The Case for Old St. Andrews in Duty Free and Travel Retail

Contact Details.......................................................................................................1Introduction............................................................................................................2Travel Retail Interest..............................................................................................3

Travel Retail Listings Examples at July 2010....................................................3Market Share Information................................................................................4

Scotch Whiskies.....................................................................................................5Clubhouse Blended Scotch Whisky..................................................................5Blended Malt Scotch Whiskies..........................................................................5Whisky Price Positioning..................................................................................6Whisky Quality.................................................................................................6

London Dry Gins.....................................................................................................7Pink 47.............................................................................................................7London 40 & 47................................................................................................8Gin Price Positioning........................................................................................8Gin Quality.......................................................................................................9

Presentation & Promotion.....................................................................................10References...........................................................................................................11

Contact DetailsFurther information at www.osawhisky.com

Bob GortonManaging DirectorTel: +44 (0)1732 761106Mob: +44 (0)7967 028642

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Old St. Andrews Ltd.Unit E1 Chaucer Business Park

Kemsing Nr. SevenoaksKent

TN15 7YPUnited Kingdom

IntroductionOld St. Andrews is the designer, brand owner, bottler and distributor of premium and distinctive alcohol brands. We supply the duty free, travel retail and gift markets worldwide with signature products that include:

Old St Andrews Whisky – the distinctive brand that speaks to enthusiasts of scotch whisky and golf

Pink 47 and London 40 – the definitive premium London Dry Gins Whisky Barrel – a delightfully packaged premium malt whisky

Figure 1: The Old St. Andrews Whisky Range is 'Gift Ready'

Figure 2: Pink 47 Premium London Dry Gin (left) & Whisky Barrel Malt

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Travel Retail InterestA primary interest of the travel retail industry is ‘to provide the best environment possible for travellers to buy a wide array of brands… retailers and suppliers need to work together to find ways to increase choice, penetration, conversion and spend per passenger’.1

When travelling, people often want to buy things that are exclusive and unique. Paradoxically, they also want brands they recognise and trust. The tightrope… is to provide offers that are both universally distinguishable and rare enough to be coveted.2

Figure 3: The Old St. Andrews Brand is Trademark Protected Worldwide

Old St. Andrews meets these needs by offering brands that are distinctive, with an exclusive cache that motivates consumers to purchase. Old St. Andrews products allows travel retailers to extend their brand array and satisy the demand for a value-added buying experience by offering something out of the ordinary that nevertheless sells well.

Travel Retail Listings Examples at July 2010

Beirut, Lebanon: Rafic Hariri International Airport (Hanimex) Cardiff, UK: Cardiff Airport (The Nuance Group) Finland: various seaports & ferry services Gibraltar, UK: Airport & all peninsular retail outlets Johor, Malaysia: Johor Senai Airport (Extra Vantage) Kuala Lumpur, Malaysia: International Airport (Malaysia Airports + DFZ +

Eraman) Langkawi, Malaysia: Lankawi Airport (Lankawi Duty Free + Pemborong

Bumihijau) Penang, Malaysia: Penang Airport (Syarikat Seri) Praque, Czech Republic: Ruzyne Airport (Berentzen) Prestwick, UK: Prestwick Airport (The Nuance Group) Seoul, Korea: Incheon Airport (Lotte Duty Free) Tokyo, Japan: Narita Airport (Meidi-Ya/Traveller Retail) Vietnam: Golden Century & Millenium Co. duty free outlets (Imex Asia

Pacific International Ltd)

1 Kolasinski M (2009) ‘Troubling Times’ in Frontier June/July p.1 Metropolis Business Publishing, UK2 Harvey J (2009) ‘The rules of attraction’ in Frontier June/July p.21 Metropolis Business Publishing, UK

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‘We are delighted with sales: from the outset is was obvious that the packaging was attractive to customers, so we will extend the listing to include Cardiff as well as Prestwick and I’d like you to make a presentation to our head office in Zurich.’ 3

Rachel Elks, The Nuance Group

Market Share InformationMarket share information is not available yet because:

o Old St. Andrews Scotch whiskies are a niche brand focussed on gifting rather than mainstream liquor consumption and there is no comparable leader.

o Pink 47 is a newly introduced product and our market share is not yet measurable.

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Scotch Whiskies

Old St. Andrews Scotch whiskies are positioned as being a gift products, rather than a mainstream drinking whisky.

Our distinctive whiskies are uniquely bottled to have high appeal for that segment of shoppers known as ‘travelling browsers’. These are an outstanding source of customers looking for fashionable gifts and souvenir ‘trophies’. Such ‘treasure hunters’, who are looking for something new, are drawn to our products because of their unusual appeal. They like to pick up and examine them, which helps to bridge the gulf between browsing and buying... because once in the hand it is a small move to the basket and the till.

People who buy Old St. Andrews whisky are buying for a whisky lover and looking for something out of the ordinary. They are typically of a ‘romantic idealist’ inclination and searching for a:

Good whisky Souvenir trophy or heritage token of Scotland Gift for a whisky lover or golfer Curiosity or collectable

Clubhouse Blended Scotch Whisky

Old St. Andrews Clubhouse is full flavoured, fruity and fresh. The exceptional blend of rich fruit flavours comes from ageing in European oak casks that have previously contained sweet wines, sherry or port. The powerful flavours are balanced with and undertone of sweet spiciness that leaves a fresh, energetic, mouth watering finish. The perfect accompaniment to and evening with friends.

Our Clubhouse is available in a variety of formats including 50cl, 70cl and 100cl.

Blended Malt Scotch Whiskies

The enduring popularity of our uniquely packaged Clubhouse blend has created a demand for the subtle flavour combinations that only Malt Scotch Whisky can provide.

We offer a range each with a distinctively different taste carefully chosen to reflect the spectrum of flavours available to whisky lovers.

Twilight: the fresh and delicate one Fireside: the slightly smokey one Nightcap: the rich honeyed oak one

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Figure 4: The Old St. Andrews flavour line up

Whisky Price Positioning

We understand that competitive postioning is all important when competing for shelf space. Here is what our research indicates…

Although not designed to compete as a ‘mainstream’ whisky, wherever Old St. Andrews Clubhouse Scotch whisky 100cl appears on an adjacent shelf, we are generally $3 to $5 lower in price than Walker Black Label®, Chevas Regal® et al.

Even though these are 12 year old whiskies, we demonstrate the capacity to earn respectable margins for distributors and retailers alongside these iconic brands.

Actual Traveller retail prices averaged across our listings for Old St. Andrews Clubhouse 100cl is US$34.99

Whisky QualityWhilst first response interest is generated by our unusual packaging, consumers quickly discover that the beverage alcohol is very high quality indeed.

The clean taste of Old St. Andrews is also generating repeat sales amongst whisky lovers who have discovered it as their main drinking whisky.

‘Can you deliver without the gift packing please, because many of our customers are now choosing this as their main drinking whisky’ 4

Old St. Andrews Clubhouse has won several medals in international whisky competitions, most recently a silver award in the International Spirits Challenge 2009. Jim Murray’s Whisky Bible (2006) - the most comprehensive and thoroughly researched guide to the world’s whiskies ever produced, says:

Old St. Andrews Clubhouse: 90/100 = Brilliant…clean as a whistle… a Speyside influence comes through loud and clear: mouth-watering... clear as the morning dew on the first green and no less grassy. Long finish… soft vanillas… fresh and lacking any sort of pretentions. It has quality enough. 5

4 Hannah E (2008) Remarks after trialling the product for six months in Lebanon domestic and duty free

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Figure 4: The Clubhouse ISC Medals

London Dry GinsThe huge popularity of vodka, leading to the development of flavoured vodkas, has created a surge o interest in other white spirits such as gin, which is flavoured mainly with juniper. This interest in other white spirits has been causing gin to become more fashionable and driving a movement into premium categories.

Pink 47

Pink 47 is a prize winning London Dry Gin. It is positioned as a force to be reckoned with in the premium white spirits category: being expensive but affordable: ‘daring’, ‘glamorous’ and ‘aspirational’.

Pink 47 consumers are typically affluent professionals, both male and female, with a romantic inclination that value peer approbation. They are also:

Gin drinkers Cocktail enthusiasts Explorers of fine spirits

These buyers value a premium gin that is worth paying a little extra for. Our delicious recipe is carefully crafted in small batches with a mix of 10 botanicals. The result is a unique and complex flavour. Four times distilled and at 47% alcohol by volume, it is perfect for cocktails – strong and smooth, with a crisp and compelling finish but without any trace of harshness.

As well as our unique 70cl diamond shaped bottle, Pink 47 is also available in standard 70cl and 100cl formats.

London 40 & 47

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London 47 is the same great formula and the same prize-winning gin as our remarkable Pink 47, but packaged in a simple bottle with an iconic London theme to suit those markets where product heritage offers a more attractive buying proposition than bottle shape.

London 40 uses the same recipe again but is made to a lower alcohol formulation to suit those sectors where this is imporant for social or price considerations.

Gin Price Positioning

We understand that competitive postioning is all important when competing for shelf space. Here is what our research indicates…

The strong sales of premium white spirits fuels confidence in the growth of the upper echelons of the gin category where there is plenty of room for growth because the existing super-premium gin share is decidedly small at only 2% to date: mainly Hendricks® and Tanquery®.6

Wherever Pink 47 70cl finds shelf space alongside other benchmark brands it achieves a ‘street’ price point around the same as Tanquery® 47%. Always above Bombay Sapphire® yet below Hendrick’s®.

Pink 47 has ‘shelf presence’ and all the signs in the super-premium sector of the gin category are good.

‘Gin is one of the big excitements on the international spirits stage.’ 7

Actual Traveller retail prices averaged across our listings for Old St. Andrews Pink 47 70cl is $15.99.

6 Murray F (2008) ‘The measure of gin’ in Drinks International June p.287 Gould P (2009) ‘Gins is most definitely in’ in The Spirits Business Feb p.27

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Gin Quality

Our Pink 47 Premium London Dry Gin is fast developing a reputation for the ‘Definitive’ gin base for cocktails.

It has won several gold and silver medals internationally (see www.osawhisky.com for the full list) and last year was awarded the Trophy from ISW for the Aromatic Spirit of the Year.

"Everything blends just perfectly with Pink 47" 8

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Figure 5: Some Pink 47 Awards

Presentation & Promotion

We recognise that most purchasing decisions for gift and souvenir products are made at the point of sale and this desire-driven, impulse decision-making can be significantly influenced by the quality of display and merchandising. The combination of premium alcohol spirit blends with uniquely attractive packaging creates a compelling purchase incentive for gift and souvenir buyers. This translates into a high shelf return for retailers, which is important to all of us.

Our products really stand out and catch the eye, which is much of the key to impulse buying9. Experience has proved that high shelf visibilty has been found to be the most effective sales driver for us. So location and shelf position are as critically important as for any other consumer retail product. In retail arenas that are chronically short of space, simply an eye level shelf in the appropriate whisky or gin section produces high returns per shelf centimetre.

Figure 9: Old St. Andrews On Display Top Centre Helsinki Airport (left) & Langkawi, Malaysia

However, in two of our most succesful outlets, Malaysia and Czech Republic, the products are presented on their own sales gondolas.

9 Munday G (2009) ‘The rules of attraction’ in Frontier June/July p.22 Metropolis Business Publishing, UK

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Figure 10: OSA Gondola Designed to Requirements of Kuala Lumpur Duty Free (left) & as supplied for Prague

Some travel retail goods require constant promotions and gift incentives as critical sales drivers. Because of the unique visual appeal of our Clubhouse whisky, Pink47 gin and Whisky Barrel, there has not yet been a need to conduct samplings or special promotions.

However, the need to increase sales to the mutual benefit of our retailer partners and ourselves is unrelenting, so we are testing a sample promotion that offers a gift with purchase in selected outlets at certain times. This is a highly collectable engraved Old St. Andrews whisky tumbler, a unique gift that customers cannot get anywhere else.

References

3 Elks R (2008) remarks on the launch of Old St. Andrews at Prestwick Airport by The Nuance Group5 Murray J (2006) Jim Murray’s Whisky Bible pp.234/235 Carlton Books Limited8 Staack M (2009) Connoisseur de cocktails from the Bar Hamburg at the Bar Zone, Berlin (May)

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Figure 8: Free Whisky Tumbler