Beam Suntory denies ‘volatile’ US-Japan relations

Beam Suntory has sought to mitigate potential effects of a report that highlights a “volatile” integration of its US and Japanese businesses.

Beam Suntory has released a statement hitting out at a report that claims its US and Japanese counterparts have experienced a strained relationship

According to a report in the Financial Times, the group has suffered “strained relations” between its US-based Beam and Japan-based Suntory counterparts.

Suntory acquired Jim Beam Bourbon and Courvoisier Cognac maker Beam Inc in early 2014 for US$16bn, creating Beam Suntory – the third largest spirits producer in the world.

However, according to the FT, Suntory generated a net debt of US$15bn following the takeover.

The report also states that a suggestion by Takeshi Niinami – president of parent company Suntory Holdings – to improve the quality of Jim Beam through a Japanese process called Kaizen, the “philosophy of continuous improvement”, was not well received by American executives.

It also highlights a “climate of mistrust” that allegedly developed after the merger due to a delay in Suntory’s planned IPO in the US following opposition by the founding family.

However, Beam has released a statement arguing that the report “doesn’t reflect the very real success of the integration and how we’ve brought together two companies with proud heritages, shared values, and mutual trust and respect”.

Clarkson Hine, SVP of corporate communications and public affairs for Beam Suntory added: “The fact is, it’s almost unprecedented for an acquired company to hit its stride as quickly as Beam Suntory has, both commercially and culturally.

“We have built on a set of common values and embraced a common culture that is healthy and rooted in our shared pursuit of ambitious goals. This strong cultural foundation has helped enable us to deliver results that have outperformed our global market and over-delivered against our own targets.

“Further, we have done this with strong support from our parent company, which is committed to our long-term success and is investing substantially in our growth priorities.

“And we have done it with the best team of people we’ve ever had, at every level of the organisation, drawn from both businesses who have come together to create a powerful new force in our industry.”

In 2015, Beam Suntory’s sales grew 23% on a reported basis, driven by strong performances in its Bourbon and Scotch portfolios.