Moët Hennessy cheers rising economy, makes a major push in PH
MANILA, Philippines – From the onset of its major push in the Philippines, Moët Hennessy has made clear its aspirational standards.
“We aim to be the most expensive brand in every market segment we enter into,” said Steven Bullock, the brand’s managing director for Asia-Pacific.
The firm is responsible for famous labels such as the cognac house Hennessy, and champagnes Moët & Chandon and Dom Pérignon.
Moët Hennessy began a major push in the Philippines in 2014 by creating a full-fledged local corporation, Moet-Hennessy Philippines Incorporated (MHPI).
The first bottles of Hennessy hit Philippine shores as early as 1903. But it was only in the last few years that the rapidly growing Philippine economy has caught the eye of luxury giant, Louis Vuitton Moet Hennessy (LVMH), Moët Hennessy’s global parent firm.
In the mid-1990s, there was deemed to be enough potential to start investing in the local market to create a representative office, Bullock said in an event promoting celebrations of Hennessy’s 250th anniversary.
The representative office could handle marketing activities but legally could not engage in commercial activities, he explained.
“One of the key differences we wanted is to have the ability to sell, hence we put in a sales team, incorporated, and now we’re up and running,” he said.
The new firm is not cutting out existing dealers but rather maintaining the existing distribution method, with the only difference being, that the firm will import products directly, he added.
Bullock said that in about 5 years, the parent firm identified up-and-coming markets in the growing Southeast Asia region, and decided to focus on developing those markets.
The brand chose the Philippines, along with Cambodia and Indonesia, for similar economic reasons.
The Philippines’ positive economic indicators such as its appreciating peso, increased domestic consumption, and foreign investment, and the government being more transparent are all major factors, he said.
Bullock sees the country as a spirit drinking market – the Philippines is among the top 10 liquor-consuming countries in the world on a per capita basis.
The bright prospects of a vibrant night life and the rising gaming industry in the country is another allure, especially as they make ideal partners for MH’s high-end brands, he said.
Bullock added that the sector is set for even more growth as Macau has slowed down due to the Chinese government’s crackdown on excessive consumption.
Lower volume, higher margin
Its business model is based on relatively lower volume with a much higher margin through the value chain, so it is not volume game for the brand, he explained.
“We're not a fast moving consumer good,” Bullock stressed.
MHPI is not worried about competition from local brands despite some seeking to position themselves as more aspirational.
Local competition is always a concern as it adds to consumer choice but the consumers MHPI is targeting to represent a different market, Bullock explained.
“The consumer who may be enjoying a bottle of Emperador in a local bar somewhere may not be the same person who may be enjoying a bottle of Hennessy VS in a high-end club like Valkyrie,” he said.
The firm is focused on 3 brands in the Philippines: Hennessy Cognac, Moët & Chandon champagne, and Belvedere vodka. Bullock said its major competition in a crowded vodka market are other imported premium brands like Grey Goose vodka or Absolut.
Widening the mark
The Hennessy brand is the centerpiece of the firm’s push in the country though, Bullock said.
Historically, the higher-end Hennessy VSOP and XO labels have been consumed mostly by small sectors of Filipino society, particularly the Filipino-Chinese.
There was a lot of consumption in the forms of gift-giving of bottles, celebrations for Chinese New Year, and friends getting together, he explained.
As such, the firm recently introduced Hennessy VS to the local market, priced around P1,500 ($40) in supermarkets, with the aim of widening the brand's target demographic.
Bullock said Hennessy VS is aimed specifically at including mainstream, young affluent Filipino professionals aged 25 to 30.
The group has also targeted clubs as an avenue to increase the brand’s presence. The price accessibility of Hennessy VS allows for it to be used in mixed drinks, which is popular at these places.
“Two years ago, we said we wanted to target young, hip Filipinos who are going to the trendy places in the Fort or Makati and give them the opportunity to drink something more premium than the usual Jack Daniels or Johnny Walker whiskies,” Bullock said.
He added that Hennessy VS represents about 15% to 20% premium over those drinks.
The hope is that they will develop a lifelong affinity to the brand and eventually move up to the higher-end labels, Bullock said.
The Hennessy and Moët & Chandon brands are both the market leaders domestically and internationally, commanding about 55% of the local market for cognac and around 70% for champagne respectively, Bullock said.
As a result, MHPI is focused more on growing the market for these types of liquor rather than trying to win market share.
“We really see now as an opportune time to raise the level of awareness. For us, it’s not a market share game, it’s a matter of steering more consumers to these types of drinks,” he said. – Rappler.com
$1 = P44.20