Liquor companies like to make drinkers think that their favorite spirits always have been and always will be attached to a very particular place — Kentucky bourbon, Irish whiskey, Russia vodka.
But like many other industries, the liquor business has gone global and a small number of players increasingly dominate the industry worldwide. The distilling may still be local, but ownership is definitely international.
The next time you enjoy a Kentucky bourbon, whether it’s a Jim Beam and Coke or perhaps a Manhattan concocted with Maker’s Mark, you might want to tip your glass eastward.
A Japanese company, Suntory, agreed to buy Beam Inc. for about $16 billion in cash and assumed debt. Suntory not only picked up two quintessentially American bourbons, it also acquired an array of internationally renowned spirits in the deal, including Canadian Club whiskey, Sauza tequila and Courvoisier cognac.
Suntory is a private, family-run company that has focused on its home market for more than a century. But it will now have a global presence as one of the largest drinks companies in the world.
Frank Coleman, with the Distilled Spirits Council of the United States, a national trade association, says if a company wants to be a global player in distilled spirits, it needs brands based in every category and from around the world.
Diageo, a British firm, and the largest producer of spirits in the world, owns Johnnie Walker whiskey, Smirnoff vodka and Tanqueray gin.
Chivas Regal whiskey, Absolut vodka and Jameson Irish Whiskey are owned by the French company, Pernod Ricard, the second largest distiller.
Another couple of favorites from the U.S. South — Jack Daniel’s Tennessee whiskey and Southern Comfort — are still firmly under American control. They’re owned by the Kentucky-based Brown-Forman. It was the third largest distiller worldwide until this latest deal between Beam and Suntory.
Coleman says you see a lot of deals going on in beer and wine, but these sorts of mega-deals in the spirits industry come along every three to four years.
Jeremy Cunnington, a senior alcoholic drinks analyst (now that’s a great job title) with the strategy research group Euromonitor International, says it’s not surprising Suntory made the bid.
It’s one of the oldest distributors of spirits in Japan and has recently expanded to include other food and drinks ventures to help move beyond the shrinking Japanese market.
Suntory and Beam already had a business relationship. Suntory distributes the Beam portfolio in Japan, while the American company moves Suntory products around Asia.