Bacardi Limited CFO on alcohol sales during COVID-19

Tony Latham, Bacardi Limited CFO, joined Yahoo Finance Live to discuss drinking trends during the pandemic and what he's expecting from the holiday shopping season.

Video Transcript

SEANA SMITH: Let's talk about alcohol sales, because we talked about it during COVID, but of course, the holiday season is very important for a lot of these distributors. A recent report from American Medical Association found a 14% increase nationwide in alcohol sales during the pandemic.

So for more on that and what to expect over the next month, we want to bring in Tony Latham. He is the CFO of Bacardi Limited. And Tony, great to have you on the program. Let's just start with, I guess, some of the trends that you've been seeing over the past couple of months. Alcohol consumption has been up, but many restaurants and bars, on the other hand, a lot of your customers, have been closed for some time. What kind of impact has COVID had on your business?

TONY LATHAM: Yes, so if we look at what we call the on-premise, restaurants, nightclubs, sporting venues, that accounts for around 30% of our business. And so, you know, for the most part over the last six months, much of that business has gone away. What we have seen is a surge in retail sales, which has been very welcomed, down in explosion in digital commerce.

But of course, there's a bigger story there, and that's the millions of people's lives that have been affected through the closure of the on-premise. But some recovery through retail sales and an explosion of digital commerce is being welcomed from outside.

ADAM SHAPIRO: I think everybody would agree there's nothing better than maybe a little scotch on the rocks after battling with a major tech company over the new computer that doesn't work. But I'm curious, what are we drinking? Because Bacardi sells everything. I mean, I was pleased to learn that, I think, Grey Goose is in your portfolio. And I do like vodka, too. So what is it we're drinking right now?

TONY LATHAM: Grey Goose is indeed in our portfolio. What we have here in front of us today is a Patrón tequila festive fizz made with our wonderful Patrón tequila brand, rosemary simple syrup, some lemon juice, pomegranate juice, cranberry juice, all shaken and strained over ice and topped out with some club soda. It is absolutely perfect for the holiday period.

SEANA SMITH: Tony, talking about that holiday period, we know Thanksgiving through New Year's Eve, some of the stats that you sent over is this make or break time period for the spirits brand. They typically do 30% to 40% of business during this period. Given, though, what's going on, what are some of your projections over the next month for sales?

TONY LATHAM: Look, we're still expecting quite a strong quarter. As I mentioned, there's been a significant uplift or shift in volume from the on-premise to the retail environment, as well as digital commerce. We're also expecting a very strong holiday gifting period. And, you know, there's lots of people looking for convenient, practical gifting solutions with a wow factor.

And our wonderful portfolio brand certainly offer that. And there's many options available now, limited edition bottles, ready-to-make cocktail kits, personalized and customized solutions. And so, we're expecting a very strong holiday gifting season, as well as a continuation of the strong retail environment and the strong online commerce environment.

ADAM SHAPIRO: Is it difficult-- for those of us who do drink responsibly and want to enjoy adult beverages, I can't order directly from Bacardi. Can I-- I guess, it depends on where I live, or do I have to go through a third party within the state? You've got 50 different states and 50 different liquor regulations. How hard is that for a company like yours?

TONY LATHAM: Well, there's a three-tiered distribution system for distribution of alcohol in North America that's been around since the time of prohibition. So, no, you cannot order directly from Bacardi. But what's emerged over the last six months in particular is a selection of platforms such as Drizly, InstaCart, Cocktail Courier, Reserve Bar, that are providing consumers with a really positive experience.

Many consumers experiencing purchasing spirits online for the first time. Less than 1% of sales pre-COVID. We've seen explosive growth, as I mentioned. And anyone following those platforms will have seen very, very strong triple digit growth over the last six or seven months. So there are easy, convenient solutions available for consumers out there to get our wonderful brands delivered at their door.

SEANA SMITH: And Tony, talking about some of the strategic moves that you've made recently, we know Bacardi has just acquired Tails. This is a brand that has really been expanding across Western Europe. When you're identifying potential opportunities, more names to bring under your brand umbrella, what are you looking for in those potential names?

TONY LATHAM: Yeah, I bet you know over the last couple of decades, the board of management has done a wonderful job of building up a portfolio of Bacardi brands such that it isn't just Bacardi anymore. And Adam, you mentioned Grey Goose. Of course, we've got Patrón Tequila, Bombay Sapphire Gin. We're looking for positions where we can play in growth categories to meet consumer needs, whether that be on a brand basis or on a solution basis.

I think Tails is a good example of a solution rather than a brand itself. And this particular solution is tailored towards the on-premise, actually, to bars and restaurants, but could very well become a consumer offering throughout Western Europe and the rest of the world over time. So we're looking at meeting consumer needs, finding solutions for them both in the liquid and the format we deliver.

ADAM SHAPIRO: In North America, are we rum drinkers? Are we gin drinkers? Are we vodka drinkers? And is it the same in Western Europe?

TONY LATHAM: Well, you know, the beauty of what's happening in North America is that there's a great diversity of what consumers are enjoying from a brand spirits. I mean, some of the hot categories at the moment are, obviously, tequila. There's an emergence of gin in North America. Vodka and rum are two very strong traditional categories, all forms of whiskey, American whiskey, Japanese whiskey, et cetera.

So there's a great diversity of American consumers enjoying many, many brands and categories. And what we're seeing is those trends, over time, play out around the rest of the world.

SEANA SMITH: All right, Tony Latham, great to have you on this show. CFO of Bacardi Limited, thanks so much for taking the time to join us.

TONY LATHAM: Thanks very much.