SINGAPORE. Having celebrated its centenary in 2023, The House of Suntory kept up the party spirit with the inauguration of its first travel retail shop-in-shop on 11 March, housed within Lotte Duty Free’s newly renovated central duplex store at Changi Airport Terminal 3.
The Moodie Davitt Report Asia Pacific Content Strategist Lara Netherlands was on hand to report this seminal development and to conduct exclusive interviews with Beam Suntory President & CEO Greg Hughes and Managing Director of Global Travel Retail Ashish Gandham.
In a fascinating conversation, Hughes reveals the spirit behind the spirits, delving into the company’s storied journey; its standout 2023 performance; its key values; and the ‘halo effect’ travel retail offers to domestic markets {look out for the Ashish Gandham interview coming soon}.
The Moodie Davitt Report: You assumed your role as President & CEO in 2023. How would you define your key strategic priorities for the group?
Greg Hughes: Our ambition is to build the world’s most-admired premium spirits company. I think we’re less concerned about being the biggest spirits company in the world, but we want to be the best.
Those words are all intentional. We see the company as global and particularly, as you look at global travel retail and emerging Asia, we have a very strong business in Japan and the US, but also an opportunity to build across the world.
We want people to think of our brands and know them for the quality that they have; for the brand building work that we do; and for the quality of execution.
Awareness about how we do business is also important. We’re committed to sustainability and doing business the right way, which for us comes to our proof-positive commitments: nature positive, consumer positive and community positive.
It’s about giving back to nature, responsibility and consumption, diversity and inclusion, as well as how we show up.
On a culture of inclusivity, we are a unique company that brings together the East with Japan and the West with the US. To be able to manage two different cultures in an inclusive way is a strength that we can be admired for.
There’s an increasing emphasis within today’s travel retail landscape on brands and retailers aligning with social causes and sustainability efforts. While this may sometimes appear as a strategic trend to garner consumer support, why are these values so integral to the group’s ethos and long–term strategy?
I know ESG and social responsibility is a little bit ‘of the moment’ but as for Suntory, from its founding as a Japanese company and as a family-owned company, it has been committed to growing for good.
Our products are largely from the blessings of nature. We can’t make our products without water, oak, or grain. For us (giving back to nature) is not only the right thing to do, but also part of our license to operate.
If we don’t protect nature, encourage responsible consumption, and create a world where everyone feels like they can be a part of it, then we won’t have a right to operate for another 100 years.
Let’s talk about premiumisation – key to your strategic priorities – built around your premium-plus American whiskey, tequila, Japanese spirits and RTDs. Guide us through how you keep delivering that premiumisation.
It starts with quality and the Japanese concept of monozukuri, which is this relentless commitment to quality all the way from seed to sip.
For us it starts with the grain, it goes all the way through the production process and all the way to the glassware, the ice and making sure we’re delivering that quality at the point of consumption. It’s not only about what we put in the barrel, but also goes all the way through to how you consume the product at the point of sale.
We want for every one of our products to be able to stand hand over heart and say: “For what this is, it’s the very best version that it can be” – whether that be our RTDs, Jim Beam, a Yamasaki 55, or whether it costs two dollars or a million dollars, we want it to be the very best version of itself.
We fundamentally believe if we make better quality products for consumers, over time we’ll be rewarded with their loyalty and with the satisfaction of the experience we have delivered for them.
Growing in the right places
The group’s 2023 results were strong with net sales up +7% year-on-year and operating income up +13%. We know you can’t reveal numbers for 2024 but in general how are you seeing the spirits universe in terms of the areas and categories where Beam Suntory plays?
We think we’re lucky in that we have strength in the categories that are growing. What is driving the growth in spirits globally right now is whisky, particularly Japanese whisky and American whiskey, tequila, and RTDs.
Those categories are the ones in which we compete. We have differentiated products and we feel like we have a right to win.
We also benefit from a nice geographic footprint in that we’re very strong and large in business in Asia, and large in business in North America, as well as having diversity across the rest of the world.
Last year is a good example of where both our category footprint – with whisky, tequila and RTD – and our geographic footprint helped in the way in which we were growing rapidly in Asia. It also helped in what happened to be a more challenging year for most spirits players in North America.
Conversely, we’ve had years where North America was incredibly strong, and – particularly for example, during COVID – Asia was struggling more. So that is a benefit of our footprint and we do see those trends continuing in 2024.
There’s no dramatic change in what consumers are buying – whisky, tequila and RTD continue to lead the way. Furthermore, we still have huge opportunities, particularly across Asia and emerging Asia, to develop our businesses.
Amplifying the halo effect
Can you elaborate on how you see that growth trend shaping across Asia?
Partially because we’re still relatively small outside of Japan and the US, so we have huge potential to take these wonderful bourbon, tequila and Japanese whisky brands and introduce them to the world.
This is also part of why we’re so excited about things like launching this boutique store for The House of Suntory in Changi Airport where you have travellers of the world, particularly premium travellers from Asia, coming through global travel retail.
It is a great flagship for us to help show our brands and what they can be to people who don’t have easy access to them. We want to help introduce more people (through this channel) to our brands and then we can build local markets behind that, which will help them to continue to buy our brands.
Based on your overarching perspective as Beam Suntory President, let’s delve a little deeper into what initiatives such as The House of Suntory shop-in-shop here means in terms of brand reinforcement and the halo effect for your domestic markets.
This initiative allows us a flagship place to tell the story of the brand by showing the attention to detail, craftsmanship, and how premium and high quality the experience is. It shows the range across both our very high-end age statement exclusive products like the GTR exclusive range, as well as our Toku, Roku and Haku which are more accessible products.
This shop-in-shop gives us a chance to establish that footprint in the most international hub possible, as you’ve got people coming through Changi Airport from all over the world discovering our brands. This helps bring that halo effect back to the domestic market when they travel home.
What do you think makes Beam Suntory and Suntory different from your competitors and what are you most proud of in terms of the 2023 results?
The +7% top line and +13% bottom line growth last year was great and compared very favourably to most of our spirits’ competitors, but what I was most proud of was really three things:
One. How we delivered those results with our commitment to sustainability and doing business the right way, as well our commitment to water, planting trees and responsible consumption. How we delivered the results was as important to me as the financial results.
Two. A relentless commitment to quality is what differentiates us, with that obsession that good enough is never good enough, and that we will make every product the very best version of itself all the way through to the consumer experience.
Three. There’s a great humanity in Beam Suntory. The culture stems from a place of values which comes from a founding family, and the founders of the brands are still involved. This humanity in our culture is what makes it a really special place.
To close, sum up what the future looks like for Beam Suntory.
We’re committed to continue growing our brands around the world and particularly for brands like The House of Suntory, Maker’s Mark and Bowmore, which are great whiskey assets.
We see global travel retail as the place to build those brands. Ashish and his team are focused on picking the right airports and the right ‘halo’ places to introduce our brands to as many travellers as we can. I think we have a very bright future and I’m excited for what’s to come. ✈
