The Big Interview: Jean-Etienne Gourgues, CEO of Chivas Brothers
In September 2021, the company applauded a 6% increase in total organic sales in the year up to the previous June, with Mr. Gourgues saying at the time: “It is clear from these results that we back to our pre-Covid regularly. dynamic, already exceeding this level in domestic markets. The breadth of our portfolio is our greatest asset, and we have continued to invest in innovation and creative campaigns despite a difficult year. “
The Paris executive, alongside the results, also unveiled key environmental goals, such as targeting net zero distillation by 2026.
Prior to assuming his current role, Mr. Gourgues was CEO of Pernod Ricard China since July 2014, and previously Chairman and CEO of Pernod Ricard Japan. His CV also includes a stint on the executive committee of Martell Mumm Perrier-Jouët.
You came to Glasgow for COP26 – can you tell us more about how your visit went and what was achieved at the conference by the Scottish industry, which presented a special limited edition showcasing its ecological references …
I left COP26 encouraged by the progress Scottish industry has made on sustainability. It’s almost impossible not to feel energized after meeting and hearing from some of the best minds in the world who are passionate about developing real solutions to tackle climate change.
The COP26 conference was also an opportunity to showcase some of the industry’s achievements over the past ten years, including a 34% reduction in greenhouse gas emissions, a 22% improvement in the efficiency of water and a 75% reduction in landfill waste.
Scotland’s second largest whiskey producer sees ‘good sales growth’ continuing
These achievements have only been possible through the collective action of all Scottish producers, large and small. I am especially proud that in September the Scotch Whiskey Association (SWA) became Scotland’s first trade association and the first UK food and drink trade association to be recognized as a partner of the UN Race to Zero. in the perspective of COP26.
The limited edition COP26 whiskey, to which Chivas Brothers has contributed, is the perfect expression of the unique collaborative spirit of our industry. We hope we can inspire others in the beverage industry and beyond to join hands and continue to innovate in the critical area of sustainability.
Chivas Brothers has highlighted its own sustainability efforts, for example targeting net zero distillation by 2026. Can you say more about that – and the company is doing enough?
Distillation is an energy intensive process, and that means any long-term solution to reducing emissions in our own operations must begin with distillation. Our priority is to conduct a distillation with very low energy consumption, then to decarbonize all residual carbon emissions to reach net zero.
For us, a long-term sustainable change in distillation requires an investment in new technologies such as high efficiency mechanical vapor recompression (MVR). In the distillation process, MVR scavenges energy from the alcohol vapor and uses it again to boil the still, much like a slow cooker, where the heat vapor is recovered.
At Glentauchers, which is a major component of Ballantine’s single malt, the MVR led to a massive 90 percent energy reduction on a single still. We plan to deploy the MVR to all viable sites by 2026.
We have also invested in alternative fuels to help decarbonise residual carbon emissions and are delighted that our Braeval distillery is our first direct zero carbon distillery after a successful switch to a biofuel made from rapeseed residue.
Packaging is another area of interest for us, and by 2025, 100% of our packaging will be recyclable, compostable or bio-based.
Sustainability is a priority battleground for our business, and we continually seek ways to innovate or adapt further to continue to make measurable progress and ideally improve or advance our commitments.
How would you characterize the first few months in your current role, and what are your main priorities?
“Dynamic” is the word that comes to mind when I think about my time at Chivas Brothers. We saw the US tariff suspension in June, which was a monumental victory for Scotch, and then all eyes were on Glasgow in the fall for COP26.
Throughout all of this, we’ve also seen the country go back and forth with the Covid restrictions and see a significant impact on the global supply chain with unprecedented inventories and increased demand across the world after the pandemic.
This ever-changing operating environment means we’ve had to step up a gear to make sure we stay nimble and on track to regain our pre-Covid momentum. I am fortunate to work with a large and very committed team on our 29 sites.
Previously, you led Pernod Ricard China and believe that the country will remain a strong growth engine for the company. Can you give more details on this?
China is such an exciting market for Scotch right now and I loved the time I spent running the business there. Scotch is growing rapidly among wealthy Chinese spirits drinkers, particularly in super premium blended and single malt, where Chivas and The Glenlivet bring whiskeys with unique finishes and experiences to an ever-growing fan base. There is a very strong desire in the country to discover new products with authentic heritage.
In our latest full year results, China has been the key to Chivas Brothers’ success globally, driven by the strong performance of the entire portfolio (Chivas, Royal Salute, The Glenlivet and Ballantine’s) in the country that has leads to a 47% growth in value compared to the previous year.
I was also very lucky to have been involved from the start in the project to bring the first malt whiskey distillery to China. This is a significant investment by Pernod Ricard and proof of confidence in the potential of the market. The distillery is now operational and its name – The Chuan – was revealed at the official opening in November.
You said in September, when Chivas Brothers announced its annual sales, that it was seeing a “steady return” to the pre-Covid momentum. What are your prospects now, in the context of the novel variant of the coronavirus and supply chain issues?
Our outlook remains cautiously optimistic as we continue to see strong performance in the domestic market and the gradual resurgence of the global travel retail channel as international travel picks up.
The disruption of the supply chain, especially around heavy truck drivers and shipping delays, remains a troublesome issue for our industry as it means we have not been able to take full advantage of the renewed demand in the main Scottish markets. Much more needs to be done in national and international policies to alleviate supply chain problems.
The annual results saw you applaud the suspension of U.S. single malt tariffs and say scotch should be the priority in ongoing trade negotiations – echoing the industry’s call to cut tariffs by 150. % on spirits exports to India. Can you explain more about this?
The SWA estimated that removing India’s 150% import tariff would unlock more than £ 1 billion in export growth for scotch. This would not only be important for distillers, but it would also boost jobs and investment in the Scottish and UK supply chain.
The US tariff suspension was a big win for the industry, especially in our business for brands like The Glenlivet, which is the number one single malt producer in the United States. More recently, we have also applauded the UK-Australia deal, which was a landmark deal for UK’s newly independent trade policy. We look forward to further victories for Global Britain in the burgeoning Asia-Pacific region.
The company has invested in its assets in Scotland, including the Balloch Hall at its Kilmalid bottling plant in Dumbarton, and its revamped visitor experience at Glenlivet – how much is this contributing to growth?
These investments are essential to remain competitive in a dynamic market that sees scotch competing for consumer attention not only alongside the world’s whiskeys, but also other spirits and even low-alcohol or non-alcoholic beverages. .
We need to invest in improving the consumer experience at all points of engagement. In recent years, we have also focused a lot on investing in our people by improving working environments in some of our key offices and operational sites. All of these investments are a vote of confidence in Scotch’s resilience and long-term future.
What would you like Chivas Brothers to look like in 2026, the year of its net zero distillation goal?
Chivas Brothers has a long heritage of innovation, which will stand us in good stead on the path to net zero distillation. But our ambitions do not end there. In 2026, I want us to continue leading the way in innovation, and – who knows? – maybe even moving us beyond carbon neutrality. We also expect our products to be a little different by then as we step up our ambitions to reduce our carbon footprint.
Right now we’re at a turning point for society and business, and I’m really excited to see what the next five years have in store for us. Basically I think we can set an example for other distillers and the whole spirits industry by proving that protecting the planet is a prerequisite for sustainable business growth.