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Interview, Part 1: Takeshi Niinami, President, Suntory Holdings

May 29, 2019

Five years after its $16 billion acquisition of Beam Inc., Suntory Holdings continues to expand its presence in the global spirits market, especially at the premium-and-above tier of the whisk(e)y and Tequila categories.

The company has seen strong results in the U.S. lately, with its Jim Beam, Hornitos, Sauza Blue, and Basil Hayden’s brands all earning Impact “Hot Brand” honors for their 2018 performances. With both Jim Beam and Maker’s Mark in expansion mode, Beam Suntory expects to invest more than $1 billion in its Kentucky operations over the next five years. Shanken News Daily executive editor Daniel Marsteller recently met with Suntory Holdings president Takeshi Niinami to get an update on progress.

SND: What areas of the Beam Suntory portfolio have been performing best lately? Where does the business still have room to improve?

Niinami: Beam Suntory is performing far above the industry in the North American market, and that’s been achieved due to the cohesive efforts of both Beam and Suntory. The Jim Beam brand has been premiumizing. Jim Beam Black is doing fantastic, and has been developing much faster than I expected. Plus, Maker’s Mark has been growing quite a lot. In Tequila, Hornitos is a great brand for us, although rising agave prices are creating a bit of a headwind there. But overall, the strategic move to premiumize the portfolio is right on track. The U.S. is the biggest market, and we want to dig into it more and more. We’re currently growing faster than the market. To accelerate growth even further, we need to leverage innovation. A great example is our new whiskey, Legent, which is a blending of East and West. It’s highly differentiated, because no other company can do that kind of product. That type of innovation can create more room for us to grow in the U.S.

SND: In American whiskey, you’ve continued to expand operations in Kentucky. Where are those investments currently focused?

Niinami: We’re now maximizing production at our Kentucky distilleries. At Maker’s Mark, we expanded a few years ago, so the capacity is adequate for now. But we need to think about how to continue expanding our output at Jim Beam. We’ll have to work on increasing productivity as well as potentially investing in more capacity.

SND: How is Jim Beam’s growth in Japan and other key overseas markets progressing? Have you seen any negative effects from tariff increases on American whiskies in markets like the E.U.?

Niinami: Regarding the tariffs, they’re a headache. The trade situation between the U.S. and Europe is a game of chicken in a sense. Having said that, the European economy isn’t doing as well as it was previously, and the forecast is for it to continue to slow down. Still, the tariffs represent a hard hit—as much as 25%. We do plan to take price, but we have to be very careful not to lose our presence in European markets. In Japan, we didn’t expect the degree of uplift in sales that we’ve seen. Jim Beam will hit 1 million cases there sooner or later. Maker’s Mark is also in high demand. There’s huge potential to continue to increase sales of our Bourbons in Japan. In addition, we’re expanding our Highball campaign supporting Bourbon from Japan into other markets like China and Southeast Asia. The millennial generation has a powerful voice in those markets, and they’re responding to the Highball concept. Educating consumers on different serves such as the Highball is a big opportunity for us.

Beam Suntory―Top 10 Premium-Plus Brands In The U.S.1
(thousands of 9-liter case depletions)
Rank Brand Origin/Type 2017 2018 Percent
Change5
1 Jim Beam2 Bourbon/Rye 4,892 5,266 7.6%
2 Maker’s Mark3 Bourbon 1,616 1,758 8.8%
3 Hornitos Tequila 810 1,002 23.7%
4 Courvoisier Cognac 489 533 8.9%
5 Knob Creek2 Bourbon/Rye 410 444 8.3%
6 Sauza Blue Tequila 339 381 12.2%
7 Basil Hayden’s Bourbon/Rye 181 253 39.5%
8 Effen Imported Vodka 209 214 2.7%
9 Salignac Cognac 149 169 13.7%
10 100 Años Tequila 77 99 28.7%
Total Top Ten4 9,172 10,118 10.3%
1 at least $15 per 750-ml on average
2 includes flavors
3 includes Makers 46 and Mint Julep
4 addition of columns may not agree due to rounding
5 based on unrounded data

Source: IMPACT DATABANK

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