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.


Quintilian B. Nasty said...

Thanks for the rundown on what's going on with Beam.

Quintilian B. Nasty said...

In an unrelated note, after I read your Bourbon, Straight, I started thinking about the probable mash bill of Washington's whiskey you relate in Ch. 22: 60% rye, 35% corn, and 5% malted barley.

Of the commercial distilleries right now, what rye whiskeys come closest to that possible mash bill?

Or maybe that's a dumb question? I know most of the Mt. Vernon whiskey would have been probably white doggish, but I'm curious about rye whiskeys that have similar mash bills.

Chuck Cowdery said...

Most ryes are 51% rye, the legal minimum. Then there's MGP at 95%. Probably some micros are in-between, but none of the majors.

Bedlamist said...

The local Rite Aid has lowered green price stickers on Old Grand-Dad BIB so of course I bought one. I don't mind paying only $13.49 for it, but at Rite Aid green stickers usually mean "discontinued." It's no big loss to me if Rite Aid stops carrying it, but sure I don't want OGD BIB to go away like Old Charter 10 Year Old, my previous favorite in that price range. Has anybody heard anything about this?

Chuck Cowdery said...

Old Grand-Dad BIB is not being discontinued.

sam k said...

I thought Wild Turkey rye was around 60% rye. Not the case?

jonnyd said...

Y'all, buy the subscription to the Bourbon County Reader (or re-up)!!! Without Chuck's contacts and knowledge from having been there and done that, we'd be without a big resource in the whiskey world. Thanks Chuck, and keep it up!

Keith W said...

I suspect Suntory will ruin Beam the same way they ruin their own whiskey...oh, wait. Their stuff is usually fantastic.

Well then, I suspect Suntory will ruin Beam the same way Kirin ruined Four Roses...oh wait. They basically salvaged that brand from the rubbish heap of the bottom shelf and turned it into an industry darling.

Well then surely there will be a sudden influx of Japanese employees displacing hard-working Americans just as how Wild Turkey used to be crawling with Frenchmen and is now staffed entirely by bicycle riding Italians.

Or in other words, from the viewpoint of an outsider looking in at the company, I suspect either nothing will change or it will change for the better.

What I really want is for this behemoth to keep doing what their doing and then bring in more Suntory whiskies.

mbroo5880i said...

Thank you for not only insider perspective but a historical account of Beam. My hope is that they will build on their small batch brands. Not that they aren't already successful but it would be good to see the top bourbon producer push the envelope a little more.

Chuck Cowdery said...

I checked with Wild Turkey and while they won't give the actual mashbill, they do confirm it is more than 51 percent rye.