Premiumization in the Philippines

According to Euromonitor, the alcoholic drink industry in South-East Asia will continue to register double-digit growth over the next 5 years. How would you describe the industry and its potential within the next 5 years and what category do you see as the most attractive?

Emperador Inc. competes primarily against established Philippine spirits companies that produce and distribute brandy and other spirits to the domestic market. The main competitors in the Philippine broad distilled spirits market mainly comprise of Ginebra San Miguel, Inc. (GSMI) and Tanduay Distillers, Inc. (TDI). The Company also competes against imported labels. With respect to flavored vodka, gin and other alcohol products, it primarily competes with other local vodka and gin companies that also produce ready-to-serve alcoholic beverages as well as imported labels. The whisky segment in the Philippines is not well tapped at present, and the Company aims to revive this segment. Our competitive edge is our preparedness with respect to and our focus on premiumization. So, in the next five years or so, premiumization is key and whisky is a growth opportunity for us.

In terms of strategy beyond manufacturing smaller bottles, education may play a significant role. Both the higher and lower end markets have to be educated in terms of choosing the right liquor for their taste and budget or even to prefer Emperador over other brands. Following this thought, the challenge of educating consumers arises. How does the company do that?

Emperador is the largest liquor brand in the Philippines. In Emperador brandy our volume is driven mostly by the large package of 750ml and 1 liter size.  We have an ongoing campaign to push 350ml Emperador Light to better compete with local gin and rum brands since their volumes are driven mostly by small more price accessible bottles sold to working class in rural areas.

Recently, we have introduced Andy Player Whisky and a RTD variant called Andy Cola, a blend of cola our Andy Player Whisky in the Philippine market.  We hope to create a whisky drinking culture in the country.  The compelling products are backed by a 360-degree marketing campaigns to help consumers learn about whisky and hopefully appreciate it more. It can potentially jumpstart the curiosity of non-whisky drinkers.

Do you consider Emperador already at the point of being able to compete with known brands, such as Jonnie Walker considering that the kind of a product that is rather new for the Filipinos?

We believe together with the international brands, we can build the whisky business faster.  We look at it as a collaborative effort than competition.  Of course, we are spearheading the campaign on whisky with serious investment in the segment.  We hope to be the market leader in this category in the near future.

Specific to the spirits industry, what do you consider are the current main trends that influences the local spirits market?

With the current economic expansion in the Philippines and across Asia, we believe we are entering a period of consumerism.  The middle class is growing and consumption behavior and patterns are changing.  We believe there will eventually be a flight to more quality offerings.  The diversity of our international portfolio of products and production facilities in Scotland, and Spain and our global reach on account of Whyte and Mackay and Bodegas Fundador, give us a distinct advantage.  

We believe we are able to capitalize on the synergies within the group.  Leverage on product innovation, world class quality and international learning’s across 100 countries that we are present in. 

We are an Asian company based in the Philippines.  There are very few companies like us within the region with the kind of global reach and experience.  The ASEAN integration is one thing we follow quite closely.

Having acquired a very aggressive position in the whisky segment, what is your strategy focusing on maximizing the fact that most of Asia is keen on whisky?

Whyte and Mackay is a British institution and the global operation is managed from UK.  The company is now significantly invested in the Asian market.   Asia market is a new frontier for our whiskies.  We are a new player in a mature market.  We have to be more innovative in our approach and closely work with key partners in each market. 

Yes, we have some iconic whisky brands within our portfolio.  This presents some unique opportunity at the top end of the market.

In this sense, Emperador has become a symbol of the Filipino identity and spirit which is very unique. Do you consider Emperador as one of the flagship brands of the Philippines?

Philippines maybe the most international country in Asia.  We have close affinity with Spain and United States of America.  The Filipino culture is highly influenced by the Spanish heritage.   Emperador has significant investment in the brandy producing region of Jerez de la Frontera in Spain.   Yes, we consider Emperador as one of the flagship brands of the Philippines being the largest brandy brand in the world and exported to more than 50 countries.   

Emperador has certainly become a part of the Filipino identity as you have said. Liquor in general is a big part of the Philippines’ identity. In this regard, when you see different foreign brands (i.e. Corona, Budweiser, Heineken), each of which having a different identity or personality, what do you consider as Emperador’s identity?

Emperador pioneered the brandy segment in the Philippines in the early 1990s.   We believe that branding is a critical factor in a consumer’s choice of beverage.  Emperador Brandy’s philosophy of excellence resonated well a new generation of consumers.  Emperador is seen as a celebratory drink for the celebration of life successes though values of diligence, perseverance and responsibility.

In a macro perspective, the Philippine economy was a top performer in South-east Asia in 2016 with a YOY growth of 6.8% and an estimated 6.8-7% growth in Q1 2017. What is your opinion on this phenomenon and how is Emperador affected?

Definitely, it is a great opportunity for a company like us.   We believe premiumization is on the way.  Thus, we are trying to capture this space.  The company’s investment in the Scotch whisky assets and the Spanish brandy businesses are all part of the plan.   We are both upgrading our local offerings and introducing international brands into the Philippine market.

Recently, we have introduced a few products each with a specific target audience.   We are excited about the future.