Beam Suntory making ‘big, bold bet on Bourbon’

15th August, 2019 by Amy Hopkins

The American whiskey category “still has much more room to grow”, according to the new CEO of Beam Suntory, who is aiming to make Bourbon “the world’s whisk(e)y”.

Beam Suntory owns 40%-45% of the Bourbon barrels in Kentucky

Speaking to The Spirits Business, Albert Baladi, who became CEO of Beam Suntory in April this year, said despite the American whiskey boom, Bourbon has not yet reached its sales peak of the 1970s.

“We have been laying down liquid with a view of making Bourbon the world’s whisk(e)y,” he said. “The vision here is a big, bold bet on Bourbon.

“If you look at the US, the Bourbon market is a lot lower than its peak in the 1970s. So while we think the US has been really buoyant in American whiskey, there’s still much more room to grow.

“If you look internationally, American whiskey is a fifth the size of Scotch, and it’s growing faster. There’s a real opportunity to put Bourbon on the map more than it is today.”

Beam Suntory produces the world’s biggest Bourbon brand, Jim Beam, which sold 9.7 million cases in 2018 and scooped SB’s World Whisky Brand Champion 2019 title.

The firm invests approximately half a billion dollars in its Kentucky operations each year and owns 40%-45% of the Bourbon barrels in Kentucky, with 30 warehouses and “growing at a rate of six per year”. As such, the fire that destroyed one of Beam Suntory’s warehouses earlier this summer wiped out only 1% of the group’s total maturing stock.

In July, Beam Suntory announced its plans to build a new ‘craft’ distillery in Kentucky at a cost of US$60m.

Tariff wars

Despite its “bold ambition”, Beam Suntory has been hit by recent trade spats between the US and EU, which have led to new tariffs for Bourbon imports.

“We are an unfortunate victim of these tariff wars, and obviously it hurts, because consumers look at whisky overall and they compare us with other categories,” he said.

“We have to go after Scotch, and we know there is a very clear transfer between the two. Therefore, our pricing relativity has to be maintained, which is very difficult when you have tariffs.”

As such, Beam Suntory has increased its prices in some markets “in a strategic and punctual manner”.

Baladi added: “We have taken what I would call a differentiated strategic approach, which has passed some price on to the consumer, has absorbed some in profit and loss, and we have made some very painful choices in our investment approach because of the cost of tariffs.”

Nevertheless, the CEO is confident the category will bounce back: “There are so many opportunities [for Bourbon] in the US and overseas. Building scale around Bourbon is one of our big priorities.”

To read Albert Baladi’s full interview with The Spirits Business, see our August 2019 issue, out now.

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