In high spir­its

Le­banon’s al­co­hol dis­trib­u­tors talk growth and trends

Executive Magazine - - Contents -

Be­hind that flute of prosecco or gin-based cock­tail en­joyed at a bar af­ter a long day— or even the sin­gle malt whisky or bot­tle of wine rec­om­mended by a pre­mium spe­cialty liquor bou­tique—there is an in­tri­cate dis­tri­bu­tion chain.

Ex­ec­u­tive sat down with Le­banon’s ma­jor spirit im­porters and brand own­ers to dis­cuss the Le­banese drinks of choice for 2017, the drinks con­sump­tion trends, how they were con­sumed, and by whom.


Spirit dis­trib­u­tors had sev­eral rea­sons to toast in 2017. Di­a­geo marked its 20th an­niver­sary with var­i­ous pro­mo­tional ac­tiv­i­ties, which in­tro­duced Le­banese con­sumers to the com­pany be­hind well-known brands like John­nie Walker whisky and Dom Pérignon cham­pagne. “We wanted to high­light Di­a­geo’s con­tri­bu­tion to the busi­ness in terms of el­e­vat­ing the stan­dards of ser­vice, build­ing markets, grow­ing the trade, [and] pro­vid­ing lead­er­ship for the in­dus­try,” says Ziad Karam, MENA corporate re­la­tions di­rec­tor for Di­a­geo. Le­banon, he added, is among the key sales markets for Di­a­geo world­wide.

Hav­ing ac­quired and re-launched the Edring­ton Group port­fo­lio in Le­banon early in 2017, Carlo Vin­centi, the owner of G. Vin­centi & Sons, says its brands—in par­tic­u­lar The Fa­mous Grouse blended Scotch whisky and Ma­callan sin­gle malt whisky—had record growth. “The Fa­mous Grouse had an al­most 50 per­cent in­crease in sales in 2017 when we took over, and is now the pre­ferred brand in [bars and restau­rants]. The Ma­callan also had a record year in 2017, with an al­most 100 per­cent in­crease from 2016: For ex­am­ple, we sold a Ma­callan Lalique bot­tle,” says Vin­centi, re­fer­ring to a 65-year-old limited-edi­tion bot­tle priced at $36,000.

In fact, all the spirit dis­trib­u­tors who spoke with Ex­ec­u­tive say 2017 was an over­all growth year com­pared to 2016. “It was a very good year for spir­its, with an over­all dou­ble-digit growth across most of our spir­its port­fo­lio,” says Jea­nine Ghosn, man­ag­ing di­rec­tor of Gabriel Bocti.

Etab­lisse­ments An­toine Mas­soud (EAM) also re­ports a pos­i­tive 2017 for both its spir­its-dis­tri­bu­tion arm and its re­tail arm, The Malt Gallery, which com­pleted its third year of op-

er­a­tions early in 2018. “The growth rate for EAM spir­its arm is 10 per­cent, while for The Malt Gallery it’s 40 per­cent. The Malt Gallery has be­come an im­por­tant com­po­nent of our busi­ness and con­sti­tutes al­most 14 per­cent of our sales,” says An­thony Mas­soud, EAM’s owner and man­ag­ing di­rec­tor, adding that while whisky is a ma­jor con­trib­u­tor of sales in The Malt Gallery, wine and craft beer are be­com­ing im­por­tant com­po­nents as well (for more on craft beer see ar­ti­cle page 92).


Sales flour­ished last year de­spite the usual ob­sta­cles, both in the on­trade (hos­pi­tal­ity venues such as restau­rants and bars) and off-trade (re­tail spa­ces such as su­per­mar­kets or spe­cialty stores) sec­tors.

Sum­mer 2017 saw the open­ing of sev­eral new rooftop bars and clubs, much to the de­light of spirit dis­trib­u­tors, who see them as an op­por­tu­nity to show­case their brands. “The sum­mer was very good for the in­dus­try— es­pe­cially for on-trade, since a lot of new places opened, and they were all very ac­tive and fully booked on week­ends. Such clubs have a 1,500 [per­son] ca­pac­ity, so it’s very good for busi­ness. How­ever, these clubs usu­ally have ex­clu­siv­ity deals with spirit dis­trib­u­tors, so while prof­itabil­ity shrinks, it’s still a show­case for our brands,” says Roy Diab, mar­ket­ing man­ager for Fawaz Hold­ings. Diab ex­plains that brands that are mar­keted suc­cess­fully in the on-trade sec­tor even­tu­ally be­come pop­u­lar and more con­sumed off-trade, and, as such, the on-trade sec­tor is an im­por­tant mar­ket­ing tool for dis­trib­u­tors.

While sum­mer 2017 may have been a good sea­son for the on-trade sec­tor, some spirit dis­trib­u­tors be­lieve that the po­lit­i­cal un­cer­tain­ties of Novem­ber 2017 (the res­ig­na­tion and suse­quent re­turn of PM Saad Hariri) put a stop­per in the drinks on-trade mar­ket and led to a slight down­turn in De­cem­ber’s per­for­mance. “In the on-trade, we were de­pend­ing on end-of-year sales, and those were not as good as ex­pected be­cause tourists didn’t come to Le­banon for New Year’s,” says Ziad Na­couzi, head of the spir­its dis­tri­bu­tion di­vi­sion at Neo Comet KFF Food and Bev­er­age.

Gabriel Bocti’s Ghosn ex­plains that the length of Le­banon’s tourism sea­son—which used to be the whole month of De­cem­ber for end-of-year fes­tiv­i­ties, and July and Au­gust for the sum­mer—is be­com­ing shorter and shorter, which means the pe­ri­ods of high-fre­quency al­co­hol con­sump­tion are be­com­ing nar­rower.

Vin­centi also com­plains about the sea­son­al­ity in on-trade due to low do­mes­tic con­sump­tion. “The HORECA per­for­mance is very much linked to the sea­son­al­ity and fes­tive tim­ings, be­cause it re­lies on ex­pats and Arab tourists who are still not com­ing [to Le­banon] in big vol­umes, ex­cept for [dur­ing the] hol­i­days,” he says, us­ing an acronym for the food-ser­vice in­dus­try. “Do­mes­tic con­sump­tion spend­ing is too small and doesn’t even cover 30 per­cent of the HORECA po­ten­tial con­sid­er­ing the num­ber of venues in Le­banon and the num­ber of peo­ple who go out.”


Although dis­trib­u­tors agree that De­cem­ber was a good month for the off-trade sec­tor—largely driven by hol­i­day gift­ing and in­creas­ingly lav­ish home celebrations—they say that the dwin­dling pur­chas­ing power among av­er­age con­sumers has be­come an is­sue. “Le­banese are still strug­gling with their pur­chas­ing power, the per­fect ex­am­ple be­ing when there were a lot of price cuts on al­co­hol in su­per­mar­kets in De­cem­ber,” says Samer Nas­sar, head of mar­ket­ing at Di­a­geo. “Peo­ple are ei­ther mov­ing to the more ac­ces­si­ble cat­e­gories as com­pared to the stan­dard, or go­ing to pre­mium, but stan­dard is still the big­gest cat­e­gory.”

In­deed, start­ing in mid-Novem­ber 2017, al­co­hol con­sumers were bom­barded with text mes­sages pro­mot­ing ma­jor re­tail­ers’ pro­mo­tions on all va­ri­eties of al­co­hol. Su­per­mar­ket aisles were crowded with sig­nif­i­cant dis­counts on many al­co­hol brands and hol­i­day pro­mo­tions, such as free glasses with ev­ery bot­tle pur­chased. Ma­jor re­tail­ers were com­pet­ing to pro­vide the most at­trac­tive deals on al­co­hol, which would lure con­sumers into their spa­ces and get them buy­ing.

For Diab, the prob­lem with these price wars is that they neg­a­tively im­pact a pre­mium brand’s per­cep­tion. “The is­sue is that price re­flects im­age, value, and po­si­tion in the mar­ket, so when the price of a pre­mium brand starts fluc­tu­at­ing down­ward in the mar­ket, ques­tions may arise among con­sumers on the le­git­i­macy and au­then­tic­ity of the prod­uct from one end, as well as the im­age per­cep­tion from the other end,” he says, ex­plain­ing that since Fawaz Hold­ings has good re­la­tion­ships with these re­tail­ers, they usu­ally reach an agree­ment to re­strict the price cuts.


Trends in spir­its con­sump­tion among Le­banese con­sumers did not change much in 2017. “A trend is not a fash­ion or a fad, and it lasts for a while— for al­most 10 years. So today, we’re still in this trend of pre­mier­iza­tion, crafts, and cock­tails,” ex­plains Mas­soud.

In­deed, all the dis­trib­u­tors Ex­ec­u­tive spoke to said they con­tin­ued to see growth in their pre­mium or high­end brands across all cat­e­gories. Na­couzi says he saw an in­crease in sales of 10 per­cent and above in his com­pany’s pre­mium whiskies port­fo­lio, men­tion­ing that it re­cently re­leased De­war’s 25 into the mar­ket—priced at $225 a bot­tle—to pos­i­tive feed­back from con­sumers.

Like­wise, de­spite an over­all stag­na­tion in the stan­dard vodka cat­e­gory, the high end has been do­ing well. “Although con­sump­tion of reg­u­lar vodka has slowed down, su­per­premium vodka con­tin­ues to grow ,and Grey Goose saw a 20 per­cent in­crease,” says Na­couzi, ex­plain­ing that since vodka is as­so­ci­ated with par­ty­ing, its growth is re­lated to the new high-end bars and clubs that opened this sum­mer.

Like Na­couzi, Diab says Ab­so­lut Vodka saw 8 per­cent growth com­pared with 2016—lead by an in­crease in off-trade con­sump­tion fol­low­ing two ma­jor hol­i­day en­gage­ments for the brand in 2017—which, he says, is a sig­nif­i­cant in­crease given it al­ready has a large vol­ume base.


The trend of gin con­sump­tion also con­tin­ued through 2017. “Although it re­mains a small seg­ment of the spir­its in­dus­try, con­tribut­ing less than 1 per­cent of its to­tal value, it’s def­i­nitely the fastest grow­ing,” says Di­a­geo’s Nas­sar.

Speaking for Bocti, which dis­trib­utes Hen­drick’s gin, Ghosn says bot­tles of gin are now be­ing of­fered on ta­bles in night­clubs (for con­sumers to drink with their mixer of choice), while Fawaz Hold­ings’ Diab says gin con­sump­tion is still go­ing strong both on- and off-trade.

“Beefeater, our core gin brand, is still do­ing strong in the on-trade and is grow­ing in the off-trade be­cause home con­sump­tion is in­creas­ing. Peo­ple are grow­ing more ac­cus­tomed to cre­at­ing their own cock­tails at home or get­ting bar cater­ing for their pri­vate events,” he ex­plains, adding that su­per-pre­mium gin is also grow­ing solidly. Mon­key 47, a su­per­premium gin made with 47 botan­i­cals, is do­ing so well, Diab says, that Fawaz Hold­ings had to re­vise and in­crease the vol­ume al­lo­ca­tion for Le­banon twice in 2017.

Like­wise, sin­gle malt whiskies are in­creas­ingly pop­u­lar, and Na­couzi says his sales in that cat­e­gory have in­creased by 25 per­cent in 2017. Vin­centi ex­plains that the strength of the sin­gle malt whisky trend is in its value. “I would say the to­tal sin­gle malt con­sump­tion in Le­banon in­creased by 30 to 40 per­cent [since the trend started in 2015], and it’s still driv­ing the whisky cat­e­gory up­wards in vol­ume to some ex­tent,

“There is a dif­fer­ence be­tween a bot­tle of cham­pagne sold for be­tween $40 and $60, and a bot­tle of prosecco, which you can find for $10 to $12.”

but more im­por­tantly, in value. To give you a small ex­am­ple, in 2017, we sold five bot­tles of Bow­more 50 Year Old for $20,000 for each bot­tle [in our re­tail show­case store. The Cask and Bar­rel], which would have never been pos­si­ble three years ago. This shows that there is a se­ri­ous sin­gle malt fan base de­vel­op­ing in Le­banon,” he says, adding his com­pany has a wait­ing list on limited edi­tion bot­tles.


Mean­while, a new trend of prosecco con­sump­tion emerged in 2017. “Women pri­mar­ily drive this cat­e­gory in both the on-trade and off-trade seg­ments. Today, on the su­per­mar­ket shelf you can find a large num­ber of prosecco brands, while three years ago, you would only have seen a few brands,” says Diab.

The dis­trib­u­tors Ex­ec­u­tive spoke to tried to ex­plain prosecco’s ris­ing al­lure. “Prosecco was grow­ing slightly in 2016, but ex­ploded in 2017. It’s a global trend that we’re fol­low­ing. It’s also smooth to drink, and the price com­pared to cham­pagne is also at­trac­tive. There is a dif­fer­ence be­tween a bot­tle of cham­pagne sold for be­tween $40 and $60, and a bot­tle of prosecco, which you can find for $10 to $12. There’s a big three-digit growth in some cases in this cat­e­gory,” says Ghosn.

Mas­soud ex­plains that while cham­pagne has al­ways been an oc­ca­sional drink in Le­banon and mainly as­so­ci­ated with celebrations, prosecco is today more ac­ces­si­ble and reg­u­larly served in bars and clubs.


Dis­trib­u­tors agree that these trends are driven by well-trav­eled Le­banese in their mid-20s and above, who are so­cial me­dia savvy. “The new gen­er­a­tion and young drinkers have more cu­rios­ity and are more ex­posed to so­cial me­dia, and so you feel they want dif­fer­ent drinks than the older gen­er­a­tion used to con­sume. With them, it’s more about the ex­pe­ri­ence and the jour­ney. When we in­tro­duce niche new brands to the mar­ket, there is cu­rios­ity from the con­sumer where be­fore we were met with re­sis­tance,” ex­plains Ghosn.

To Na­couzi, this means less vol­ume, but more value. “Peo­ple are up­grad­ing what they drink: In­stead of go­ing out ev­ery night they go out less, but con­sume higher-qual­ity, and hence, more ex­pen­sive al­co­hol. It’s also a sign of pres­tige to bring pre­mium al­co­hol to a party or to a house party one is cater­ing. Also, some on­trade out­lets use the pre­mium brands as their go-to pour­ing [brand] to dis­tin­guish them­selves from the com­pe­ti­tion,” says Na­couzi.

Dis­trib­u­tors also give credit to their own mar­ket­ing ef­forts which, they say, sup­port these trends and sus­tain them through a va­ri­ety of events, in­clud­ing tast­ings for con­sumers, train­ing for bar staff, and so­cial me­dia cam­paigns. “We’re very ded­i­cated and ag­gres­sive in events, vis­i­bil­ity in the trade, in pro­mo­tions, and a lot of tast­ings across the whole mar­ket. All our com­peti­tors are also do­ing this, and we have com­mon plat­forms like the Whiskey Live event or ded­i­cated plat­forms like Malt Gallery. We’re all work­ing on fur­ther ex­pos­ing these brands to the con­sumers,” says Ghosn.

All in all, 2017 was an­other good year for Le­banon’s spir­its im­porters and brand own­ers, and while con­cerns over the in­creased end price of im­ported al­co­hol, and the low pur­chas­ing power of the do­mes­tic mar­ket con­tinue to worry those in the in­dus­try, it looks like 2018 will be an­other good year for spir­its.

With new high-end bars and clubs open­ing, vodka con­sump­tion is grow­ing

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