the spend per passenger back on track.”

To do this, Brown-Forman believes that exclusivity is key.

“The core offer of travel retail is essentially value-saving, not just in terms of saving on duties but also in the fact that consumers can buy items they would not be able to buy at home. And in this vein, exclusivity becomes very important as a value-add,” said Hodges.

“Things are changing quickly but a lot of travel retail liquor purchases are still for gifting, and today we are seeing that there is a reemergence of innovation in this exclusives for this segment to not only look at different packaging but also at different types of liquids.”

Major focus areas in the coming months

For the rise in hybrid retail, Hodges has remained coy on concrete plans Brown-Forman has to develop in this so far, but stressed that this will be a focus.

“There has been increasing talk about this, and it is going to be important in order to ensure we cater to more consumer groups as there is a significant opportunity here we cannot miss out on,” he said.

“Gen Z consumers in particular definitely want to see more of this mixing of F&B and retail, and it would help with bringing in consumers new to the brand as well.”

He also highlighted several other key major focus areas that the firm is looking at concentrating on in the coming months.

“One of the biggest alcohol categories to have seen explosive growth is Indian whiskey — Indian single malt in particular is a big category that was just created in the past few years, and there are many things we believe we can do in this market,” he said.

“For instance, we are launching our full range here — Jack Daniels has been in this market for quite a while, but we’re going to bring in tequilas as well as wider expressions of Woodford; and as it is we are already doing a lot of marketing with music in this market to ensure we stay relevant to consumers.”

Additionally, there is a rising interest in ready-to-drink (RTD) alcoholic beverages, a relatively new phenomenon for the industry.

“RTDs may not be what you would expect to see as a growth driver in travel retail, but the fact is that this business is growing quite quickly,” he said.

“This is being driven by quite a few factors, primarily convenience when travellers purchase these for their own consumption, and the current economic times.”

All in all, Brown-Forman still sees immense potential in this sector, particularly in Asia, over the coming year.

“We are very optimistic about Asia, and especially with established brands such as Jack Daniels, when it comes to growth,” said Hodges.

“It’s just important for us to ensure we keep finding ways to keep our brands relevant.”