Suntory sales soar following Beam takeover

Japanese drinks firm Suntory Holdings has seen its full year sales soar by 20% following its acquisition of Beam, however net profits fell 80%.

Suntory’s full-year profits have taken a hit following its $16bn acquisition of Beam Inc, however net sales rose 20%

The group bought US group Beam Inc, producer of Maker’s Mark Bourbon, Pinnacle Vodka and Courvoisier Cognac, for US$16 billion in January last year, creating an integrated spirits portfolio under the company Beam Suntory Inc.

Since the acquisition, Suntory Holdings reported its sales had risen 20% in the 12 months to December 2014, reaching 2.45 trillion yen (US$27bn). However operating income plummeted by 80% to 34.8bn yen (US$323m) largely attributed to the “temporary costs” of the Beam deal.

Meanwhile Beam Suntory saw its sales rise 86% year-on-year, with Jim Beam, Maker’s Mark and Knob Creek showing particularly strong growth in the US.

Jim Beam, Laphroaig Scotch whisky and other premium brands experienced solid sales in Germany, Russia and the UK. For key emerging markets India and Brazil, Teacher’s Scotch whisky also performed strongly.

Suntory notes that its marketing activities around Hibiki, Yamazaki and Hakushu have helped “expand the Japanese whisky category”. Beam Suntory’s Japanese business grew sales by 6%, with Hibiki, Yamazaki and Hakushu sales soaring 26%.

The firm added that during 2014, the world economy had started to “gradually recover”, but consumer spending saw a downturn in its domestic Japanese market.

Looking at the next fiscal year, Suntory said while it expects a “moderate trend towards recovery”, the future remains “unclear” and the business environment is forecast to become “even more severe” as competition intensifies.

“With core strength in the major market of North America and Japan, Beam Suntory will reinforce brand-building marketing activities for iconic global brands including Jim Beam, Maker’s Mark and Hibiki, and also strengthen key brands in each region to drive sustainable, profitable growth,” the firm said.

Suntory predicts an 18% increase in nets sales for its alcoholic beverage segment in 2015, reaching 1.05 trillion yen, including spirits, wine and beer.

It was revealed earlier this month that Suntory intended to double sales of Beam’s spirits to US$10 billion in the next five years, capitalising on the projected growth of Bourbon and American whiskey.

Suntory named Takeshi Niinami as its new president in July last year, marking the first time somebody from outside of the founding family had taken up the role.

The group’s alcoholic drinks arm is now the world’s third largest behind Pernod Ricard and Diageo.