ALCOHOLIC BEVERAGES

Colombia 2018 | INDUSTRY | B2B

With Colombia an attractive market in terms of premium spirits and spirits as a whole, the country will continue to be a pillar for growth for producers.

Geronimo Mejia G.
GERONIMO MEJIA G.
Country Manager
William Grant & Sons
Victor Cantisani
VICTOR CANTISANI
General Manager
Diageo Colombia

What have been the company's biggest accomplishments in Colombia?

GERONIMO MEJIA G. When we first opened the company in Colombia, there was no desire by consumers to try new brands. We introduced a product, Hendrick's Gin, which has been extremely successful and created the super premium gin category in Colombia. Since then, we have become market leaders in that category, with 68% of market share. We also re-launched Glenfiddich Single Malt Whisky in 2011 with a whole new strategy of increasing the range and repositioning the price. Today, we have close to 65% of market share in the single malt category, which has become a trend in Colombia and we lead this trend with Glenfiddich Single Malt Whisky. Not many premium spirit brands can say they enjoyed double-digit growth in a year where a new tax law was implemented. We are extremely proud to say it was the case with Glenfiddich.

VICTOR CANTISANI 2017 was a year of transition and transformation. Before, Diageo Colombia had strong double-digit growth, with figures up to 20%. However, in 2017 the tax reform increased the VAT from 16% to 19%. The enactment of Regimen Propio Law also impacted our products: most of our portfolio suffered from a considerable price increase. However, we are still growing at a healthy rate, though not as comparable to the figures of the recent past. Compared to our peers in other industries and segments of massive consumption, we are doing well. The strategy in 2018 needed to change because the most premium part of our portfolio suffered the most from the new tax scheme. Our main concern has been to maintain the health of our most iconic brands while developing the new portfolio. In 2018, we will regain our momentum and start growing as rapidly as we did in the past.

What are your commitments toward more responsible drinking and a more environmentally friendly business?

GMG Becoming socially responsible starts at home, and this is something we preach to all our employees. We are committed to our customers, and everything we do is within the legal drinking age. We also have a strong commitment to the environment and support many initiatives. Grant's distillery, perhaps the second-largest whisky distillery, has its own reactor and uses recycled energy, which is a huge project for the company. We have become so efficient that we are now selling energy to other companies in the region. Another great example is that for the Hendrick's Gin, all bottles are made from recyclable glass.

VC Diageo produces some of the world's best alcoholic drinks, and as more people have more choices and higher expectations, we want to fulfill that demand in a responsible way. We inspire people around the world to drink better, not more, and believe this is the right approach for the people who choose to drink our products. We care passionately about reducing alcohol-related harm through our own initiatives and through partnership and collaboration with others. That is why we invest in programs that discourage excessive drinking, reduce drink driving, and seek to influence future generations to have a positive relationship with alcohol, if they choose to drink.

What is your forecast for the coming year?

GMG We have a growth of 20% in our budget, though we had to acknowledge the effect the new tax reform is having on private consumption. We also have ambitions for entry-level whiskeys, a category now benefiting from the alcohol tax. Before, there was a huge gap between aguardiente and entry-level whiskeys; however, that segment grew 600% in 2017. This entry-level segment will grow for year to come. We believe the premium segment may suffer a little in 1H2018.

VC Our core business should grow by double digits. We are growing close to that today, even in the transition year. However, we aim to grow the standard and below segment significantly higher than that. Today, it represents a small part of our business. For example, we have Black & White, a blended scotch from Buchanan's house at a competitive price but with the same quality credentials of all our portfolio. Our sales for these products have increased six times YoY. We intend to continue developing our sales at that rate.