Beam Suntory sales rise 11% in 2021, fueled by shift to high-end spirits

In the last three years, Knob Creek bourbon has restored the nine-year age statement on its bottles, updated its label design and started selling 12-year and 15-year versions of its whiskey. Prices used to range from $25 to $50 a bottle, but now a bottle can set customers back anywhere from $36 to nearly $200.

It’s all part of Beam Suntory’s strategy to shift to higher-end spirits. It’s paying off for the company, which saw sales rise 11% in 2021. And as customers pay more for their spirits, they’re less sensitive to price hikes to offset inflation.

In the United States, the company’s 2021 sales rose by high-single digits, fueled by demand for its premium spirits. The company also said sales from wholesalers to retailers, which indicates real-time consumer demand, climbed by double digits during the year.

One success story for the company’s high-end strategy is its Bowmore Scotch whisky, which saw its volume climb 16% and its sales soar about 50%. To raise its prestige, the brand has partnered with luxury automaker Aston Martin on several occasions, including launching one of the rarest single malt whiskies together in 2020. A bottle of Bowmore sold for a record $532,340 at the Distillers’ One of One charity auction in December, demonstrating the perceived value for a rare whisky from the brand.

Worldwide, Beam Suntory’s sales rose 11% in 2021 compared with the year-ago period and on a two-year basis. Because the company is privately owned, it isn’t required to disclose its financial results like many of its publicly traded competitors.

“Two years ago, in 2020, we weren’t as affected as a lot of companies, so the bounce back isn’t as strong as some of the other numbers that you’re still seeing, but still I think double-digits against 2019 is quite powerful,” Beam Suntory CEO Albert Baladi said in an interview.

For comparison, rival Diageo reported 20% organic sales growth for the first half of its fiscal 2022 compared with the year-ago period.

Despite its strong sales performance, Beam Suntory wasn’t immune to many of the challenges facing the broader spirits industry. Sales in Japan were up by midsingle digits, but government restrictions weighed on demand. Glass supply constraints hurt supplies of some Jim Beam bottle sizes. And inflation cut into profits.

Baladi said that some of its brands raised their prices twice in 2021 to offset higher costs, and its American whiskey portfolio led the industry with its price hikes.

“The fact that we’re premiumizing our business, and we’re increasingly playing at the premium end of the price tiers provides a bit of a shield,” Baladi said. “These price tiers are less sensitive about pricing than others.”

So far, the company hasn’t seen any changes to consumer demand for its pricier bottles, although Baladi pointed out that the spirits industry performs well in most economic conditions. Raising prices also serves as encouragement for the company to keep up its efforts to upgrade its spirits, according to Baladi.

Looking to 2022, Baladi said the company is looking at raising prices again. January’s consumer price index climbed 7.5% compared with the same time a year ago, surpassing the company’s prediction for inflation.

As Beam Suntory invests in upgrading its spirits, it’s also trying to keep with consumer demand for ready-to-drink products, which have an unexpected upside for its business.

“The premiumization of the business, particularly in spirits, is cash and capital intensive, and ready-to-drink generates cash,” Baladi said. “So ready-to-drink is not only smack in line with consumer trends, but at the same time, it generates cash that can be invested in the capacity, the warehouses, the aged liquid and everything else we have to do to fuel the premiumization strategy.”

Last year, across the industry, premixed cocktail sales saw the fastest growth of any spirit category, according to the Distilled Spirits Council of the U.S.

As part of its efforts to expand its ready-to-drink offerings, Beam Suntory partnered with Sam Adams brewer Boston Beer to bring each company’s brands into new categories. Ready-to-drink cocktails under Beam Suntory’s Sauza brand will start shipping out in March, while Truly Vodka is expected to hit shelves in March and April.

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