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Interview: Beam Suntory’s Albert Baladi On Adapting To The New Marketplace

August 3, 2020

Last week, Beam Suntory revealed that first-half sales declined by 3% both in the U.S. and globally, as ongoing gains in Bourbon, Tequila, gin, and Japanese whisky blunted the worst effects of the Covid-19 pandemic.The spirits giant, which had sales of $4.6 billion last year and volume of nearly 62 million cases, according to Impact Databank, intends to remain agile in the face of new challenges, while continuing to pursue its vision of more than doubling sales to $10 billion by 2030. SND executive editor Daniel Marsteller spoke with Beam Suntory president and CEO Albert Baladi to get the latest.

SND: How has Beam Suntory adapted to current market conditions, and how is the business positioned for the rest of the year?

Baladi: In the dark days of late March, early April when the Western Hemisphere was shutting down and all the big markets were going into lockdown mode after Asia, we anticipated a tougher outlook for the first half than what we ended up delivering. Some markets have proven to be a bit more resilient than we anticipated, but also our teams, at the epicenter, have pivoted their activities to where consumption was shifting. Several of our markets, including Japan, are in single-digit growth, and some markets like Canada and Poland are in strong double-digit growth. We’re far away from where we want it to be. But the spirits industry has once again proven to be resilient against recession, and within that context we’ve done well, relatively speaking.

SND: Which brands are sustaining the best growth within the portfolio?

Baladi: We’re seeing Jim Beam continue to do very well. At the higher end of the portfolio, Basil Hayden’s is going from strength to strength. There’s fantastic momentum in our premium Tequila portfolio, with Hornitos and El Tesoro, as well as in Japanese whisky, with Toki in double-digit growth. Also, we launched Roku gin in the U.S. about a year ago, and it’s done incredibly well.

SND: How is the situation at your distilleries, both in terms of production and visitor experiences?

Baladi: When we talk about Kentucky and our manufacturing sites in general, these have been the true silent heroes of the company, keeping the lights on during the course of the pandemic. By and large, we’ve adjusted and are back to full capacity in our distilleries and there’s no risk to supply. Parts of our visitor experiences have reopened in Kentucky, with the right measures to protect both our employees and visitors. We’re remaining agile and plugged into the guidelines of local government and health authorities. If we need to shut down again, we will.

SND: Does the pandemic alter Beam Suntory’s longer-term vision for the future?

Baladi: We’re sticking to the plan, because we believe the general trends toward premiumization and growth of emerging markets will continue. We remain wedded to our 2030 vision. While we’ve rationalized our CapEx to a certain extent, we’ve maintained a big investment in Kentucky, for instance, in our James B. Beam Distilling Co. site, where we’re investing $60 million to build a craft distillery and upgrade the consumer experience. We’re maintaining those plans, as well as investments in reducing our carbon footprint and other key areas.

SND: The tariff issue is again coming to a head. How are you approaching that?

Baladi: As a company, we’ve been particularly hit because we had a big base of American whiskey in Europe. Exports of American whiskey have declined by about one-third since the E.U. tariffs were imposed in 2018, and that continues to be a drag on our results. We hope that with the movement on the Airbus side—they’ve said they will accept higher taxes—and potentially also the bilateral discussions between the U.S. and U.K., that there is light at the end of the tunnel that could lead to a deescalation.

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