BETTER SPIRITS ON THE RISE

Mexico 2018 | AGRICULTURE | INTERVIEW

TBY talks to Erik Seiersen, CEO of Diageo Mexico and Cuba, on the upward trend in quality, exporting a community-driven spirit, and keeping traditions alive.

Erik Seiersen
BIOGRAPHY
Erik Seiersen joined Diageo in 2013 as the CEO for Mexico. Since 2016, he has also been chairman of the Liquor and Wine Commission, an association representing the industry. He previously worked at Brink’s México as a general director. He holds an MBA from Harvard Business School.

How do you see the consumption of spirits and alcohol evolving in Mexico?

The spirits industry in Mexico is healthy. It has been a slightly challenging year after the earthquake and the economic deceleration. The industry is turning toward more premium brands—as a trend, we find people looking for quality and reaching out to better spirits. We are doing well; Diageo's growth is higher than the entire industry, which sees almost double-digit growth. There is a healthy trend toward premium brands that are both local and international. Spirits are becoming more dynamic, and there is more innovation. Spirits, such as gin and mezcal, and cocktails are becoming more popular. The industry is evolving along similar patterns to those we see internationally.

What was the rationale behind your recent acquisition of Pierde Almas?

When we started looking at mezcal, we were thinking of bolt-on acquisitions or associations. We invested in associations with other mezcal producers, though we decided to acquire Pierde Almas. We want to have a portfolio of options to present to consumers, and Pierde Almas is in the ultra-luxury segment. We will focus on exporting to the US and making sure the top segments at home and abroad become familiar with this excellent liquid. We are extremely proud of this acquisition and will continue working hard to expand our presence in the Mexican spirits market. It is one step toward our ambition of having a truly great portfolio to maximize consumer choice. As a luxury brand, Pierde Almas will be produced in small batches of superior quality. We love the history of the brand, and the taste is unmatched. The idea is to maximize the value of this family-developed brand. We want to keep the owner close to us because he is the master mezcalier and brand ambassador.

What is behind the global boom in mezcal?

People want craft, expertise, and a link to tradition and history. This is also a community-driven spirit, and people really love that. The boom started in the US, where consumers love to link their products to tradition, history, and community support. This was the major driver of international growth. Mezcal is Mexican; it is a small but important category in the Mexican market. The global sales for artisanal mezcal are still only 300,000 cases, though there is the potential to grow this to 2 million. This is what we want to support in order to keep communities together and traditions alive. We see this same growth trend for every craft spirit. People want to get close to craft and authentic stories.

Do you plan to focus more on craft distilleries in the future?

Mezcal is a 10-year vision. We truly want to make sure we are well positioned to capture the spirits growth if and when it truly takes off. We have done the same thing with tequila by investing in Casamigos. This company has a craft-oriented focus and is made in small batches by three friends. The craft trend is happening in every category, and we want to be ahead of the trend and ahead of the curve for mezcal.

Are your distribution channels changing with technology?

Spirits have not seen a huge technological disruption yet. However, we are starting to partner with different technology players to make sure that when the disruption happens, we are positioned to take advantage of it and satisfy consumer needs. There is some interesting growth in e-commerce type activity already taking place, though it is still tiny. It does not account for even 1% of total sales. This is because it is expensive and subject to many regulations. In distribution, one has to be careful because there are many requirements, and we want to make sure we take the correct steps. Trends are developing, though they are still in the initial stages.