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Impact Seminar: Pete Carr On Bacardi’s New Swagger, And Diageo’s Javier Ferrán On Luxury Marketing

March 16, 2018

Taking the stage in a much-anticipated speech at last week’s 42nd Annual Impact Marketing Seminar, Bacardi North America regional president Pete Carr addressed the audience on the topic, “Two Sides to Every Story: How Bacardi Got Its Swagger Back.” Carr began by highlighting the family-owned group’s recent $5.1-billion acquisition of Patrón Spirits—a deal that lifts Bacardi from the fifth-largest spirits company in terms of U.S. market share to the second-largest. Moving forward, Carr noted, 75% the company’s business will center on three brands, split between Bacardi rum at 22%, Grey Goose vodka at 26%, and Patrón at 27%.

Turning to Bacardi’s core rum brand, Carr used the occasion to unveil a revamped and expanded upscale portfolio, with new Reserva Añejo Cuatro and Gran Reserva Diez expressions set to join Bacardi’s Reserva Ocho and Reserva Limitada. “We’re placing a huge bet on rum premiumization,” said Carr. “Rum is the last category to premiumize, and we think there’s a $550 million category opportunity.”

Carr went on to detail efforts on several other top-performing Bacardi brands, including Cazadores Tequila and D’Ussé Cognac, and explained the turnaround strategy for Grey Goose, concentrated on plans to hold price, focus on the on-premise, and attract younger LDA and multicultural consumers to the high-end vodka franchise. He also touched on Bacardi’s national partnership with Southern Glazer’s, describing the benefits and challenges of aligning the supplier’s business to form a seamless match with the distribution heavyweight. “Overall, it’s going great, but it’s not all unicorns and rainbows,” Carr said, adding that getting a new business up and running—especially at the scale of this partnership—is always a challenge.

Meanwhile, Javier Ferrán, chairman of Diageo, spoke on the topic “Marketing Luxury Spirits In A Changing World.” According to Ferrán, several factors are set to drive luxury spirits growth in the coming years, including a consumer propensity toward “drinking better rather than drinking more,” and the ongoing rise of the middle class in emerging markets like Asia and Africa. He estimates that more than 700 million new consumers in emerging markets will be able to afford international spirits within the next decade.

In order to leverage premiumization trends, Ferrán emphasized the need to oppose burdensome advertising regulations, while continuing to campaign for minimum purchasing ages and drunk-driving prevention. He cited the company’s practical approach toward marketing in the U.K., where Diageo has seen strong growth despite a decline in per-capita alcohol consumption. He also noted the importance of consistently maintaining—and taking—price. “A key driver of perception of quality is price,” said Ferrán. “Luxury goods brand-building is a long-term game.”

Ferrán also celebrated the fact that the on-premise is enjoying a revival in key global markets, as experience-focused consumers are increasingly drawn to bars and restaurants to try new offerings. Likewise, he argues that for all the hype surrounding the craft boom, the major brands remain the key growth drivers within the market, with the share of spirits brands above 1 million cases continuing to expand.—Christina Jelski

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