Local Growth Must Catch Up to Global SuccessMon, 02/11/2019 - 11:32
Evolving consumer tastes are tilting the scale toward consumption of premium and craft spirits in Mexico, a trend that is providing significant growth opportunities, says Pablo de Brito, General Manager of Beam Suntory Mexico. “Consumers are looking for crafted spirits within the premium segment and we believe this trend will boost consumption of tequila, whiskey and gin.”
Although at a global level Beam Suntory is the third-largest spirits company in the world with a diverse portfolio of whiskey, gin and tequila, de Brito says the company’s position in the Mexican market does not reflect its global success. “In Mexico, we are ranked fifth and seventh, depending on the product segment. Our goal is to double our operations in the next five years and establish a position that is consistent with our global standing.”
While the Mexican market is highly competitive, de Brito says the company has the right capabilities to achieve its growth goals. “Mexico’s spirits retail segment is worth around US$3 billion and grows approximately at a 10 percent rate on an annual basis.” De Brito adds that the premium category is experiencing the greatest expansion. “Although in volume the market is growing at a 4 percent rate, in terms of value this number jumps to 10 percent. This means there is an increase in sales of premium products.” This 10 percent growth has created a perfect opportunity for Beam Suntory to connect demand for premium products with its own offering.
Another factor that makes Mexico an interesting and imperative market for Beam Suntory is the relevance that tequila and whiskey have within the total spirits market, at a 35 to 38 percent share independently, which is not common in any country. Gin, the other important component in Beam Suntory’s portfolio, has not reached the consumption levels that tequila and whiskey enjoy, but de Brito says it is the fastest-growing category at 50 percent year-on-year.
Growth in the Mexican market and changes in consumer preferences make it an interesting country for a company like Beam Suntory, says de Brito. “When you analyze the country and its characteristics, you will notice that we have the portfolio and capabilities to compete in around 80 percent of the market.” Mexico is one of Beam Suntory’s four most strategic markets to boost growth, along with Russia, India and China.
Given Mexico’s potential, Beam Suntory has refocused its strategy for its core products to incentivize consumption and brand awareness. “When it comes to tequila, we can highlight Casa Sauza and Hornitos as synonyms of quality,” says de Brito. “What we want to do now is to refresh their value proposition and revitalize their standing among consumers.” This strategy includes the launch of the Sauza Conmemorativo tequila and the presentation of the Hornitos Cristalino tequila. Having a Cristalino option for tequila has become a must for the company. “The rise in tequila consumption is probably due to the revolution that the Cristalino product has generated,” he says. “Traditionally, tequila was a product consumed more by men than women. However, due to its smoother taste, the Cristalino option has helped tequila to capture new consumers that felt its traditional alternatives to be stronger.”
The company’s goal is to strengthen and revitalize its position with a diversified portfolio offering. “Our product diversity is part of our company’s richness,” says de Brito. Particularly in the whiskey market, he believes Beam Suntory has the opportunity to consolidate its position. Almost 90 percent of the whiskey market in Mexico is dominated by Scotch brands, which means Beam Suntory’s offering of American and Japanese whiskies can help to diversify demand. “Our Japanese and US whiskies comply with high quality standards. If we want to double the volume of our operations in Mexico in the next five years, we need to position all our products successfully.”
For many years, Beam Suntory only operated through distributors in Mexico. However, the company has seen enough opportunity to establish long-term operations here. De Brito says the company’s products are already present in the main retail channels at a national level and reach 20 major cities, so there are no concerns about further development. “We will consolidate what we have built and will be able to participate in all relevant commercialization channels,” he says.