Interview, Part 2: Suntory Holdings’ Takeshi NiinamiMay 16, 2017
In the second part of our interview with Takeshi Niinami, the Suntory Holdings president and CEO discusses how Beam Suntory is addressing skyrocketing demand for Japanese whiskies, and how the company’s upscale single malt Scotch lineup fits into the portfolio mix.
SND: Japanese whisky was in decline for decades, but more recently has been experiencing a rebound.
Niinami: In 1980, sales of Suntory Old reached as high as 12 million cases—one brand alone, and in Japan only. Then shochu took over, and we couldn’t keep pace with the change. Total sales of Japanese whiskey plunged to 20% of their former levels. While this was a very difficult period, it also provided a good lesson for Suntory. We learned that we must stay ahead of the curve, constantly improve quality and never stand pat. By the time the super-premium labels like Hakushu, Hibiki, and Yamazaki began to rise again, production had been reduced dramatically. We’ve been ramping up since the early 2000s, but it takes years to age the product, of course. In the meantime, we’ll import more Jim Beam and Maker’s Mark, penetrating the Japanese market with our Bourbon portfolio. It’s a long-term vision, because it will be at least 10-15 years until our Japanese whisky super-premium side returns to full capacity. Until then, Bourbon will play a key role, even in Japan.
SND: While you’re waiting for capacity to refill on Yamazaki, Hakushu and Hibiki, what about the prospects for Toki?
Niinami: Even with Toki, we can’t yet supply enough. We’re now shifting more to the U.S. so Toki should play a key role there.
SND: How prominent will Scotch whisky be within the global portfolio?
Niinami: Bowmore and Laphroaig are very important brands with huge potential. But our focus is now on Bourbon, with its premiumization being the biggest priority. American whiskies are still the most popular, particularly with millennials. I’m not saying Bowmore and Laphroaig aren’t important. In fact, our Scotch portfolio grew by double-digits last year, and I want to increase their presence. But our focus is definitely on American whiskies.
SND: Many big spirits players are making acquisitions in craft spirits. Is this something Beam Suntory would consider?
Niinami: We did a small gin acquisition (of Sipsmiths) in the U.K. that will add value. We might do more such deals, but as far as craft whiskies are concerned, we have our own small batch products like Booker’s and Knob Creek, and we intend to grow them.
SND: You came aboard as president in October 2014, less than a year after Suntory made the Beam acquisition. How difficult has it been absorbing the business?
Niinami: Initially, there were some cultural differences. We Japanese don’t always say yes or no so clearly, while it’s much more clear-cut in the U.S. But by communicating frequently—with lots of travel between the U.S. and Japan—we overcame those issues. I launched the Whisky Quality Council, an organization between Yamazaki and Kentucky that reviews methods for improving quality and productivity, and it has been very successful. It has brought both sides together to share knowledge on everything from selection of raw materials to distilling and blending. There is very good chemistry now.
SND: Is it correct that you’re not considering a U.S. IPO this year, or maybe at all?
Niinami: We still have to concentrate on growing the Beam Suntory business to be able to declare the integration successful. Another major consideration is the cash from Beam Suntory’s operations. If the company is listed, we can’t control the cash, and we want to be able to continue doing that. In terms of our debt repayment, it’s so far, so good. So our focus is the successful integration with Beam Suntory.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.