Wednesday, May 7, 2014
What Effect Will Suntory Have On Beam?
This is the third ownership change I've been through with Beam. That may sound odd, since this is the first time Beam has been sold, but stay with me.
In 1987, Beam parent Fortune Brands bought National Distillers and merged it with Jim Beam. National was the larger company and had many more brands, but since it was failing hardly any of its management was retained, although some of the sales force was. I was working for a Beam agency at the time and worked on the transition directly.
In 2005, Fortune and Pernod teamed up to dismember Allied Domecq. Again, Fortune added its parts to Beam. Lots of management came over too. I was doing then what I do now and didn't have many friends at Beam, at least not in Deerfield. One man changed that.
Last month, Suntory closed on the purchase of Beam Inc. Suntory is much more than a distilled spirits company but its distilled spirits business will be attached to Beam and not the other way around. The new company will be headquartered at Beam's headquarters in Deerfield, Illinois. Its 'new' president is Matt Shattock, who has been running Beam since 2009.
Before the 1987 merger, Beamville was a one horse town. It sold Jim Beam bourbon and not much else. Although Jim Beam was doing better than most, the bourbon category was struggling. Beam was interesting in acquiring some big brands that were growing. The prize at National? DeKuyper Schnapps, a line of liqueurs with some very hot flavors. DeKuyper Peachtree Schnapps was, all by itself, a million case brand.
Suddenly having so many brands in so many categories was a shock to the system. My contribution was a merchandising manual to show salespeople where, ideally, each of their new wards should be placed on store shelves. It was the same people running things after the merger as before, but the culture changed because they were forced to take a much broader world view.
My transition from sales promotion supplier to spirits journalist was rocky at Beam. There were some misunderstandings that left me on the outside. I had great relationships with production people in Kentucky but the Deerfield folks barely spoke to me. It wasn't a big problem for me, but one of the managers who came over from Allied decided it was a problem for them. He was the VP of Corporate Communications and reached out to me in a very personal way to mend fences.
He's gone now, but he and the other Allied transplants changed the Beam culture again. They took a company that had become very self-satisfied and made it try new things. Suddenly, the most influential person in the company creatively was Maker's Mark president Bill Samuels, himself an Allied transplant.
It's hard to predict how Suntory will change Beam. It's easy to say it won't, since on the ground it looks like Beam took over Suntory and not the other way around. It surely will. It may make Beam more effective in those parts of the world that aren't North America, Europe or Australia. Since it is no longer publicly traded, it might be able to think more long term. Those would both be good things.
One thing I've learned about Beam over all these years is that while I may not always agree with them, I'm reluctant to bet against them. They survived and controlled their destiny during a very rough patch in the distilled spirits business. They have both grown their mainstays and created successful new brands. They have made money for their investors. They'll get through this too.