RAISE A GLASS

Colombia 2020 | INDUSTRY & AGRICULTURE | INTERVIEW

In a high-growth market, Diageo is aiming to disrupt the market by offering new brands and experiences.

Álvaro Cárdenas
BIOGRAPHY

Álvaro Cárdenas joined Diageo in 2007 as chief of finance for Colombia. During these 11 years, he held the roles of Andean finance director (Colombia and Venezuela), finance director for PUB (Paraguay, Uruguay, Brazil), and finance director for Southwest Asia. In 2017, he became commercial director. He assumed the role of general manager for Colombia in 2018 and Andean General Manager in 2019. Before Diageo, Cárdenas worked for The Coca-Cola Company for three years as finance manager for Femsa in the region. He also worked as financial planning manager for the Andean region at Pfizer.

Can you describe Diageo's Colombia operations and its potential in comparison to the rest of the region?
From here, we manage the entire Andean region of Venezuela and Colombia. This is a pivotal moment for Colombia, one of considerable foreign investment and many expectations within the scope of Latin America. Colombia is the only nation that is growing at 3% per annum. While this may not sound too impressive, other nations are flat, or even in recession, making us the rising star. International spirits represent less than 3% of the alcoholic beverage market. Therefore, the opportunity for any company that has the right portfolio and the right brands to win consumers is massive. We represent a 70% share of the international spirits market, and that varies between whisky, vodka, and so on. The game is not about continuing to increase shares in a highly niche game, but disrupting receptive consumers by offering new brands and experiences. Alcohol consumers in Colombia are used to hard liquor, rum, and beer. But now, thanks to the internet, they are more open to experimenting with something different. Our portfolio is in a unique position to capitalize on that opportunity. Over the past two years, we have been working to bring disruptive propositions to these consumers with the right access. The combination right now is an innovative agenda with a more diverse portfolio of different price points. We have been growing, during the past two years, at 19% on our top line, and our expectation is to continue that trajectory at least for the next four or five years in the high double digits. We expect this to be the case across the industry. These are exciting times, and we need to do whatever is possible to maximize our legacy. We want to modernize the alcohol industry in Colombia from a regulatory and taxation perspective, as well as whatever else it takes.

Can you tell us about your process of identifying the right portfolio and the right brands?
It is a combination of truly understanding the consumer and the landscape. When you are the leader, with a 70% market share, it is possible to become complacent and lose sight of the consumer's perspective. Therefore, we have developed a more granular understanding of diverse consumer motivation, depending on location, be it the home, or socializing in a casual or formal dining environment. Comprehending motivation and product selection criteria require this approach. That is why we invest time and money into a long-term strategy in response.

Which of your brands is best positioned in Colombia?
All of them really, because of the sheer opportunity in the market. The top five brands in our portfolio are all scotch. There are brands like Buchanan's that, at this moment, is the leader of the deluxe segment. Then, there is Old Parr and Johnny Walker. We launched Black & White to give consumers price accessibility with a great quality proposition. We also launched Gordon's gin, as gin is becoming a trend the world over that will soon come to Colombia. So, we decided to invest ahead in a category that still has a small niche, and we are the only ones taking that bet. Then, we launched Smirnoff X1, which is flavored vodka, and the first international brand being produced in Colombia. We did that last year and decided to work together with Empresa de Licores de Caldas. We invested more than COP4 billion in the factory to make sure we are not just having them as a co-packer, but also transferring the knowledge of a premium spirits producer to a local entity to elevate the quality of local products. So, we have been investing in different brands, segments and categories where we see potential.