Simon Murphy has had 30 years experience of the Asian drinks industry and offers some insights into living and working in this fascinating region.
Originally recruited from Jardine Matheson by Moet-Hennessy and United Distillers (a precursor to Diageo) in the early 80’s, Simon started his drinks career in Hong Kong, then managed distribution companies in Malaysia, Singapore, Vietnam, Taiwan & China. Simon then made the move to the independent sector with Burn Stewart Distillers, Angostura and Whyte & Mackay building distribution capabilities and developing new brands in the region – in countries as diverse as Japan and Australia. Simon now works extensively in Asia across a broad scope of drinks projects.
You can only understand and be effective in Asia, or any developing market for that matter, by living and working there. You need to live in and absorb the culture; understand what makes the consumer tick by watching them, talking to them, drinking with them. To try and do this from the supposed comforts of the office in Hammersmith via Terminal 5 at Heathrow, simply doesn’t work. One of the most successful international drinks brands in Asia in the last thirty years – Hennessy Cognac – was built from the ground up in the 80’s by an entrepreneurial team of people living and working in Kuala Lumpur, Taipei, Beijing & Tokyo. This is still the most effective model today.
If you want to build a business and brands out of a suitcase, don’t bother to try.
You also need time. The ‘enlightened’ blue chip corporate that spins their executives across the world from one continent to the next every two years, think they are creating the internationalist of tomorrow. They end up with a coterie of skin-deep careerists, not really understanding the countries they are working in, making short term decisions. So live in Asia, learn a language, immerse yourself, build real local expertise, stay there and enjoy!
HR departments you are warned. Living and working in Asia, or other developing markets, will not suit everyone. Adapting to a completely new environment can result in profound culture shock. It is one thing to be comfortably ensconced in Hong Kong or Singapore, quite another to set about 3-4 years in Seoul or Phnom Penh. You need to be extrovert, gregarious, energetic and disciplined. Drinking (sometimes a lot) is far more embedded in the culture of most Asian societies than is generally the case in the West. You must learn to be skilled ‘culture’ managers – which is half the fun. Thailand is four hours by plane from Korea, but they are worlds apart culturally. You need to learn how to manage cross-cultural teams and make them work. Demanding, enjoyable and rewarding, if you get it right.
The demographics of the Asia region speak for themselves, and don’t need repeating here. Over the next 5-10 years there will be tremendous opportunities within the Asian drinks industry. While some cities are very sophisticated – Hong Kong, Singapore, Tokyo – markets are continuing to evolve – Korea, Taiwan, China – and others emerge – Vietnam, Cambodia & Myanmar. In the last 30 years, the main engines of ‘western’ spirit growth have been brown spirits – first cognac, then scotch which is growing strongly both for blends and malts. Wine has made huge progress especially with the growth in China and international white spirit brands are gradually finding a niche in most markets.
Markets are ‘democratising’ – in the sense that Asian consumers are drinking western brands outside the traditional on-premise environment which has always been dominated by big brands and the big bucks. The large multinationals with enormous budgets have kept aspiring competitors out. As an example, Taiwan broke out of this straightjacket in the last 15 years, with the demise of the traditional nightclub scene and the growth of the liquor shop-hypermarket sector where a much greater variety of brands are available, at much cheaper prices with tax rates lower. The recent fall in sales of expensive cognac and whisky in China has generally been portrayed as a retrograde step in the development of the industry. This is not the case longer term. This is a real and important opportunity for a larger number of players to participate in the growth of this enormous market. The Chinese consumer has not stopped drinking. They are seeking less ostentation and greater value for money.
In the west, distribution for drinks brands is generally very structured. The supermarket sector is increasingly all-powerful. This is less the case in Asia where a more traditional wholesale and retail structure is in place. There is more reliance on relationship building and creativity in distribution mechanics. Building distribution partnerships, either to gain market entry for your brands or growing your business in your target markets, is essential and its importance under-estimated. It is very easy to spend money on visibility for your brands, less straightforward to ensure the product is in the places you want it, at the right price, with support from the trade to encourage a sale. Building personal relationships in Asia is a powerful weapon with which to build a new business or grow an existing one.
MAKE A DIFFERENCE
As the drinks industry consolidates; distribution becomes more sophisticated; the mobile device replaces talking to someone; you are only recognised as a cog in the larger machine that is the 21st century drinks company. Go and explore an emerging market, whether in Asia or elsewhere. Where work and life offer an infinite variety, you can have fun and build new, exciting drinks brands.
Check out Simon’s profile – Simon Murphy LinkedIn