Posted on | July 22, 2014
Written by | Kristen Wolfe Bieler
Kevin George, Chief Marketing Officer for the newly combined Beam Suntory, discusses the company’s big plans in the U.S. market.
THE BEVERAGE NETWORK: What aspects of Beam’s sales and marketing approach will change now that the company is part of the Suntory group?
KEVIN GEORGE: The merging of our companies is a really interesting combination. Suntory has a tremendous track record of success, yet the majority of the company’s business is currently in Japan. Suntory is looking to make a major international play and with the $16 billion purchase of Beam, they are gaining access to our route to market. The biggest change retailers will see is much greater access to Suntory legacy brands like their Japanese whiskies. Suntory sees tremendous opportunity in the U.S. which is the largest spirits market in the world, and they operate in a long-term thinking mode just like we do, which is fantastic.
TBN: Japanese whisky has certainly made a lot of headlines of late, but do you think the category will be difficult to market because it is relatively new in the U.S.?
KG: It’s not a hurdle anymore. I’m amazed to see that even many casual whisky consumers are familiar with Japanese whisky, and its reputation for quality precedes it, so it’s extremely easy to get people to try them. Yamazaki and Hakushu are some of the fastest growing single malts in the world right now, and the Hibiki blended malt is on fire. These are extremely premium—the Yamazaki 18 Year Old is on the shelf for around $170, but this isn’t slowing demand. The art of Japanese whisky production is world-class. The quality standards at the Suntory distilleries are unmatched; this is a best practice that we can definitely learn from, as well as their ability to market high-end luxury products.
TBN: With such a large whiskey portfolio, do you worry at all about various brands cannibalizing one another?
KG: People may have their go-to brand, but there is so much experimenting going on with whiskey. Consumers don’t just stay with one brand all the time, and we see our larger portfolio as a greater opportunity to keep them in the family. This is the reason we are introducing new flavors and additional premium expressions. Between our massive bourbon portfolio, Japanese whiskies, Irish whiskies [2 Gingers and Kilbeggan], Single Malt Scotches [Laphroaig, Bowmore, Ardmore, etc.] and blended Scotch like Teacher’s, (the #1 whisky in India), we really have whiskies for every occasion and consumer.
TBN: How is your bourbon portfolio performing?
KG: Bourbon is still on fire. Not just in the U.S. market, but around the world, so it’s a nice category in which to be the leader. The category grew 7% last year and even more in value, and our bourbons outgrew even that. Jim Beam—a 219-year-old brand—is growing at a double-digit rate, which is phenomenal. One key to the category’s growth is through premiumization, and we’ve seen tremendous interest in recent releases like Devil’s Cut, single barrel expressions and Knob Creek Smoked Maple. We see people trading up to different expressions or coming in through flavors like Red Stag or Jim Beam Honey. There are bourbons for purists and bourbons to attract new consumers and grow the category, and flavors have been really successful at that, particularly with younger legal-purchase-age consumers and women. Bourbon is a drink, not an ingredient.
TBN: Beam isn’t all about whiskey—you have huge share in the tequila category.
KG: We are the number two tequila player in the world and our portfolio is well-rounded from top to bottom. Sauza is doing extremely well, and we recently partnered with Justin Timberlake with Sauza 901. Hornitos, in the premium space, was up 25% last year. We attribute this to significant investment in a television campaign, and a package upgrade that helps the bottle stand out on the shelf. Also, our distributors really got behind it, and although Hornitos is traditionally a reposado brand, we are seeing huge growth with Plata [Silver]—the fastest-growing segment of the category. Our Hornitos Black Barrel, which we age in whiskey barrels to impart flavor, recently won double gold at the Denver International Spirits Awards. There is enormous opportunity globally for tequila as well, which we have yet to realize.
TBN: I was interested to learn that while people tend to think of Pinnacle Vodka as a flavor-driven brand, the unflavored base vodka actually dominates.
KG: Yes, while Pinnacle is obviously a leader in flavor, our unflavored vodka is 60% of the business and growing at a double-digit rate. This is largely because the quality is excellent—it was recently placed as the highest-rated vodka at the IWSC [International Wine & Spirits Competition]. At 3.5 million cases, it is the third largest imported vodka in the country and growing at 20% right now. The vodka market as a whole has slowed down, but Pinnacle continues to outperform it. Vodka is a mature category, but we still see a lot of room for growth, so we have a new Tiki campaign and a new digital promotion. We’ve been doing our consumer research: People used to drink ‘beer, wine or spirits’. Now, they say they drink ‘beer, wine or vodka’. It’s pretty significant.
TBN: The Skinnygirl brand is finding strong growth in the wine and vodka categories. What new opportunities has this afforded the brand?
KG: While the RTS category is struggling a bit, the idea of low-calorie still resonates. This is also why we expanded into vodka and wine with Skinnygirl, and we are seeing significant growth. Very few brands are capable of crossing categories like this. The premise is quite simple: It’s about permission not restriction—having everything you want without the guilt. When we acquired Skinnygirl in 2011, it was a one-product brand and we have grown it into an empire of low-calorie delicious cocktails. It went from 100,000 cases to 700,000 within a year.
The advantage to having a vodka in the line-up is that we now have the ability to get on-premise. We offer the option of taking any cocktail on the menu and making it “skinny” and 8 times out of 10 people choose our vodka. Creator Bethenny Frankel continues to be very involved and we see a lot of untapped opportunity, and we will move Skinnygirl into new spaces where it is relevant.
TBN: What will be your greatest challenge in marketing the larger, combined Beam Suntory portfolio?
KG: It is actually a marketer’s dream to work with these brands; the quality is so high and the branding so strong, it makes my job easy in many ways. We are lucky in that the cultures of Beam and Suntory are quite similar, in that we are both very entrepreneurial. The combination of these two organizations is extremely powerful and, we believe, a real recipe for success.