Beam Suntory owns multiple premium liquor brands in India, from the award-winning Teacher’s whiskey to Jim Beam bourbon, and its focus in this area has meant that it has had to face multiple challenges from alcohol taxes to travel bans in the past two years.
Its travel retail business has been hit especially hard, not only due to a general lack of travellers due to border closure but also liquor excise changes having affected travel retail pricing.
Previously, liquor being sold in travel retail had a price arbitrage over liquor being sold in the domestic market, which attracted local consumers even with a lack of foreign travellers.
However, since 2021, several areas in India such as Delhi changed liquor excise policies causing some travel retail prices to become even more expensive than domestic retail.
“Travel retail is incredibly important to Beam Suntory as it is our premium connection to global consumers, and is a very strategic channel for growth [as it] allows us to build our brands at scale both globally and locally,” Beam Suntory Global Travel Retail Managing Director Ashish Gandham said at the recent Tax Free World Association APAC Conference.
“It is a very massive priority in India as we already know that the Indian traveller is going to rise in prominence, looking at the numbers in terms of scale – by 2026,we anticipate the Indian traveller numbers to be in the top five in the world globally; and it must also be noted that there’s a generally younger demographic growing here which means more travel as well.
“Our numbers show that 77% of Indian shoppers will go to a store every time they travel, which is 1.8 times the global average; and 49% of these duty free visitors buy something every time they make a trip, which is 2.2 times the global average – it’s such a massive, massive opportunity and expected to keep growing further, [so in India] it’s extremely important to Beam Suntory to revive this sector.”
Important trends for growth
Further research data has also shown that the pandemic has changed the way Indian consumers are approaching their alcohol purchasing decisions, and a lot of this change has to do with technology.
“We know that compared to a miniscule 4% before, nowadays some 40% of Indian passengers will see advertisements online and base purchasing decisions or interest off of those; and that pre-planned purchases make up 50% of all purchases,” said Gandham.
“In addition, there is also added demand for a personal experience when buying alcohol, particularly spirits now – 75% of buyers have been buying exclusive items after COVID-19 hit, compared to 43% previously.”
Beam Suntory believes that capitalising on these consumer trends is key, which will mean adjusting various aspects of retail from product assortment to presentation.
“When premium liquor is mentioned, this used to be connected mainly with just upper-middle class consumers, but now we know that our reach needs to be broader and we must innovate to provide offerings for various shopping groups,” he added.
“There is also a need to elevate shopper experiences particularly in making things as connected as possible, e.g. providing a seamless digital to in-store experience, and then making the in-store experience as experiential and immersive as possible.
“It should also be noted that more importance must be placed on training up sales staff, as 24% of shoppers in India have claimed to have their purchasing decisions influenced by a sales staff member, which is 1.5 times the global average.”
That said, he acknowledged that there are still multiple challenges that Beam Suntory will need to overcome in India from COVID volatility to logistical hurdles to regulatory challenges and geo-political or economic shocks, but that the firm is committed to making the relevant improvements.
“In a nutshell, we have a traveller who's more aware and has really, really high expectations set for us to deliver on [and] these are things is the work we need to do to [to grow], but this is really a massive growth opportunity led by a vibrant economy and expanding passenger base with a shopper that is absolutely engaged, so we will go for it,” he said.