The Big Interview: Mark Riley of Edrington-Beam Suntory UK

While Riley is excited by new brands from Japan he still considers Scotch malts to 'be one of the hottest categories
While Riley is excited by new brands from Japan he still considers Scotch malts to 'be one of the hottest categories
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The new name does exactly what it says on the tin. Or rather bottle. From the start of April, Maxxium UK has been known as Edrington-Beam Suntory UK Distribution – the sales, marketing and distribution joint venture between two of the world’s most prestigious spirits producers.

Its portfolio is vast, and includes the likes of The Famous Grouse blended Scotch, Jim Beam and Maker’s Mark bourbons, The Macallan, Laphroaig, Highland Park and Auchentoshan single malts, House of Suntory Japanese whiskies and Brugal 1888 rum.

Indeed, the joint venture ranks as the third largest spirits business in the UK, and its Scots boss, Mark Riley, is confident of grabbing further market share.

“People did get the name confused with a business park just outside Glasgow,” jokes Riley, referring to the Maxim site at Eurocentral, next to the M8 corridor. “While our new name might not be the snappiest, sharpest title, it explains and brings to life exactly who we are and what we do.

“Maxxium used to be owned by four global shareholders which would have been too much of a mouthful. The name did us well until two of those shareholders were no longer part of the partnership. Until then it had been an international business in 30-odd markets, but it only really existed in a handful. Slowly and surely any equity that the brand name had dissipated. We felt it was time to call us what we are.”

The rebrand, which will be accompanied by a flit later this year from a business park in Stirling to city centre offices in Glasgow, comes after brands in the Edrington-Beam Suntory UK portfolio grew by 5 per cent in 2017. It continues to outperform the UK spirits market, with its leading line-up of whiskies commanding a 24 per cent value share, according to industry figures spanning the combined on and off-trade sectors.

That sprawling portfolio was further expanded in the past few days with the firm taking on the UK marketing and distribution for Effen Vodka – a name whose pronunciation is sure to cause much mirth when ordered at the bar – the Sauza Tequila family and Kilbeggan Irish Whiskey. The brands joined the Edrington-Beam Suntory UK family on 1 May.

“We decided to bring in a couple of new brands,” observes Riley, who has previously worked for spirits giant Diageo. “They are operating in high growth categories. Premium craft vodka is hot right now.”

The Edrington-Beam Suntory MD uses that description “hot” frequently, upping the ante to label the UK’s craft gin sector as being “on fire”. He says that market shows “very few signs of slowing down” while Japanese whisky is “probably the hottest of all categories at the moment” and only constrained by the fact that the Japanese can’t make enough of it. Three years back, Scottish distillers were left licking their wounds after a Japanese single malt – Yamazaki – was crowned top tipple in the annual Whisky Bible.

“The Japanese are true artisans and craftsmen,” adds Riley. “However, Scotch is also doing very well for us – malts are again one of the hottest categories. We are desperate to make sure that we are operating in all of those hot categories.

“We are focusing on our strengths and we are predominately a whisky company. We want to be recognised and known as the whisky experts within the UK spirits trade. Even in the less dynamic category of blended Scotch we are still winning with an all time record share.

“Where appropriate, we will take some calculated bets in categories outside of premium.”

Riley says the firm has “significantly upped” its investment in the on-trade market in key UK cities.

“We used to have a field sales team that called nationally in relatively mainstream bars, pubs and clubs and we now spend much more time and effort focusing on eight or nine key cities,” he says. “You are not trying to win everywhere – you are winning just with the winners.”

The firm aims to grow the “contemporary whiskies” category in the UK market. This will be led by a key city strategy and investment for brands including Maker’s Mark, Naked Grouse and Auchentoshan, capitalising on heightened interest in whiskies among younger drinkers.

There will also be a focus on building an even stronger presence in the growing luxury segment of spirits through The Macallan, as well as Japanese whisky brands, Hibiki, the aforementioned award-winning Yamazaki, Hakushu and the new single grain whisky, Chita.

The business has had to adapt to a rapidly changing and consolidating retail sector, culminating in the current audacious plans for a multi-billion-pound mega-merger between Sainsbury’s and Walmart-owned Asda. All of which heaps further pressure on suppliers such as Edrington-Beam Suntory.

“We had the Tesco/Booker merger in the background, we had Conviviality and their challenges, we had the Palmer and Harvey [wholesaler] collapse, so the market is having to evolve at such a tremendous pace in front of us,” Riley concedes. “If we don’t evolve at least at the same pace as the market then we will go backwards.

“We will have to see how Sainsbury’s plays out. I’m sure it will go through. I have to believe that [Sainsbury’s chief executive] Mike Coupe has got his institutional investors with him before he makes such an incredibly bold announcement to the world.

“We have incredibly strong relationships with all of the big supermarket groups. I’ve no doubt it will come with some commercial challenges but that’s just the way of the world that we work in.”

The onslaught of the German discounters, Aldi and Lidl, is changing Britain’s grocery landscape and is one of the factors behind the potential consolidation of the “big four” (the other two being Tesco and Morrisons) into a “big three”.

“We don’t operate with the German discounters,” Riley stresses. “They don’t do branded premium spirits so it is not a world we are involved in, but the pressure they are applying on the big four certainly has a ripple effect.”

Illustrative of the shifting sands within the off-trade market, the firm has grown its business with Amazon “from zero to something quite substantial” in a relatively short space of time.

“We are trying to keep pace with a rapidly changing world outside these four walls. We are always looking at our portfolio and trying to understand whether we have the right brands, the right categories and the right price points to win in the market.”

With the firm focused on the more premium end of the market, Riley is not anticipating a dramatic impact from Scotland’s new booze price laws. The minimum pricing of alcohol was finally introduced on 1 May following a protracted court battle.

Advocates of the minimum 50p per unit pricing expect it to save hundreds of lives over the next five years in a radical approach to tackle Scotland’s at times troubled relationship with drink.

Opponents claim that it will mean “drastic increases” for Scots drinkers and the public have been misled over suggestions that only strong lagers and ciders will rise in price. The new policy means that a bottle of blended whisky now costs at least £14. It has already led to the scrapping of some cheaper supermarket brands of beer and spirits.

“Most of our brands are not touched by minimum unit pricing,” says Riley, “but we do have The Famous Grouse. We are number one in the category but we feel that with our plans people will continue to buy Famous Grouse.

“We have millions of loyal consumers out there and we spend more on that brand than our competition, in terms of consumer engagement and pricing and promotion.

“In general, I think there will be an impact where people might pay a little more to go premium. Our premium portfolio should thrive in the world of MUP but we will of course be guided by the consumers and shoppers. There’s lots of analysis you can do, but you don’t really know until it goes live.

“Once you remove price as a unique selling point it is going to be very interesting to see what happens. Private label products and discounters will become challenged.”