The spotlight fell on Casa Redondo this year when it struck a deal for fruit flavoured liqueur brand Safari from Diageo, marking the Portuguese spirits group’s first purchase of a global label.
Set up in 1940, the family-run company’s portfolio is made up of a selection of Portuguese brands, including its flagship liqueur Licor Beirão, Per Se aperitif, Aldeia Velha brandy and FoxTale gin.
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Casa Redondo’s deal for Safari comes as the company also looks to scale Beirão, replete with a €10m ($10.5m) investment in a new distillery and warehouse facility in Portugal as it looks to increase the production capacity and grow the global presence of the brand.
Just Drinks sat down with Casa Redondo CEO Daniel Redondo to discuss the company’s intentions for Safari and why the company is still open to M&A.
Fiona Holland (FH): Why was it important for Casa Redondo to relaunch Safari in the wake of the acquisition?
Daniel Redondo (DR): We were looking for these kinds of opportunities around the world for quite some time. We had already bought many brands in our own country, where we have the route to market, everything well organised, but we were looking for this international opportunity. Luckily, we just knocked on the door of Diageo when they started this process of Safari, and we were able to get the brand.
It was a sleeping brand on Diageo’s portfolio for many reasons. I believe it’s not on their global strategies. They have huge brands and Safari was the little son hidden in the house.
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By GlobalDataWe do believe there is a big opportunity around the brand, in terms of flavour, in terms of low abv, and in terms of all the concepts around the look and feel of Safari. There [are] a lot of things that we can work around this. It’s a party drink and we believe that, still, much of this younger generation, they need to party, they need to do stuff outside of the web, of the virtual world. We believe that this brand can have a good part in it.
FH: Safari is your first international brand, correct?
DR: Yes. Just in terms of contextualisation, we are one of the top three distributors in Portugal. We are fighting with Diageo and Pernod Ricard on [being] the biggest distributors in Portugal but we have mostly the number one spirit brand overall in the market. We have Licor Beirão, which is our main brand… that was where we got all the knowledge about producing and marketing spirits.
We are used to doing 360 marketing campaigns… and now we want to bring that know-how to new brands into new markets. We are doing that with Safari. We want to get a new concept around the brand, maybe reviewing some things about the packaging. We believe that it’s a bit stuck in time…Diageo hasn’t done anything on the brand for over ten years now, so we will start using our know-how to make the brand relevant for the consumer again.
FH: How specifically do you plan to update the brand?
DR: We just integrated the branding in September. We are more or less one month selling the brand now and we are already working with our partners to see what different routes we can have for the brand… We are still also working with our international partners that distribute the brand in other countries. We are working closely with them to find this new way of communicating the brand, and what kind of adjustments are crucial to do in the short term.
FH: Besides branding, how will you look to grow Safari in the next year?
DR: Mostly we are making a sales effort in other markets because it was out of the scope for Diageo. Besides making sure that we keep on selling where Diageo was selling already [Benelux, Portugal and Türkiye], we believe there is a potential for many other markets [Germany, Denmark, Spain and Brazil].
We are in contact with many different players, either distributors or retailers around the world, and we are looking for partners for the brand internationally.
FH: Do you think M&A will continue to play a role in Casa Redondo’s growth plans?
DR: We do believe that we need to get some more muscle to have more relevant brands in more markets.
We have partners around the world because we are producers. In our own markets, we are distributors mostly because we are very strong in this market but the rule for our company is to have partners around the world, to have independent distributors around the world.
To accelerate, of course, we could do brands from zero but we do believe that the investment would be higher than buying existing brands. We are still looking and we are still open to these M&A deals.
FH: Are you looking to enter any new markets with your other brands in the next year?
DR: We are not actively looking for new markets as we just opened the key ones for us. We started quite strongly in the Netherlands this year with A Brand New Day, our [distribution] partner. We launched a TV campaign there [for Beirão] and that has been having very good results.
We are doing the same in Germany and in Brazil. In these three markets, we are investing quite [a lot]… for now, we are making sure that these ones work quite well.
We also have all the focus on launching a new campaign around Safari and then we have another one, which is Per Se, an aperitif distilled with 24 botanicals, which is having quite a good success in Germany.
We are entering quite strongly in duty-free in the Nordics, also in Denmark.
FH: Where are your most important markets at the minute?
DR: For now, I would say it’s central Europe. It’s France, Germany and the Netherlands are the key markets.
We do have some sales in the US but [it’s] far from being a key market. We believe that the US is a very tough market and a very expensive one, so, if we want to grow, we need to have a lot of resources focus[ed] on that market. For now, we have some basic distribution but we are not actively developing distribution there.
I would say it’s central Europe and Portugal and Spain. Portugal where we have a very strong position and spend, where we are growing, also because of natural proximity with our market.
FH: How much do you expect to grow sales in the next year?
DR: We know that there is a tough market right now but, nevertheless, we believe that, with all this investment that we started… that we are having very good results this year and we expect to grow around 20% the next year.
FH: Is premiumisation a focus for the company?
DR: People drink less, but they drink better, and that’s a normal trend.
We are on the low end of the premium brands, so we are more on the standard premium, but we are very far away from the low cost that we don’t believe in. To be able to have a good drink, to have a good spirit, with a good distillation, good ingredients, a good packaging, you cannot be on the low-cost side.
FH: Is there a reason why you’ve focused on that lower end, as opposed to ultra-premium?
DR: It’s a bit of know-how. We’ve been in this segment for [the whole] life of this company.
Also, even in Portugal, in the south of Europe, very expensive products, [we] don’t have a big space for them. There are the economic constraints around it but, still, we are always looking for other brands that can justify that premium side. We are able and we can do a very premium packaging for some brands but to sell 5,000 bottles or 10,000 bottles, it doesn’t make sense. It’s not our way of doing business.
FH: Are you sold equally across on- and off-trade?
DR: It depends on the market. Here in the south of Europe, it’s mostly on-trade.
Sometimes we are around 70% on-trade, 30% off-trade but there are markets where it’s the other way around. It’s 80%/20%, or even 90%/10%.
The northern countries, we see much more this at-home consumption of spirits. Spirits in the south… people go out to have a cocktail and so, if the weather is bad, people don’t go out and don’t drink. Luckily, Portugal is becoming much of a foodie destination. People come a lot to Portugal to experience our food, our wines and our spirits. It’s very good to have our brands connected to that moment when people go out there.
FH: What are the main growth opportunities for Casa Redondo’s brands in the next year?
DR: First, we believe a lot [in] the Safari brand, we believe there is a big opportunity around that and all the feedback that we have been receiving from our partners and from potential clients around the world has been very good.
We believe Per Se is a brand that can double volumes very easily in many countries.
Per Se is having a huge success where it’s been launched, so we believe that it’s a brand that can double volumes very easily in many countries.
We’ve seen that recently and then, of course, Beirão, which is a different product, very niche. We are talking about a spice liquor, a double distillation, something very conservative but unique. In Portugal, we sell almost 4 million bottles and we have no competition… we do believe there is a long way to [go] on that brand, as long as we find new consumers, they become very loyal because it’s a unique offering. But of course, it’s Portuguese. It is not something that everybody understands. You need to come to Portugal and love Portugal to be able to love this brand, so it’s a process.
FH: Do you see interest in lower abv spirits increasing?
DR: I do think so. There are some people, they want something that is easier to drink. When you have a higher proof, you need a learning curve that is higher now, you take a long time to understand the liquid and this younger generation is not that focused on that.
Of course, there are some people that become experts, they like to know everything about that category. But this common family in Europe, I do believe that they want something easy to drink where they have fun with their family, with their friends, and this is more on the low abv kind of drinks.
FH: You also have one non-alcoholic product?
DR: Yes, FoxTale has launched a zero abv gin lookalike. It’s something we had to study. We had to learn new techniques to develop this product, but we are quite happy with the result.
Non-alcoholic spirits in Portugal [have] a long way to go. Mostly because of financial terms because the liquids are not cheap and people don’t understand why are they paying that amount for something that has no alcohol? Of course, it has a distillation underneath so it has some quality but the consumers still don’t understand.
FH: Is FoxTale 0% only available in Portugal or across Europe?
DR: We are selling already in some other markets [Spain] but it’s a category that has a long way to establish itself to have its own space.
I believe in the UK there is already a very important part of the shelf [taken by] non-alcoholic spirits. Also, the fact that it doesn’t have any duty, it [has] a huge margin.
If you compare to southern Europe where the wine in Portugal has no duty, you [can] buy a bottle of wine for €3.50 that is quite good in terms of quality, for €5 you have a premium wine. When you compare [that] to a non-alcoholic spirit that is selling at €20 a bottle, people still struggle to understand.
FH: Do you plan to expand further in non-alcoholic spirits?
DR: We are analysing, we are studying, but it’s [mostly] on quality. If we are not sure about the quality, about the consumer drinking and feeling it’s a great liquid, we prefer not to launch it… We are not in a hurry. The market is not that big.
