September 9, 2020

Whisky talk with William Grant & Sons

Rita Greenwood at William Grant (photo: William Grant)
William Grant
Rita Greenwood: "Staying home with friends is becoming the new going-out"
Wid ye lik' a wee dram afore ye gang? In the last part of our UK summer tour, our newspaper spoke per video conference with Rita Greenwood, Regional President Europe, Middle East & Africa, at venerable Scots spirits maker William Grant & Sons.

Their 'blether' ranged from drinking whisky in the time of Corona to the Sassenachs taking Brexit with their tea just south of the border. With consummate diplomacy, the lady even managed to skirt carefully around the thistly question of Scotch independence.

With revenues of €1.4bn in 2018, William Grant is still quite a small laddie when compared with global Goliaths Diageo (€13.3bn) or Pernod Ricard (€9bn). But like David, the company packs something powerful in its sling: Glenfiddich, the world's largest single malt whisky brand by annual sales...

Talking of tipple, we have interviewed a conspicuously large number of whisk(e)y makers over the years, including Diageo and Beam, Inc. Readers may praise the assiduity but what must they think of our sobriety?

"It's all about trust"

Ms Greenwood, how have William Grant & Sons experienced the coronavirus crisis so far?
As a spirits supplier we quickly realized that it was our role to help out, so we produced ethanol. We estimate that we made the equivalent of 24.3 million 500 millilitre bottles.

How was this achieved?

In the beginning we diverted the production of our spirits to produce ethanol. But, as we went on, we managed to integrate this and made the ethanol on top of our normal production. Of course, it was our first and foremost priority to protect our own people, while ensuring our business continuity.

How else has Covid affected your business?

We have seen the channels of trade changing. Many countries shut down their hospitality sector, and people don't go out as much anymore, so we have seen our sales shift from gastronomy into online and grocery retail.

Rita Greenwood at William Grant (photo: William Grant)
William Grant
Those were the days: Rita Greenwood socialising in pre-Covid times
What does that mean in terms of numbers?
In some countries our sales have slumped quite dramatically, for example, by 30 per cent in Spain or Italy. On the other hand, there have been pockets of growth, like the UK or Germany, where retail is traditionally stronger than the on-trade business.

So has your business declined or grown overall?

So we stay optimistic. As a 132-year-old business, we have weathered many storms, and we will come out of this one both strong and united.

What is your survival strategy in the time of Corona?

It's a tremendously difficult situation for our industry. Our priorities since the start of the pandemic have been to protect our people and our business. The biggest opportunity is to understand how consumers are changing, what they want, and how they behave in the 'new normal'.

So how do they behave?
There's big growth in at-home entertainment. People still do meet, but the gatherings are smaller and more intimate. In a way, staying home with friends is becoming the new going-out. Consequently, grocery and online retail will continue to grow as sales channels for us.

Therefore, we will have to educate consumers about drinking occasions and how to pair drinks with food because professional hospitality staff can't do that as often now as they used to.

Could offline retailers get into trouble as online sales grow?
Some will. But only the ones who haven't considered an online option yet and who don't have a really great experience in their stores. Omnichannel is the key. People still want to shop in bricks-and-mortar stores. And up till now, only around 5 per cent of spirits are sold online.

But e-commerce is growing double digits. Therefore, the two channels are complementing each other.

What does this trend mean to you?
For us, digitalization is definitely an opportunity. We can bring the stories of our brands to life in a digital world and connect to people who would like to learn more about them. Making sure that you can reach people and that they understand what your brand is about is very important in these times.

Sustainability has been a major trend in Covid times. Is that true for spirits, too?
Yes, it really is. People are much more aware of their expectations from brands. This is why we are happy about our innovation brand called 'Discarded', which is all about sustainability.

It uses raw materials which would have normally been thrown away, for example banana peel for rum or coffee fruit for vermouth. We will see great opportunities for further innovations.

Glenfiddich Distillery (photo: William Grant & Sons)
William Grant & Sons
Rural tradition: The Glenfiddich Distillery in Bonnie Scotland
What about the renaissance of big, well-known brands?
We have seen a resurgence and strong growth for brands like Glenfiddich, Tullamore Dew and Hendrick's Gin.

It's all about trust. In times of uncertainty people turn back to the story, the heritage, and the authenticity of well-established brands that they know. At the same time, we always need innovations to keep people interested.

Does anybody still talk about Brexit in Covid times?
It really seems a long time ago that we set up a Brexit committee to ensure the transformation will run as smoothly as possible. Brexit could add another layer of uncertainty to the Covid crisis, but we are prepared for any outcome of the negotiations as a business.

Could Brexit worsen the recession caused by Covid, leaving your customers with less money to spend?

If we continue to build our brands in the right way, consumers will continue to demand them.

It's rather a question of how we allocate our products. If we see a falling demand in one part of the world, we move our supply to another part where demand is rising. The most important thing for us is continuity of supply.

What role does Germany play for you in this context?
Europe is a very important marketplace for us, and Germany is our third most important market in Europe. We wouldn't build our own distribution company in Germany if we didn't believe in the growth potential of this exciting market.

Why do it yourself when cooperation was good with Campari?
The foundation for our success was brilliantly built by Campari over the last eight years. But now is the time to take our distribution to a new level.

What about Scotland, by the way? Do you as a Scottish company take a distinctly Scottish perspective on Brexit?
We are a global business with a global strategy. Of course, we have our Scottish heritage, but Scotch whisky is very much an international export business. Whatever the political changes, we always need to be able to export.

That's why we engage in the Scotch Whisky Association, which is basically lobbying for free trade.

William Grant could have supported the Remainers in the Brexit discussion, as it did during the referendum for Scottish independence?
That was a different story. Generally, as an independent business we pride ourselves on the diversity of people, ethnicities, and thoughts within our company. We want diverse teams with different ways of thinking, ages, and backgrounds.

Does that count for gender equality, too? What is life like for a female manager in the male-dominated spirits business?
The industry has changed over the last 18 years in which I have been with William Grant. We are seeing many more female managers now than in the old days. Our Chief People Officer is female, as are our managing, commercial and marketing directors in France.

Can you make growth plans for the medium-term or has the uncertainty around Covid made them impossible?
For six months we've been running in crisis mode, but now we are turning to a new normal. As a 132-year-old family-owned business we traditionally like to take a long-term view.

And what would that be?
In our five-year strategy we see great opportunities in the luxury space for single malt brands like Balvenie and Glenfiddich. Even in Eastern Europe, where vodka is traditionally strong, the interest in high-end whisky is rising. And there are lots of opportunities in the US, where we are still relatively small.

Why are you betting on premiumisation in a worldwide recession?
Because consumers are already trading up. If they understand the real value of a brand, they are willing to pay more for it. And, as a single malt distiller, we are operating in a premium branch anyway.

How hard would you like to push premium as opposed to mainstream sales?
Actually, we would like to move every brand to premium, including the mainstream ones. Take Grant's, for example, our blended Scotch. We are selling the premium twelve-year variety to Poland right now.

Don't you want to grow market share, too?
Yes, we do. In many parts of Europe our share is less than 10 per cent. But our Glenfiddich is the best-selling single malt whisky in the world as well as in Germany. That shows that there is still big potential.

And when will we finally overcome the Covid crisis?
Until there is a vaccine, we'll continue to see local lockdowns and have uncertainty, especially in the hospitality sector. But precisely here real innovation will come through. I am thinking about party services and event teams going to peoples' homes. After all, people do want to interact socially, Covid or not.

Lebensmittel Zeitung with its online sisters (photo: LZ)
Our German retail B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: 'Corona hin oder her' by features editor Mathias Himberg on pages 24 & 25 of Lebensmittel Zeitung, no. 37, 11.09.2020

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