In a huge surprise, Japanese drinks company Suntory has purchased US company Beam Inc. best known for its staple of US whiskies for $16 bn. That Beam – the 5th largest global drinks company – has been bought out is no surprise in itself. There has been fevered speculation that Pernod Ricard or Diageo would swoop for it ever since it split from Fortune Brands in 2011. What is more surprising is that the buyer is Suntory, which was previously ranked among the top 15 spirits companies and is also the world’s 14th-ranked brewer.
The purchase is in tune with other recent global acquisitions from major Japanese players as they look for growth opportunities beyond the stagnant Japanese drinks market. Last year Suntory agreed to purchase iconic British brands, Ribena and Lucozade, for £1.35 bn after acquiring Orangina Schweppes in 2009. Japanese drinks firm Kirin also took control of Brazilian brewer Schincariol in 2011. This is part of a wider trend, which Mintel calls East Meets West. We’re familiar with the notion of Asia as a ‘cash cow’ for the West, but increasingly this story is being reversed, with Eastern companies buying up Western brands.
As well as being a major soft drinks player, Suntory will now become one of the world’s leading whiskey players. Whiskey is comfortably the world’s number one selling spirit, and its recent growth rates have been extremely healthy. Beam owns Kentucky bourbon Jim Beam as well as Canadian Club, Teacher’s and cult craft bourbon Maker’s Mark. These will be added to Suntory’s staple of Japanese whiskies: Yamazaki, Hakushu, Hibiki, and Kakubin, as well as Bowmore Scotch whisky.
Beam has been a key player in whiskey’s startling revival in Western markets over the past five years. The company’s Red Stag bourbon, infused with a black cherry flavour, was a pioneering product. It was introduced in 2009 to huge skepticism – both within the company and externally – the view being that whiskies were something you “should drink neat and savour” not sweeten. However, its impressive sales and ability to attract females and younger drinkers to a category previously deemed more suitable for “old men”, has propelled global innovation and sales of flavoured whiskey.
Jim Beam – like its competitor Jack Daniel’s – has also been a key player in driving the popularity of American whiskies abroad – especially in Europe. Unlike Scotch, US whiskies have been able to fully experiment with flavours and production processes, and they have also done a great job of injecting personality, charm, and accessibility into the highly traditional whiskey category. They have also benefitted hugely from American whiskey’s central role in recent American pop culture output, through hugely popular series’ such as Mad Men and Boardwalk Empire.
Therefore, in the short-term at least, Suntory will be seeking to build upon the momentum that Beam has created in Beam’s domestic US market, as well as in Europe, in markets such as Germany, Poland and Russia. However, it will also be eyeing sales in wider Asia and Latin America. Status-conscious drinkers in these regions revere Scotch above all, but are increasingly interested in whiskies made from outside Scotland – whether it be from America, Ireland – or Japan.
Jonny Fosyth is Global Food and Drink Analyst at Mintel. Previously responsible for researching and writing all of Mintel’s UK drinks reports, Jonny has worked as a Global Drinks Analyst since 2012. He is regularly called upon by both national and international media to provide commentary and analysis on market and consumer trends within the drinks sector. Follow Jonny on Twitter @Jonny_Mintel
