SB meets… Ian McLernon, Rémy Cointreau

The CEO of Rémy Cointreau’s Asia Pacific, Europe, Middle East and Africa (EMEA) and global travel retail (GTR) channels discusses the outlook for the latter region.

What insights can you share regarding the global travel retail scene at the moment?

I’ve been in travel retail on and off for about 10 years, so I’ve seen a lot of change. The first positive thing is that business is coming back after a tough period and the pandemic. There is something special about travel retail as a channel; there’s a deep connection.

In this channel, people matter, relationships matter – and there is a change in how we do business. I think it’s still quite often misunderstood for companies, in terms of the role that it plays. It’s not just the shop window – it’s a place where you sell goods, where you bring brands to life. That’s where you create experiences.

What we want to try to do is bring to life the experience of your favourite bar or your favourite bartender. We look at how we can bring those elements to life in an airport environment. It’s neither the on-premise of the off-premise; it’s a third channel and actually a convergence of all three.

How exactly do you work to bring brands to life?

For Rémy Cointreau, it really starts with making sure we’re on the right course. We have the right assortment of products and the right stores. So space visibility is key. We believe that people shop visually, so even if you don’t know the brand, say Bruichladdich for example, you will see the very distinctive aqua blue. People are drawn in, they’re intrigued, they’re interested. The role of merchandising is to catch attention. The conversion comes through sampling activations – liquid to lips – but also the sales associates. We believe that people are at the heart of what we sell.

Which travel retail markets are doing well for Rémy Cointreau?

Domestic and GTR are linked. I guess the common theme is that the Chinese traveller isn’t back yet. As we’ve talked to airports about travel retail and retailers, we’re seeing strong optimism that the Chinese traveller will come back in the second half of the year. We believe Chinese New Year will be strong.

However, we shouldn’t rely on one nationality or one type of traveller. During the pandemic, we’ve been pleasantly surprised to see that the European travel market has been spiking. The European consumer has been probably less value-driven and more experience-driven, and seems more open to trying new brands.

During the pandemic, one of the trends we saw at home – as clearly people weren’t travelling – was people trading up into higher-quality spirits. We’re all trying to be mixologists and bartenders at home with various levels of success. The brands in the mixology scene have started to perform better in travel retail than pre-pandemic. It’s because the consumer has got used to being able to enjoy mixing products – and there’s still a big opportunity to do more.

Are there any emerging travel retail regions you’re excited about?

At Rémy Cointreau, we’ve seen consumers from Southeast Asia – so Singaporeans, Malaysian, Indonesian, South Korean, Japanese – show quite interesting developments in terms of their purchasing, which again tends to be at a higher level in terms of their purchasing value when they travel. Japan is performing exceptionally well in GTR, driven by most of those nationalities. Europe varies by country, but we see the higher end in Europe generally performing well – certainly for our portfolio.

There’s also an opportunity since Brexit of the UK being duty free. It’s quite clear that as a frequent traveller on the Eurostar, people are purchasing to use their allowance. Even between Ireland and the UK, you have an element of duty free that was not there before.

How much are rising costs impacting GTR?

It depends on the country. Some countries are more challenging. Macroeconomic high inflation in the UK, for example, is very different from continental Europe. If you look at Eastern Europe, high inflation in the Czech Republic has been the norm for many years. When you go to Africa, the challenge is currency, which fluctuates a lot. So there’s always something that can impact the consumer’s ability to purchase. But I think the consumer expects to have an assortment of products from entry level to the top level, to fit their budget ranges and also the mood and occasion.

As a retailer, it’s important to offer the full assortment. What we need to be careful of is price, which I think is the big challenge for GTR. If we end up in a race to the bottom, I think many brands will struggle. It has to be much more experiential, about having a full range of spirits and, most importantly, we have to bring our brands to life.