SND: Beam Suntory saw increased sales last year, amid some broad headwinds in the industry. What drove those positive results?

Hughes: We had really solid 2023 results driven by some of our key brands like Jim Beam, Maker’s Mark, and Yamazaki. We had Jim Beam up 3%, Maker’s Mark up 10%, Knob Creek up 10%, brands that are rooted in quality and craftsmanship and authentic heritage. That was true also with El Tesoro Tequila delivering double-digit growth and then our RTD portfolio being up 12%. We saw particularly strong traction behind our House of Suntory hundred-year anniversary, which drove double-digit growth for that portfolio.

We benefit from our category footprint and our geographic diversity. We saw very strong performance across Japan, emerging Asia, and global travel retail. As the industry has, we faced some challenges in the U.S. due to market trends, but with net sales up 7% and operating income up 13%, we feel quite good that those are strong results.

SND: You noted that Beam Suntory is continuing its premiumization strategy despite some slowing in the U.S. in that regard last year. What’s your view on premiumization moving forward?

Hughes: The key is that consumers buy products across a range of different occasions and needs, and I think the desire to premiumize each of those occasions and needs remains. We still see that trend toward premiumization, whether it’s within whisky with consumers trading up to a 25-year-old Bowmore or 18-year-old Yamazaki, or with a premium version of at-home cocktail consumption like On the Rocks. It’s obviously segmented by category and need state, but that overall trend will continue to grow.

SND: How is the supply situation on Japanese whisky evolving?

Hughes: The good news is we have strong demand for the House of Suntory brands and recognition by consumers of the heritage and craftsmanship that goes into them. We still have more demand for those products globally than we have supply. But we continue to make significant investments in our capacity, particularly on our premium-plus whisky brands. As those investments come to fruition, we anticipate supply increasing and that will allow us to further globalize, particularly our House of Suntory luxury whisky portfolio.

SND: What went into the decision to sell Courvoisier to Campari?

Hughes: This sale was part of our ongoing efforts to prioritize and make sure our portfolio aligns with our strategic growth agenda, particularly where we see high-growth categories and where we have a right to win. That’s grounded in what we see as our differentiation, our authenticity, and our ability to deliver better experiences to consumers, especially across whisk(e)y, Tequila, and ready-to-drink. This allows us to focus on those priorities in the portfolio. Courvoisier is an iconic brand and we were able to take it to new heights. We’re excited to see where Campari can take it from here.

SND: You mentioned Tequila. Do you envision bigger things for that part of the lineup?

Hughes: Yes, definitely. We play across all the price tiers, with El Tesoro at the top, which has high engagement both from consumers and the trade in the ultra-premium and prestige tier. We have Tres Generaciones, which plays in the super-premium range and had incredible growth last year in the U.S. and has potential to globalize. Then we have Hornitos, which is premium-priced and north of a million cases, benefiting from growth both in the U.S. and Mexico. And we also have the Sauza brand and 100 Años, which play at the opening price point. So we have a robust portfolio that spans all tiers and feel great about our ability to deliver the right quality and the best version of each of those within the category.

SND: How about the RTD segment?

Hughes: Our clear ambition is to be the number-one global RTD player. On the Rocks has been a massive growth driver for us since the acquisition, we have a great partnership with Jennifer Lopez on Delola, and I’m incredibly excited about the expansion of -196° C Vodka Seltzer. That product takes whole fruit, uses our unique freeze crush technology to freeze it at -196° Celsius, and then uses it as the flavor infusion for the RTD. It’s seen incredible growth in Japan and Australia. We test marketed in the U.S. in four markets last year and we’re looking to expand to 21 states this year. We think it’s a great illustration of our ability to deliver a superior product.

SND: Any plans to expand via acquisition?

Hughes: Should a great opportunity come along that fits within our strategic focus, we would absolutely consider it. But right now I think we’ve got a great collection of brands and markets that we still have tons of runway with and lots of growth opportunities to drive.