Make It Suntory Time

Consolidation in the globalized liquor industry continues: Beverage giant Suntory will be acquiring Beam Inc. for $13.6 billion. The deal has yet to be finalized, but both sides have come to an agreement, and competing offers are unlikely. So what does it mean that Jim Beam, Maker’s Mark, and Knob Creek will be owned by a Japanese company? What does it mean that France’s Pernod Ricard owns Absolut Swedish vodka? Or that Britain’s Diageo has a 50 percent stake in Dutch Ketel One? In other words, not much for the whiskey lover—Maker’s Mark will continue to be distilled in Kentucky. And Beam Inc. will continue being run out of Deerfield, IL. The point of all this is distribution.

And as the Wall Street Journal notes, the buyout comes at a time when brown spirits are making a serious comeback:

Beam is positioned squarely in a part of the liquor business experiencing a powerful global upswing: bourbon whiskey. The traditional American spirit is made mostly from corn, aged in charred oak barrels and typically hails from Kentucky. Its popularity is building as some consumers grow tired of vodka, the top-selling U.S. spirit, and gravitate toward distillers of brown spirits with more than centurylong domestic roots.

Long in the doldrums, U.S. bourbon has made a comeback in the past decade and production in 2012 rose above one million barrels for the first time since 1973. Distillers have invested roughly $300 million to boost capacity since 2011. North American whiskey—including bourbon, Tennessee and Canadian whiskeys—accounted for more than half of the total growth in the $21 billion U.S. spirits market in the 52 weeks ended Oct. 12, 2013, according to store tracker Nielsen.

It is also worth noting that among Beam products, Basil Hayden bourbon experienced the largest growth last year at 34 percent. After having met with Beam executive John Horn (for my upcoming vodka book), I am guessing this has to do with the growing mass appeal of Maker’s Mark: There was a time when Maker’s was an elite bourbon—and a pricey one at that. The product remains on the expensive side but more Americans are making it their go-to bourbon—even mixing it in Maker’s and Coke! (It’s the best of both worlds: expensive and popular.) As Horn theorized, those of us who drank Maker’s in a more, shall we say, selective time, have moved on in search of the next elite bourbon. Said Horn, Beam’s director of field marketing in control states: “I drink Maker’s because it’s Maker’s. Now it doesn’t feel like Maker’s anymore so maybe I’m on to the next thing like Basil.” He’s obviously not alone.

In addition, the acquisition turns Suntory-Beam into the third biggest spirits company behind Diageo and Pernod Ricard, but ahead of Bacardi.

So for relaxing times…

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