Suntory Holdings (Japan)

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Suntory of Japan is best-known as a leading beverage producer, controlling an extensive collection of alcoholic and non-alcoholic beverages. The company first introduced whisky into Japan in the 1930s, and now controls some 70% of the huge domestic market, importing around 70 spirits as well as 1,500 wines from 21 countries. More recently it jumped aggressively into the beer sector, though it still lags well behind market leaders Asahi and Kirin. Since the late 2000s, though, Suntory has devoted much of its attention to developing a strong global profile through a series of increasingly ambitious acquisitions. Several of these were in soft drinks, establishing Suntory Beverage & Food as a major force in Australasia and Europe. However, the biggest development by far was an agreement to absorb US spirits giant Beam Inc at the beginning of 2014. That $16bn deal catapulted Suntory in the #3 spot among premium spirits companies behind Diageo and Pernod-Ricard. Still privately owned by its founding family, the group also has a huge portfolio of other interests ranging from pharmaceuticals to resort development and florists, and owns traditional Japanese-style restaurants in 17 major cities around the globe.

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Brands

Suntory Whisky Suntory Foods
Suntory Pure Malt Malt's
Midori Suntory Brewery
Hibiki KinMugi
Kakubin Haagen-Dazs Japan
Suntory Wine Orangina Schweppes
Subway Japan Suntory Pharma
MD Magnum Dry Suntory Restaurants

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 26th Jun 2014: Family-controlled Japanese drinks group Suntory chose an outsider as its next CEO for the first time. Members of the founding family have led the group for its 115-year history to-date. Now, Takeshi Niinami, a Japanese-born but Harvard-educated executive, will succeed Nobutada Saji as group president next month. For the past decade he has headed Japanese convenience store group Lawson (a unit of Mitsubishi), and has been selected for his wider international experience. Suntory has established a strong presence in recent years in Western markets through acquisitions including Orangina Schweppes, Lucozade energy drinks and the Beam spirits group.

Adbrands Weekly Update 16th Jan 2014: Watch out drinks companies; the Japanese are coming! Suntory precipitated a seismic shake-up of the established order among global drinks groups by announcing an agreed deal to acquire US giant Beam Inc for $13.6bn (or $16bn including debt). That will add Jim Beam, Courvoisier cognac and Pinnacle vodka and others to Suntory's existing collection of mainly Japanese whiskies. The news came only days after completion of the Japanese group's takeover of GSK's Lucozade and Ribena soft drinks. The Beam deal - the biggest-ever in the global spirits industry - remains subject to regulatory and shareholder approval but is thought likely to go through smoothly. Suntory and Beam have already negotiated a sizeable break-up penalty as part of the deal, making it unlikely that a rival offer will emerge. Their combination will create the world's third largest premium spirits company by volume ahead of Bacardi, though still behind Diageo and Pernod-Ricard. Combined pro forma volumes are around 54m cases annually. The two groups are already partners in Japan and other Asian markets with reciprocal distribution deals. The current Beam management team led by CEO Matt Shattock will continue to manage the merged group's international operations from the US.

 


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Background

Free for all users | see full profile for current activities: The business was founded by patriarch Shinjiro Torii in the final year of the 19th century. Operating under the company name Kotobukiya, the company manufactured Western-style sweet red wine. At the time, wine was virtually unknown in Japan, but the company's Akadama Port Wine was a great success and this remained its principal business until the 1930s. As Japan opened itself up to foreign influence in the early years of the 20th century, the company dabbled with other Western-style drinks. In 1923, Kotobukiya built Japan's first distillery in Yamazaki outside Kyoto, with the intention of making whisky. But for years, none of the whisky produced by the distillery was deemed suitable for launch. Finally, in 1929 the first bottles of whisky, under the name Shirofuda (or "white label"), were released. But quality was far below that of imported malts and demand was weak (although the blend is still available, marketed in Japan as Suntory White).

In 1937, the company launched its first aged whisky, Kakubin ("square bottle"), with slightly greater success. This was designed as a whisky with a subtle flavour to be drunk with food rather than on its own, in the Western style. But the business only really began to take off after World War II as a result of American influence. In the late 1940s and early 1950s, steep taxes on imported alcohol, plus a widespread adoption of US culture led to an extraordinary rise in the popularity of local whisky, which gradually eclipsed traditional sake as the Japanese liquor of choice. Suntory's years of experience in distilling gave them dominance over what was suddenly one of the country's most lucrative alcohol sectors. By the 1960s, control of the business had passed to the founder's son Keizo Saji Torii who oversaw the creation of a network of "bottle keep" bars and restaurants around Japan where customers could deposit their private bottle of whisky for future visits.

In 1963, the company changed its name from Kotobukiya to Suntory. The same year, the business took its first major step into a new market, establishing a brewery in Tokyo to make Junnama draught beer, for sale through its extensive network of bars and restaurants. Suntory quickly carved itself a large slice out of a market previously dominated by other companies, building another brewery in 1969 to manage demand. Later it sold off its bars, although it retained the chain of upscale restaurants. The 1970s saw rapid expansion of the business on all fronts. In 1970, the group became Japanese importers of US company Brown Forman's portfolio of whisky and other spirits, and also opened the first Suntory restaurant outside the country, in Mexico City. In 1972, the group established a separate division to market non-alcoholic drinks and foods under the Suntory brand. In 1975, Suntory's wine business moved upmarket with the harvesting of Japan's first connoisseur wine, derived from the noble rot grape which is the base to France's Sauternes or German Mosel wines.

In a completely new departure, four years later, the group established Suntory Institute for Biomedical Research to develop medicinal substances, and this led to the formation of a full-grown pharmaceutical business, Suntory Pharma, in 1988. Other developments included an aggressive move into the US market. First step was the acquisition of US Pepsi bottling plant Pepcom Industries in 1980. Five years later the group acquired Kentwood Spring Water, the country's sixth largest manufacturer and distributor of bottled water. A series of subsequent purchases had made Suntory Water Group the US's second-largest bottled water delivery company by 1998. In 1990, Suntory acquired a controlling interest in Cerebos Pacific, a Singapore-based company manufacturing and marketing foods in 10 countries in Asia and Australasia. The business was later renamed Brand's, after the company's main food brand. That year, Keizo Sajii passed control of the business to his nephew, Shinichiro Torii. (Sajii died in 1999).

In 1998 the group acquired the local Japanese operations of Pepsi-Cola and launched an all-out assault on Coca-Cola. In 1999 the group also launched a sports drink in Japan, Dakara. Another generation took control of the business when Keizo Sajii's son Nobutada became group president. See full profile for more


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