Why craft brands are gaining traction

12 June, 2019

I’ve always maintained that the cards are stacked against craft spirits brands wanting to build a meaningful travel retail presence.

Travel retail has often been slow to pick up on domestic trends, but money is the main reason the craft spirits boom has only been heard faintly at airports so far. Travel retail is an expensive distribution channel with wafer-thin profit margins for suppliers and plenty of extra costs, such as in-store promotions, staff training and an often complex supply-chain.

The business model has traditionally favoured the major multinationals and the economies of scale they can bring to bear. Make no mistake, big brands do continue to dominate – the top five selling spirit brands in duty free in 2017 (Johnnie Walker, Jack Daniel’s, Chivas Regal and Hennessy) accounted for nearly a quarter of total sales by volume. And yet I do sense a change in the air.

Craft spirits are beginning to make an impact. Retailers as far apart as Oslo and Singapore are giving craft brands shelf space and creating in-store promotions and festivals around them. The reason is simply that travellers, especially millennials, are requesting these types of products be stocked. The classic forces of supply and demand are at work.

Take the recent example of Slingsby gin, which is made in the Yorkshire spa town of Harrogate by local company Spirit of Harrogate. Launched in 2015 and enjoying annual sales of around £5m, Slingsby gained a breakthrough listing with World Duty Free Group at five UK regional airports in April last year. Slingsby has also managed to win a listing onboard UK regional airline Jet 2, which carries some 10.4m passengers worldwide each year. Says marketing director Claire Gibson: “Our miniature Experience Boxes are available to consumers travelling from the airline’s nine UK bases to sun and city destinations across Europe. The box contains three different miniatures of award winning gin— perfect for gifting.”

Craft gins are also making an appearance further afield in travel retail. The London Distillery recently launched an exclusive Hong Kong variant of its Kew Organic gin for Lagardère Travel Retail to showcase at its stores at Hong Kong airport. The gin was created in partnership with the Royal Botanic Gardens, London and contains Chinese botanicals such as green jasmine tea, galangal and camellia sinensis.

Slingsby and Kew Organic gins are just two examples of a wider craft trend, which I believe will gather pace during 2019 and beyond. In the past, it’s been difficult for a craft brand such as Slingsby to grow its travel retail distribution beyond its local or regional airport, but the fact that so many regional concessions are now operated by multinational travel retailers means that if an initial local listing is successful, further listings at other, more distant airports often follow.

How the multinationals are responding to this craft threat is fascinating. The introduction of travel retail-exclusive line extensions is a tried-and-trusted method, of course, but companies are also dusting off previously neglected jewels in their portfolios and presenting them to travellers as discovery brands. A case in point is Whyte & Mackay’s decision to launch a travel retail-exclusive Fettercairn single malt whisky later this year.

Other big players are acquiring craft brands and launching them into duty free. At this month’s 2019 Duty Free Summit of the Americas show in Orlando, for instance, Stoli Group will be launching the ultra-premium small-batch bourbon Kentucky Owl into the Americas duty free market. Whether such acquired brands should still carry the craft label is a hotly contested question, but what is less debatable is that craft brands, however they are defined, are now here to stay in travel retail.





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