Suntory seeks tequila to satisfy America’s taste for high-end spirits

Suntory Holdings, the Japanese beverage group behind Jim Beam and Yamazaki, is seeking to grab premium tequila and mescal brands to meet growing U.S. demand for premium spirits at a time when low-income consumers drink less.

“A polarization is happening in the US market: one is towards premium; the other is less alcohol consumption,” Takeshi Niinami, chief executive of Suntory, told the Financial Times.

“Standard” brands were seeing consumers “become more cautious about buying one more bottle, one more drink,” he said, but he predicted continued growth for more expensive brands. .

Eight years after Suntory acquired Jim Beam for $16 billion, “I don’t think we’ll be taking such a huge risk again in the near future,” Niinami said. But he said he hoped to fill gaps in his U.S. portfolio by finding “ultra premium” brands beyond his current lineup, which includes Sauza tequila, Courvoisier brandy and Roku gin.

“We need more categories like mescal and tequila,” he said, adding that he wanted to buy certain brands while investing more in existing operations in Kentucky and Mexico. Such investments would be funded by cash generated from its US operations, he said, noting the weakness of the yen against the dollar.

Suntory’s search for more expensive brands comes after global rival Diageo bought several super premium tequila and mezcal brands, including Don Julio, George Clooney-backed Casamigos, Mezcal Unión and the 21 Seeds flavored tequila line.

Bernstein analyst Trevor Stirling said an obvious target would be the fast-growing Teremana brand backed by Dwayne “The Rock” Johnson, but a stake in that brand is owned by Jägermeister, meaning any other buyers would likely have to offer. a significant bonus.

Suntory would also likely face Pernod Ricard in the search for high-end tequila brands to buy, but could look to high-end Mexican brands ripe for expansion, Stirling added. “There are a lot of people looking for tequila [acquisitions],” he added.

The Japanese group announced a $400 million investment in Jim Beam’s Booker Noe distillery in Kentucky this summer, and Niinami said its priority would be to expand its existing distilleries where innovation could help it position themselves at the top of the market.

“Even Jim Beam is going premium,” he said, “Jim Beam was really good quality and it’s coming back.”

The group recently released an east-meets-west bourbon called Legent, made by Jim Beam’s master distiller Fred Noe and Suntory’s head blender of Japanese whiskeys Shinji Fukuyo.

It also plays a role in the lower segment of the market, where consumers are looking for more affordable, low-alcohol options. It touts Jim Beam Classic Highball, a new canned bourbon and seltzer drink, as “low in calories.” [and] great in refreshment”.

Beam Suntory moved its US headquarters from Chicago to New York this month, which Niinami said was a better lure for diverse global talent, and he predicted that innovation and population growth would make the US “by far” the most attractive spirits market.

He also expressed optimism about the UK, despite its recent monetary tumult. “Maybe it will take a year or two, depending on whether the war in Ukraine is resolved or not, but the UK is resilient,” he said, adding that Suntory planned to invest more resources in London.

“The only key area we are concerned about is Japan,” Niinami said. Suntory was raising prices there to offset the effects of inflation, he said, but after years of deflation, “people are not used to seeing price increases”.

About Dawn Valle

Check Also

Chainsaw Man: List of All Opening and Ending Songs

Chainsaw Man has been one of the most anticipated anime to release in fall 2022. …