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Suntory and Jim Beam blend skills to create new bourbon

Japan distiller searches for ways to make its American investment pay off

Jim Beam bourbon serves as the base of the blended whiskey. (Photo courtesy of Beam Suntory)

TOKYO -- Japanese brewer Suntory Holdings will release in the U.S. this month a bourbon developed jointly with Beam Suntory, marking a significant milestone since the American distiller was acquired five years ago.

The new label, to be named Legent, will come from distilleries in the U.S. Suntory looks to tap into surging demand for Japanese whiskey, and reap a return on its $16 billion purchase of Beam.

"We have created a big opportunity to develop new products together," Suntory President Takeshi Niinami has said about the 2014 acquisition of the company once known as Beam. But the whiskeys produced at both the parent and subsidiary can take 10 or more years to mature, creating a substantial lag time. In addition, distilling techniques differ across the Pacific, and efforts to combine methodologies delayed product development.

Legent represents a marriage between Suntory Beam's liquor and Japanese blending techniques. The whiskey uses Beam's bourbon as a base, and is further matured in casks that once held sherry and wine. The 750-milliliter bottles will be priced at around $35, more than the $20 price tag for a standard bottle of Jim Beam.

The new product will target millennials, who have helped push growth in the U.S. whiskey market to more than 6% annually over the past five years.

Legent will be priced at around $35. (Courtesy of Beam Suntory)

At the time Suntory purchased Beam, a company with a history dating back more than 200 years, there was a sizable gap between the two companies in sales strategies and in other areas. "It felt like they didn't want us to stick our noses in their business since they are a globally recognized name," said Niinami.

To better integrate business operations, Suntory in 2015 launched a talent development program named Suntory University. Beam employees were taught Suntory's founding ethos of taking on challenges and giving back to society. Personnel rotated between Suntory's Yamazaki distillery in Osaka and Beam's distillery in Kentucky, which resulted in the sharing of philosophies.

Thanks to those efforts, Beam Suntory launched Roku, a jointly developed top-shelf gin made available in Japan and other select markets in 2017. That year, Roku's global sales surpassed expectations by hitting 22,000 cases, grabbing the top share in Japan's premium gin market. Haku vodka followed in 2018.

Now the duo will focus on whiskey. There is currently a whiskey shortage in Japan and there are no plans to sell Legent in Japan at this stage.

The launch also represents a test of sorts for overseas acquisitions by Japanese corporations. Recent history is pocked with failures, such as Toshiba's financial implosion courtesy of Westinghouse Electric, and Japan Post Holdings' ill-fated purchase of Australian logistics group Toll.

Those two cases were the result of breakdowns in corporate governance. Suntory has steadily beefed up governance at Suntory Beam.

However, as an unlisted company Suntory Beam is not required to disclose its earnings. Suntory Chairman Nobutada Saji, who made the decision to buy Beam, set a sales goal of 1 trillion yen ($8.95 billion) for the distillery business. Revenue appears to be short of that target.

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