Beam Suntory Sees Trading Down, But Says Premiumization Remains Right Long-Term Strategy
October 2, 2023Beam Suntory has seen some trading down lately in the U.S., Suntory Holdings CEO Takeshi Niinami said in an interview with Yahoo Finance late last week, but believes premiumization remains the right strategy for the business over the long term. Niinami said the company is noting some trade down from ultra-premium to premium brands and from premium to standard brands as consumer confidence declines.
He explained that Beam Suntory’s broad portfolio has insulated it from the effects of downtrading, with some brands benefiting from the shift. For example, in Tequila the group’s Hornitos label is well-positioned to capture consumers trading down slightly from the highest price tiers. Millennials continue to drive the Tequila trend in the U.S., he added, and profits within the category are now getting a boost from lower agave prices.
In brown spirits, meanwhile, demand continues to far outstrip supply of Japanese whisky within the Beam Suntory portfolio, with Niinami saying the company won’t undermine its strict quality controls for brands like Yamazaki and Hibiki, despite the shortage.
Beam Suntory veteran Greg Hughes officially ascended to the CEO role on October 1, succeeding Albert Baladi, who stepped down after a transformational five-year tenure as chief executive. The company ranks third among all spirits marketers globally, with 2022 volume of 62.5 million 9-liter cases, according to Impact Databank.
In the first half of this year, Beam Suntory saw 10% growth globally, as strong gains in its Asia Pacific and International segments “helped balance out a challenging market in North America, which was flat versus the first half last year as the business contends with a slowdown in consumer demand in the U.S. and the category resets post-Covid.”—Daniel Marsteller
| Beam Suntory – Key Brands in the U.S. | ||||
| Brand | Type | Total 2022 U.S. Depletions2 |
Control States Volume Growth 2023 YTD3 |
|
|---|---|---|---|---|
| Jim Beam1 | Bourbon | 6,085 | 5.5% | |
| Maker’s Mark | Bourbon | 2,350 | 0.6% | |
| Hornitos | Tequila | 1,690 | 10.0% | |
| Cruzan | Rum | 725 | 5.4% | |
| On The Rocks | RTD | 672 | 62.4% | |
| Knob Creek | Bourbon | 539 | -0.8% | |
| Basil Hayden | Bourbon | 530 | 6.4% | |
| Toki | Japanese Whisky | 125 | -2.1% | |
| Tres Generaciones | Tequila | 91 | 3.2% | |
| Roku | Gin | 60 | 9.6% | |
| Haku | Vodka | 39 | 11.4% | |
| Sipsmith | Gin | 23 | 17.4% | |
| Total Key Brands | 12,929 | 5.5% | ||
| 1 includes flavors 2 thousands of 9-liter cases 3 year-to-date through June Source: NABCA and IMPACT DATABANK © 2023 |
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