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Beam Suntory H1 sales hit by Covid-19 crisis

Maker’s Mark owner Beam Suntory saw net sales decline 3% in the first six months of 2020 due to the coronavirus pandemic.

Beam Suntory’s brands include Jim Beam and Maker’s Mark Bourbons

From January to June 2020, Beam Suntory’s net sales in the US fell 3% as a result of “significantly lower” revenue due to the closure of the on-trade, which was offset by a boost in the off-trade.

“While our sales were substantially below our expectations at the start of the year, the people of Beam Suntory rose to the challenge and fuelled stronger momentum than we expected at the onset of the pandemic,” said Albert Baladi, president and CEO of Beam Suntory.

“Our teams demonstrated impressive agility to pivot in many important ways – to redirect resources to fast-growing channels such as off-premise and e-commerce, to meet consumers in the new ‘home premise’ and to support restaurants and bars through new revenue streams like cocktails to-go.”

The firm took a big hit in markets such as Spain, India and global travel retail, which were “severely” affected by the pandemic, resulting in double-digit losses.

However, the company recorded a low-single-digit sales increase in Japan, Germany, the UK and Russia, while Canada grew by double digits.

Beam Suntory said revenue for its brands mirrored consumer trends in the current crisis, including the “strong appeal of familiar brands, continued premiumisation and convenient formats”.

The firm said sales for brands that depended on the on-trade and travel retail – two channels hugely impacted by the pandemic – were generally lower.

During the period, Jim Beam Bourbon grew by low single digits while small-batch Bourbon brands Basil Hayden’s and Knob Creek, Japanese whisky Toki, Roku gin and Haku vodka increased sales by double digits. In addition, Japanese ready-to-drink products rose by 20%.

Baladi warned that the group must still tackle the challenge of punitive tariffs. The EU’s 25% retaliatory tariff on US products was imposed in July 2018, and caused American whiskey exports to the EU to fall 27% to US$514 million last year.

Beam Suntory recorded a mid-single-digit sales increase in 2019, however the firm was impacted by the EU-US tariffs on American whiskey.

Baladi said: “Looking ahead, the ongoing pandemic presents continued uncertainty across global markets, and we must still manage the adverse impact of retaliatory tariffs.

“Even so, we’re determined to boost strategic investment to compete intensively in the current environment and emerge from the crisis in the strongest possible position.”

Growing for Good update

The firm also provided an update on its Growing for Good initiatives. To date, the firm has produce enough sanitiser to clean more than 50 million pair of hands. In support of the hospitality sector, Beam Suntory has donated more than US$2m to restaurant and bar workers across a number of markets.

Regarding the firm’s sustainability efforts, the group said it is “step-changing” its use of renewable electricity with the aim of reaching a projected 85% of electricity needs this year, increasing to 100% in 2022. The firm expects to cut carbon dioxide emissions by up to 20%, with the aim of reaching a 25% reduction by its 2030 target.

The group has also reduced its use of water per unit of production by 7%. The company’s planned investments are expected to result in an up to 50% cutback by 2022.

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