Diageo GTR boss ‘sees opportunity’ for vodka and baijiu

15th January, 2018 by Melita Kiely

Dayalan Nayager, managing director of global travel at Diageo, on coping with geopolitical upheavals, a reformatted business model and the potential he sees in vodka and baijiu.

Dayalan Nayager, managing director of global travel at Diageo

*This feature was originally published in the October 2017 issue of The Spirits Business

The winds of change have been blowing through Diageo’s global travel retail division this past year. After an in­-depth review of its Global Travel and Middle East (GTME) business, the company decided to separate its domestic Middle East and North Africa (MENA) operations. It created a dedicated global travel headquarters in London, moving from Singapore. Dayalan Nayager, former regional director of GTME Europe, was brought in to lead Diageo’s global travel retail team as managing director. It’s been a year­-long transition for the group, but the changeover was finalised at the end of June.

“We were based in Singapore, travelling all the time,” Nayager tells me over coffee at the group’s new base in London. “Our big customers – the likes of Heinemann, Dufry, Aer Rianta and Lagadère – are all based in Europe. We wanted to be in closer proximity to our customers, and London is the easiest region globally to run a business from because you can touch every time zone during the day. In Singapore, to run a US business is very, very difficult.”

But that’s just change number one. The second alteration was to the business’s operating model, whereby four regions – Europe, Asia, Middle East and the Americas – which each ran independently, were restructured to commercial businesses with one central team. A third change was also put into effect; the domestic division of Diageo’s MENA business moved its reporting lines to Turkey.

However, as can be expected with every business model, a structural overhaul of any size brings with it risks of redundancies. “We minimised staff impacts as much as possible,” stresses Nayager. “Obviously, there were changes as we had a lot of people based in Singapore that weren’t willing to relocate to London. If you look at staff levels on a purely numbers basis, probably around 70 or 80 heads went to domestic. So if you say, ‘Oh, there’s 80 people less’, it’s not because they lost their jobs – it’s because they transitioned to another side of the business.”

Johnnie Walker Blenders’ Batch Bourbon Cask and Rye Finish

TRAVEL RETAIL: A TOUGH YEAR

With all this to contend with, while simultaneously endeavouring to keep a business ticking over – nay, in growth – how have the past 12 months been for Diageo GTR? “Busy,” laughs Nayager. “Changing an operating model is obviously quite big, and we had a new team, new people starting and setting up the business in London; there’s that challenge. But also in travel retail in general it’s been quite a tough year where there’ve been a lot issues that have affected the industry.”

Over the past 12 months or so there have been a number of incidents sparking geopolitical challenges, currency issues and general unrest – from the controversy surrounding US president Donald Trump’s election to the UK’s decision to leave the European Union.

“Currency volatility has been around for as long as I’ve been in travel retail,” says Nayager. “It’s not something new and I don’t think it’s something that’s going to go away. We’ve seen the dollar stabilise – does it help? Yes, it does, but there will always be somewhere else that’s impacted.” He continues to discuss the devaluation of the Russian ruble, which has been a long­standing issue for more than two years. But for all the country’s troubles, Nayager says Russian passenger numbers are up and the group is seeing improvements in the region, as well as in Eastern Europe, leaving room for optimism. Though as Nayager aforementioned, there’s always another region that will pose a different sort of challenge. Take Venezuela, for example, which has seen mass anti­government protests this year, throwing the country into economic and political chaos. How does a company like Diageo combat such cases of geopolitical turmoil? “I don’t think you could combat it – I don’t think any brand could combat geopolitical issues,” says Nayager. “What you’ve got to do is mitigate the circumstances as best as you possibly can.”

Numerous airports and holiday destinations have also been targets of terrorism in recent years. But has a fear of terrorism left a lasting impact on people’s willingness to travel, and has this forced changes in strategy to tackle potentially lower sales in travel retail?

“Not really, no,” insists Nayager. “Whenever there is a terror attack, there’s more security in the airport; it’s much tighter. But once people are airside and shopping, it doesn’t change that much. Passenger numbers are still growing; people are still travelling.” Though, sadly, there are some terrorist atrocities that are harder to rebound from than others. While sales stabilised following the 2016 Brussels attack, unfortunately the same cannot be said for the assault in Tunisia in 2015. “In Tunisia, there’s just never been a return,” he regrets. “The rest of the business there has been drastically impacted. But it’s not something you can plan for, it’s not something you can say: ‘Oh, this is what we’re going to be doing.’ You’ve got to just manage it case by case.”

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