Interview: Beam Suntory North America President Greg HughesFebruary 22, 2022
Beam Suntory saw full-year sales climb 11% globally in 2021, with the U.S. contributing high single-digit shipment growth and double-digit gains in depletions, led by dynamic performances from the company’s premium whisk(e)y and Tequila portfolios. Following the results, SND executive editor Daniel Marsteller spoke with Greg Hughes, president of Beam Suntory North America, for an update on the business.
SND: How are overall conditions in the spirits market currently? What gives you cause for optimism, and what challenges are you concerned about?
Hughes: We were able to deliver 11% top line growth globally and high single-digit growth in the U.S. in the face of historically strong challenges, particularly when you look over the last two years with the pandemic, the opening and closing of the on-premise, and obviously supply chain constraints. I’m optimistic because of the incredible resilience of the industry—we’ve seen that across our team, our brands, our distributor partners, our retail partners, and the on-premise. The other trend driving our results is the pace of premiumization. Our dollar sales growth outpaced volume, which was up mid single digits, and we’re seeing those trends continue this year. There’s an equally strong trend toward flavor, convenience, and refreshment that’s benefiting the ready-to-drink sector, where we acquired the On The Rocks brand a year ago and saw it grow by triple-digits in 2021, with the same trajectory expected for 2022. We’re also seeing the on-premise move in the right direction. That’s all tempered somewhat with the challenges on glass, dry goods, and logistics, both trucking and over the water.
SND: Which brands are driving growth for Beam Suntory in the U.S.?
Hughes: We saw strong growth on Maker’s Mark, Basil Hayden, Knob Creek, Booker’s, Legent, and others. In Knob Creek, we have the single barrel program, and we’ve added a range of age statements, a 9-year-old, 12-year-old, and 15-year-old. The price range now stretches from the mid-$30s to $180. We’re also seeing strong growth on the higher pricing tiers of Maker’s, including Maker’s 46. We see that premiumization coming to life across all of our American whiskey brands, and it’s equally true in Japanese whisky and Scotch. On Jim Beam, we had pretty extreme glass challenges particularly on the 1.75-liter last year, which definitely impacted growth.
SND: How has the Tequila range fared lately?
Hughes: You see premium Tequila growing incredibly fast, and the trade-up to 100%-agave is still continuing. There’s a lot of energy moving into the super-premium and ultra-premium price points. We’re benefiting from that with Tres Generaciones and El Tesoro.
SND: What can you tell us about the strategic venture with Boston Beer?
Hughes: Truly vodka starts shipping March 1st. We’re excited about bringing the Truly brand into the flavored vodka space with three flavors that are inspired by the largest flavor variants of Truly hard seltzer. They’re positioned in the $15-$20 price range, depending on the market, and are rolling out nationally. At the same time, Boston Beer is launching a line of Sauza agave cocktails through their route to market. We’re continuing to innovate and expect to have an equally exciting pipeline of ideas for next year.
SND: Is Beam Suntory likely to engage in any significant M&A activity targeted to the U.S. over the coming year?
Hughes: We’re always looking for opportunities. If we find bolt-on acquisitions that make sense, we would definitely take advantage. On The Rocks is a great example. We needed to get into that fast-growing ready-to-drink space. It started out as a fairly small acquisition, but it’s doubling year over year and quickly becoming a huge brand for us. It’s primarily off-premise so far, but as we’re getting supply stabilized and catching up to the demand of the off-premise there’s a real opportunity to drive growth on-premise, particularly in the 100-ml. and 200-ml. sizes in places like hotels, poolside, and golf courses. We’ll bring some new permanent additions to the line this year as well as some limited editions and seasonal packs.
|Beam Suntory―Key Brands in the U.S.
(thousands of 9-liter case depletions)
|On the Rocks||Premixed Cocktail||198||416||109.7%|
|Total Key Brands3||15,733||16,837||7.0%|
|1 based on unrounded data
2 includes flavors
3 addition of columns may not agree due to rounding
Source: IMPACT DATABANK © 2022