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Interview: Beam Suntory CEO Albert Baladi

February 19, 2020

Beam Suntory’s U.S. sales continue to be driven by the boom in Bourbon and other American whiskies, especially as consumers trade up to higher priced marques. The company has also set its sights on a bigger global presence for the category, but while it’s had success with Jim Beam in Japan, European Union tariffs on American whiskies have slowed that expansion somewhat. SND associate editor Shane English recently caught up with Beam Suntory CEO Albert Baladi to get an update on the company’s recent performance and the outlook for the rest of the year. Baladi will be among the speakers at the 44th Annual Impact Marketing Seminar in New York on March 5

SND: Where is the momentum centered within Beam Suntory’s portfolio?

Baladi: Overall we’re growing at about twice the rate of the global spirits market, fueled by premiumization. Jim Beam was up by high single-digits last year, with Maker’s Mark at low double-digits, and our small-batch and super-premium Bourbons at very healthy double-digits. We’ve also had some great performances in the House of Suntory range, which continues to do very well despite some strategic pricing that we took in all our markets.

SND: Where are you seeing consumers trade up within the portfolio?

Baladi: Jim Beam Black is growing really strongly, at very healthy double-digits. Millennials in particular are starting to pay a bit more for Bourbon and engaging in the category. We’re seeing a lot of brands at the $40-$50-and-up price points popping up on shelves and taking more space in retail accounts.

SND: Are you seeing people trade up within the same brand family—say from Jim Beam to Jim Beam Black—or into entirely new brands?

Baladi: We see both, actually. If you look at a brand like Maker’s Mark, where the base Maker’s starts at around $25 but then Private Select could be all the way up to $75, brands are now stretching across a wide variety of price points. You have consumers who find an entry point and then eventually move upward as they get to know the category a bit more. We think our brands can be stretched in that way, but at the same time we need to ensure that our portfolio is broad enough to offer a variety of brands at different price points.

SND: How have the E.U. tariffs on American whiskey and the U.S. tariffs on single malts affected the business so far?

Baladi: Tariffs in Europe have put a dent in our growth in Bourbon, which was previously very healthy. Outside the U.S., Bourbon is one-fifth of the size of Scotch. We see great opportunities to grow Bourbon at healthy rates in a number of different areas. We have very strong routes to market in Europe that have allowed us to absorb some of the shock, but right now we’re definitely a good material clip below our historical growth rates in those markets. So it’s a very significant issue for us. We’ve also had other headwinds. In Tequila we’ve had to take strategic pricing in many parts of the world and in the U.S. due to increased costs. And unfortunately, the tariffs that have been imposed on single malts in the U.S. are going to affect growth in that area, where we have the Laphroaig and Bowmore brands.

Beam Suntory’s Key Brands in the U.S.
(thousands of 9-liter case depletions)
Calendar Year Percent
Brand1 Origin/Type 2018 2019E Change1
Jim Beam2 Bourbon 5,266 5,715 8.5%
Maker’s Mark3 Bourbon 1,758 1,900 8.1
Hornitos Tequila 1,002 1,032 3.0
Courvoisier Cognac 533 570 7.0
Knob Creek2 Bourbon 444 506 14.0
Basil Hayden’s2 Bourbon 253 320 26.5
Total Key Beam Suntory Brands4 9.25 10.06 8.5%
1 based on unrounded data
2 includes flavors and rye
3 includes Maker’s 46 and Mint Julep
4 addition of columns may not agree due to rounding

Source: IMPACT DATABANK © 2020

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