Suntory President Takeshi Niinami On Tapping Bourbon’s Global Potential

Editor’s Note: Takeshi Niinami became president and CEO of Suntory Holdings in October of 2014, just 10 months after Suntory’s $16 billion acquisition of Beam Inc. In the ensuing integration, the new Beam Suntory experienced some growing pains due to cultural differences, though both sides say those issues have now been resolved. Looking ahead, as Japanese whisky copes with a major inventory shortfall, the company’s focus is now squarely on Kentucky, with ambitious plans to expand in the Bourbon space. SND executive editor David Fleming met recently with Niinami to discuss the road ahead.

SND: Beam Suntory is currently pouring $1 billion into its Kentucky operations. What’s the nature of this investment?

Niinami: The investments include both capital expenditures and operating costs, to support an expanding Bourbon business. We think American whiskey will continue to grow, particularly on the premium side. So we’re boosting capacity at Jim Beam, just as we did at Maker’s Mark. Over the next five years, including capital expenditures, barrel purchases, grains and labor, we will thus invest well over $1 billion to make Bourbon in Kentucky.

SND: Will there also be further production increases?

Niinami: For Jim Beam, yes. We’ve also invested to expand capacity twice at Maker’s Mark. The first expansion doubled production capacity, and the second increased it by a further 50%. For Beam, the increase will be about 20%. We want to make use of our cash to build more warehousing—not just for Jim Beam, but also for the small-batch Bourbons like Knob Creek and Booker’s.

SND: After you acquired Beam, there was much discussion of tapping whiskey’s global potential. How large can it become, and which brands will lead the global charge?

Niinami: Jim Beam’s sales will expand, particularly in Japan. Last year it sold 560,000 cases there, and our goal is to reach 1 million cases by 2020. Japan has become one of Jim Beam’s biggest markets along with the U.S., Australia and Germany. We also see good prospects for India and China, though they’re still emerging. China has great potential, with the world’s biggest spirits consumption by far. It’s mostly local spirits, of course, but they’re shifting from beer. China has traditionally been more of a Cognac market, but Bourbon’s sweet taste fits Chinese palates. We’re also creating a footprint in Mexico.

SND: How will Beam Suntory lead the innovation game in Bourbon going forward?

Niinami: Kentucky and Yamazaki are working together. The two parties shuttle back and forth, focusing on what we call Monozukuri, a craftsmanship project between the two parties, as well as kaizen—or constant improvement. Jim Beam is a great whiskey, but the culture at Suntory is to constantly strive to be better. We’re never satisfied with the status quo. Kentucky is accepting that they can produce something better by collaborating with the Yamazaki people, and we’re learning Bourbon. So we’re creating something better together. Since we don’t have sufficient inventory in Japan, Kentucky is now the center for both parties in this pursuit.

Tagged : Beam Suntory, Bourbon, Jim Beam, Maker's Mark, spirits

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