BROWN SPIRITS REPORT: BEAM SUNTORY


Beam Suntory to capitalise on ‘mid- single-digit’ gains and new synergies


Suntory Group has plans to strengthen synergies between its various companies this year. As Luke Barras-Hill discovers, this is only good news for the expanding Beam business.


In its full-year 2016 results, Suntory Group said sales at the Beam Suntory entity increased at a ‘mid-single-digit rate’, boosted by growth in Jim Beam, Maker’s Mark, Hornitos tequila, and the company’s super-premium bourbon and Scotch whisky brands. However, net sales for Suntory’s


Courvoisier Artisan Edition activation at Paris CDG.


Below: Bowmore 15YO.


M


ore than three years has past since Suntory Holdings Limited and


Beam Inc. announced a definitive agreement in which the former would acquire all outstanding Beam shares in a transaction worth $16bn. The deal created an eye-watering


portfolio of celebrated household spirits brands, which included Jim Beam, Maker’s Mark and Knob Creek bourbons; Teacher’s, Laphroaig, Bowmore and Kilbeggan whiskies; Courvoisier Cognac; and Suntory’s Yamazaki, Hakushu, Hibiki and Kakubin Japanese whiskies.


“Consumers can struggle to understand the differences between cognacs in comparison to whisky, which is all about flavours, regions and production stories,”


Michael Cockram, Marketing Director Global Travel Retail, Beam Suntory


alcoholic beverages segment totalled ¥988.7bn ($8.8bn) – a -3.6% decline year on year, mirroring global business uncertainty. Looking ahead to year-end 2017,


the Japanese drinks monolith is forecasting a +1.5% uplift in net sales to ¥2.69tn ($24bn). In addition, Group plans to drive


further growth and profitability ‘by striving to expand the synergy between the various companies in Suntory Group’ can only be good news in deepening the integration.


New Bowmore range in TR “We have a number of new product launches, activations and innovations coming up this year, including around 10 new skus across three markets,” Michael Cockram, Marketing Director Global Travel Retail, Beam Suntory tells TRBusiness. In the first quarter of this year,


Beam Suntory launched the new Bowmore travel retail exclusive range – marking a return to age statements for the first time in five years – alongside two new releases from heavily peated Islay malt Laphroaig. Meanwhile in the Cognac category,


SUNTORY CONSOLIDATED OPERATING RESULTS AND FINANCIAL POSITIONS (JAN 1-DEC 31, 2016)


Net Values Operating income


Fiscal year ended


Dec 31, 2016


Dec 31, 2015


¥million %


2,651,479 (1.3)


2,686,765 9.4


¥million %


197,988 7.0


185,094 12.3


Ordinary income


¥million %


175,825 12.5


156,286 1.6


Net income


¥million %


121,518 168.6


45,239 17.9


Source: Suntory Group 162 TRBUSINESS


the release of a fresh gift pack from Courvoisier aims at highlighting the brand’s luxury Parisian heritage, says Cockram. The Artisan Edition VSOP Triple


Oak is housed in packaging evoking the iconic Eiffel Tower emblem, building on the release of the Artisan Edition last year. When asked whether Cognac’s


tradition and grandeur presents a challenge to engaging consumers in


travel retail, Cockram is frank: “Consumers can struggle to


understand the differences between Cognacs in comparison to whisky, which is all about flavours, regions and production stories. “We know that the trend towards


ultra high-end Cognacs is softening, with stores replacing the really big fixtures we were seeing up until two years ago – Cognac in general is struggling slightly, with whisky definitely in the ascendancy.”


Japanese whisky on the up In the same year that the Beam Suntory juggernaut was born, Suntory’s Yamazaki Single Malt Sherry Cask snared the 2014 best whisky in the world, according to leading whisky sage Jim Murray. Momentum for Japanese whiskies


around the world had already garnered momentum by this time, and the signs indicate the appeal is set to stay. “Japanese whisky is flying off the


shelf in Hong Kong and Singapore and everywhere it’s listed it rotates very quickly, particularly with the Chinese consumer who is searching out Japanese whisky in a big way,” observes Cockram. The liquid’s distillation craft is


strongly influenced by Scotch, but often devoid of the heavy price tags and strict regulatory controls. There are also elements


that distinguish it from Scotch, such as the maturation climate in Japan, the water source, and the ability to create a variety of whiskies from single distilleries, explains Cockram. “This commitment to quality


is why Suntory is not able to fully keep up with consumer demand, although it has invested heavily in additional production and maturation capacity, the full impact of which will not be realised for a few more years,” he concludes. «


MAY 2017


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