Hennessy; Why we want a piece of Kenya's luxury market

During a gala to celebrate Hennessey’s 250-year anniversary in Johannesburg recently, the firm’s president Bernard Peillon met Kenyan guests who challenged him to make Kenya one of the destinations in his next visit to Sub-Saharan Africa. Last week, Mr Peillon fulfilled his promise. The Financial Standard caught up with Mr Peillon who shared the motive behind his visit and the plans he has in store for East Africa’s largest economy.

What brings you to town?

Hennessy operates in 140 countries and we have a team here and another one in Paris that travels across our markets in the region on a regular basis but after a while I needed to come see for myself how we are faring. It was also important to come look for more opportunities to build partnerships and strengthen the ones we already have. We already have a strong presence in Nigeria and in South Africa which is the third largest market for Hennessey in the world - having witnessed great growth in the last 12 years. As we expand more into the continent, Kenya is one of the markets that we identify as in need of building a stronger process.

Why is Kenya important to Hennessy’s growth strategy in the region?

The country’s geo-political position in East and Central Africa makes it ideal and strategic. Kenya also has an expanding economy and a population of more than 45 million and literacy levels are good. These are all conditions that facilitate the expansion of the middle class and for a company like us, it is a good sign of an emerging market for lifestyle goods and one that can get to critical mass. We know if we are successful in Kenya, then it will be relatively easier for us to expand into the region. In the US for example, which is our largest market, we have a loyal base in the African American community and this relationship has been firmed up over the decades. We are quoted in hip-hop lyrics and have worked with artists such as Nas and Common who are part of our advertising. Social media is an accelerator not just for us but many brands and Kenya has great connectivity. The proliferation of smart phones and social media and the heavy presence on line is startling.

Critics would say that low incomes in developing countries can limit growth for luxury brands. Do you see this as a challenge?

This is the eighth generation of Hennessey and for the last 250 years, our approach to new markets entails a delicate process that is often more than just establishing a process. Our business calendar is structured to accommodate both a short-term and long-term growth strategy. The short-term strategy involves running the daily operations of buying and selling and balancing your financial results, marketing and advertising, etc. More important to us is the long-term and this involves establishing the brand which takes time. For example some of the cognac will be aged for decades. At the same time there is a growing middle class and a developing upper class to start from. With the economy growing at six per cent, we expect to see earnings continue to rise if the socio-economic climate remains constant.

How do you plan to grow your presence in the country and across the region?

Our team is connected to the trendsetters and opinion leaders who are the first step of contact and we start by ensuring we have a working relationship with these influencers who help in swaying opinion when it comes to fashion and taste.

There is also a lot of groundwork to be done among consumers who might not know your product and need awareness to purchase. You can’t just throw the brand at people and expect them to buy it on face value because of who you are.

We have also signed a partnership with Viva distributors who will be selling our product across Kenya, Rwanda and Uganda. Viva has a strong experience in the wine and refined spirits portfolio and the ideal partner to distribute Hennessey.

We are also banking on informal pacts with some of the high-end lounges such as Kiza and Privee among others. Consumers here know the latest trends in fashion and are in step with their counterparts in Paris or New York for example and we believe that this will go a long way in building awareness.