Japanese Company Plans to Buy Iconic “Jim Beam”

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Jim Beam is one of America’s most iconic bourbon whiskeys. Produced in Claremont Kentucky, Jim Beam has become a symbol of the United States, but now it appears that Jim Beam is heading overseas. BEAM Inc (NYSE:BEAM) Inc., the maker of Jim Beam, is set to be sold to Suntory Beverage & Food Ltd (TYO:2587) of Japan for $13.6 billion.

Suntory an emerging spirits “empire”

Suntory Beverage & Food Ltd (TYO:2587) focuses primarily on spirits, but also owns soft drink investments, restaurants, and other ventures. The company’s current spirits brands include Yamazaki Whiskey, Royal Whiskey, McClelland’s Whiskey, and Bowman Whiskey, among others. The company also sells some beers, such as Malt’s, and produces other spirits.

Almost certainly, Jim Beam will continue to be produced in the United States, and it is unlikely that Suntory will move production from its current location. Ownership of the brand, however, would be transferred to a Japanese company, which might alienate some customers and damage the brand itself.

While Jim Beam is the most well-known brand sold by BEAM Inc (NYSE:BEAM), the company also produces several other brands of liquor, including Marker’s Mark, Baker’s Bourbon, Knob Creek bourbon, Laphroaig Scotch, Teacher’s Scotch and Courvoisier cognac. Several of these brands fall into higher price categories than Jim Beam, but are not as widely known or drank.

Alcoholic beverage market consolidating

The sale should come as no surprise. Alcoholic beverage makers have been undergoing a period of consolidation over the last several years. Already, Budweiser and other iconic American beers are owned by foreign companies. Most large alcoholic beverage companies are now international conglomerates with offices and production facilities spread across the world.

Still, not all brands have been offering themselves up for sale. Several spirits and beer brands are owned by families and other investors unwilling to sell. For example, the company that owns Jack Daniels, Brown-Forman Corporation (NYSE:BF.A) (NYSE:BF.B), has shown no interest in selling off. Many microbrews and other smaller companies have also resisted buyout attempts by larger companies. Indeed, Jim Beam offered one of the few opportunities for a larger company to acquire an iconic brand.

Also, it’s worth noting that liquor sales have been rising while beer sales have begun to stagnant. In the United States, spirit sales in 2012 saw a 3% increase from 2011 as more people are turning to their favorite bottle of liquor and leaving the beer in the fridge (or store). This marked a total increase to $21.3 billion dollars worth of sales. Importantly, higher-end brands, such as Jim Beam, actually outshone value brands.

With these market trends in play, the consolidation of liquor and alcoholic beverage companies will likely continue. This might cause some blowback against national brands if local buyers begin to perceive the brands as foreign, however, such brands might also enjoy an expansion due to the new parent company’s larger international distribution networks.

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