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In the first part of our interview with Beam Suntory's CEO, which was published earlier this week, Albert Baladi talked broadly about the group, its strategy going forward and how Beam intends to grow. Here, in part two, we look at the company's portfolio and the positioning of and prospects for its major brands.
Which company does Beam Suntory CEO Albert Baladi see as the group's main competition?
Since Suntory Holdings snapped up Beam Inc five years ago, the spirits group has made some clear changes of direction, in brand terms: A broader geographical focus for the Japanese whisky expressions that Suntory brought to the table and the release and subsequent wider roll-out of Roku Japanese gin are two of the more obvious moves.
Within Beam's existing portfolio, the purchase has given flagship Bourbon brand Jim Beam a renewed lease of life. "In 2012, Jim Beam sold about 30,000 cases in Japan," says Baladi. "Last year, we exceeded 800,000 cases. We'll be hitting around 1m cases in the country by 2021."
Elsewhere outside the US, Baladi retains high hopes for Jim Beam. "In international," he says, "American whiskey is still only a fifth of the size of Scotch and is generally priced a little bit lower. Therefore, there are massive opportunities there. Consumers getting into the cocktail culture and the mixability of Bourbon, as well as the stories behind America's favourite spirit, are all fueling the growth of Bourbon internationally."
And, what of the whiskey's home market? "Despite growing really fast over the last ten years, the size of the Bourbon category in the US is still a fraction of what it used to be at its peak in the 1970s. It's coming back now and there's a long runway ahead of us.
"We think there are still massive opportunities for growth for us in the US."
Much as we've already heard about Baladi's keenness to premiumise the group's offerings, encouraging trade-up within existing brands of scale tends to offer a different set of challenges compared to, say, buying something small and expensive. Baladi explains: "Three years ago, we had a package refresh of the core 'Jim Beam White'. It's done incredibly well and has also allowed us to refresh the look and the offering of 'Jim Beam Black', which has been a great success in the US. Taking pricing on your core trademarks is part of the premiumisation journey.
"How you premiumise is multi-faceted," he continues. "Within Maker's Mark, we've introduced Private Select and in Courvoisier, we've developed the VSOP and XO expressions. So, that's an example of where we can premiumise within the range."
Lower down Beam's value chain is Teacher's. The blended Scotch whisky brand just churns cash, right? Nothing exciting to see here? Baladi disagrees: "Teacher's is a very important brand for us in India, where it's one of the top three leading Scotches in the market and growing double-digits. It also plays an important role in Brazil, where we've recently taken over our route-to-market. Will Teacher's become a global Scotch priority for us? Probably not, but it plays important roles in a few markets.
"As we think about the segmentation of our portfolio, we talk about our global priorities and then our regional priorities, which is where Teachers's sits for us. It's a key enabler in strategic markets and we're quite bullish about the brand's prospects in these two markets and potentially in other emerging markets where it could play."
Turning to Courvoisier, the Cognac brand suffered considerably less damage than its rivals when the category took an almighty beating in China in recent years. The introduction of anti-extravagance measures hit international spirits hard, with the likes of Remy Martin and Martell bearing the brunt. "China didn't cause Courvoisier problems, because we had a small footprint then," says Baladi. "We're now able to have a sharper focus on the must-win markets and the must-win categories. We have declared Cognac a priority category and China a must-win market. Put those two together and, with the continued strength of our US business and the continued buoyancy of the Cognac category in the US, we have now re-termed Courvoisier a global priority brand where we're starting the journey to become a global luxury brand.
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Beam Suntory CEO welcomed just-drinks' editor, Olly Wehring, to the group's Sipsmith distillery in London late last month |
"Already, in the last two years, we've doubled the size of Courvoisier in China. But, this is still a fraction of the ongoing ambition, given the size of the market. We're always thinking about how we turn Courvoisier into a global, household luxury."
Rounding off our portfolio tour, I open the door marked 'Irish whiskey'. The category has witnessed something of a gold-rush in recent years, with the bigger spirits groups jostling for presence and the number of distilleries coming on-line rising by the day. Beam Suntory, meanwhile, has been noticeably quiet on the island, since making its entry eight years ago through the purchase of Cooley Distillery. "The choices that we make are on a global basis," says Baladi. "We have a competitive advantage in Bourbon, in 'House of Suntory' [Japanese whisky] and in Cognac. We have a lot to do in these categories.
"There comes a point where you just need to prioritise. For us, Irish plays a critical role for us in a few markets - Kilbeggan is the number two Irish whiskey in Germany, for example, it's bigger than Jameson there. It's growing very nicely for us at the premium end on the east coast of the US. Many companies have different strategies - We have our strategic global priority brands, then we have premium brands that play an important role in a particular place. This for us is where Irish performs."
Our time is drawing to a close but, before we finish up, I'm keen to learn who Baladi sees as Beam Suntory's main competitor in the global spirits arena.
Brown-Forman, right? Baladi laughs. "The mindset used to be that we play in American whiskey and that it's a head-to-head race between us and Jack [Daniel's]. In fact, it couldn't be further from the truth - we play in the Bourbon market but we also play in the global alco-bev market. The highball has been incredibly successful in Japan because it's gone after the beer market. If you're very focused on the consumer spaces you're going after, at times you could be competing against a direct, obvious competitor in the same category at the same price-point. At other times, your competing with a player from an adjacent category - it could be beer, it could be cordials, it could be vodka.
"We see it today - in the US, Bourbon is growing on the back of vodka. So, vodka is a competitor. For Tequila, vodka is a competitor."
Let Baladi's competition begin!
Sectors: Spirits
Companies: Beam Global Spirits & Wine, Beam Suntory Inc, Brown-Forman, Cooley Distillery, Jameson, Remy Cointreau, Suntory
