Based in Deerfield, Ill., Beam Global is a subsidiary of Fortune Brands, Inc., which purchased the James B. Beam Distilling Co. and its flagship brand in 1968. Fortune subsequently has acquired numerous premium spirits brands in the past four decades, now boasting a portfolio of more than 80 well-known spirits brands.

Today Beam Global houses eight of the world’s top 100 premium spirits, uniting a diverse array of heritages and nationalities through its brand portfolio. From Sauza tequila to Cruzan rum to Effen vodka and Courvoisier cognac, Beam Global’s brands represent strong bloodlines from Belgium, France, Germany, Portugal, Russia, Scotland, Spain and the US, just to name a few.

With a vision of “building brands people want to talk about,” Beam Global has spent the past five years strengthening its portfolio, expanding into new markets, enhancing its sales organization and gaining more control over its international routes-to-market, which all spell long-term success for the company.

And despite the challenging economic environment throughout the world, Beam Global is not content to bury its head in the sand. Rather, the company continues to find opportunities for growth by competing more strategically and focusing on innovation and brand building.

Collectively, Fortune’s spirits brands account for more than 2,000 years of craftsmanship and distilling heritage. “In this business, it’s all about brands and it’s about people. If you can bring the two together then you’re well on your way to being a part of what I like to call being custodians of those brands,” says Donard Gaynor, senior vice president and managing director, international, for Beam Global Spirits & Wine, Inc. “Some of our brands are more than 200 years old, so you might have 20 to 25 years to be custodians and do your part with those brands.”

As the spirits industry enters a new decade, the company is strategically positioning itself for long-term growth while remaining ever mindful of its past.

Building Momentum
The past five years have been a major transitional period for Fortune’s spirits business as it transformed, almost overnight, from the seventh-largest spirits company in the world to the fourth, thanks to a $5 billion acquisition in 2005 of more than 20 former Allied Domecq and Pernod Ricard spirits and wine brands. Brands such as Sauza, Courvoisier, Canadian Club and Maker’s Mark joined the existing portfolio, which included flagship Jim Beam, Knob Creek, DeKuyper cordials and Starbucks Coffee Liqueur. (Jim Beam Brands Worldwide became Beam Global Spirits & Wine in 2006.)

The acquisition also significantly boosted Beam Global’s presence in international markets by gaining premium global growth brands like Laphroaig single-malt Scotch Whisky, Larios, a Spanish gin and Teacher’s, a Scotch whisky popular in the UK.
As a new global leader in spirits and wine, Fortune’s acquisition transformed the company in a number of ways. Beam Global doubled sales and tripled the number of brands on the world’s Top 100 premium spirits list. It also increased its global footprint, as sales went from being nearly 75 percent US driven, to being closer to 50/50 between the US and the rest of the world.

For Gaynor, who came on board in 2003 to lead the international division, the acquisition greatly helped his mission of building Beam’s international business.

“When I came on back in 2003, the business was about 80/20 between the US and international and of the international business it was about 80/20 between Australia and the rest of the world. The objective was to build the business organically and by acquisition. We have now succeeded in putting Beam International on the map and, more important to me, built a broader brand portfolio in the international business,” he says. A beverage alcohol industry veteran with more than two decades of global business experience, Gaynor, an Irishman by birth who now resides in New Jersey, spent nearly 10 years at The Seagram Spirits & Wine Group in a variety of executive leadership roles.

With a continued focus on making its international business more efficient and profitable, Beam Global took steps back in 2008 to form a new international sales and distribution partnership with The Edrington Group, a Scottish premium spirits company. Now called the Alliance, the partnership spans 24 international markets and generates combined sales of more than $1.5 billion. The Alliance helps to simplify routes-to-market and helps bring both companies closer to customers and consumers around the globe, Gaynor says.

Prior to the formation of the Alliance, which officially launched last April, Beam Global was part of a four-partner joint venture, called Maxiuum Worldwide, which served as an international sales and distribution network for 10 years. The other partners were Remy Cointreau, Highland Distillers and Vin & Sprit (V&S), the former brand owner of Absolut. When Pernod Ricard bought V&S in 2008, it effectively ended Beam Global’s US distribution joint venture with V&S, clearing the way for Beam to build its next-generation sales and distribution platform in the US and around the world.

Within the structure of the Alliance, Beam Global and Edrington have joint ownership in Spain, the UK, Russia, China, Hong Kong and the travel retail segment. In 12 markets, including Germany, Australia, Canada and many Southeast Asian countries, Beam handles distribution for both companies’ portfolios.

“What this has done is given us back an incredible amount of control over our international routes-to-market, which we had shared with three other partners prior to that,” Gaynor says. The Alliance also affords Beam Global more agility and the ability to respond quickly to emerging market trends, he says. Now, 70 percent of Beam’s spirits sales are distributed through sales organizations that it entirely owns, up from less than 10 percent before.

Spirited Growth
While many in the industry like to claim that the spirits business is recession-resilient, Beam Global has felt the impact of the challenging economic landscape across the globe just as much as any other spirits company. Net sales from Fortune Brands’ spirits business hit $2.5 billion in 2009, down 0.5 percent from 2008. And while Gaynor and his team at Beam Global admit that they cannot control the economy, the company instead focuses on controlling how it competes in those markets in order to drive growth and solidify its category leadership position.

For instance, the flagship Jim Beam brand continues to be a success story in markets like Australia, Germany, the UK, China and India. In Australia, which is the world’s second-largest bourbon market, Jim Beam continues to be the No. 1 spirit brand and Beam Global also has managed to build the bourbon franchise in Germany in the past few years.

“There are some fairly unique things we do in that market such as a taste challenge with Jack Daniel’s where we had 165,000 consumers sample in blind taste tests and 75 percent of those consumers went for Beam,” Gaynor says. “That’s a great way to rejuvenate your consumer base.”

The American whiskey market in general is seeing promising growth in international markets, versus in the US where sales are flat. Maker’s Mark, Beam Global’s premium, small-batch bourbon brand, is charting 15 percent growth over the entire international region, according to Gaynor, recording as high as 75 percent and 70 percent growth in Australia and Canada, respectively.

Faced with challenging market trends influenced by the global economy, such as the shift from on-premise to off-premise and the trading down from super premium to premium and standard brands, the Beam Global International team strategically takes a differentiated approach to each market, taking advantage of opportunities for growth where and when they occur.

“The international picture is not one that’s easy to paint with one brush in terms of what the economy did,” Gaynor says. “Australia and India are two call-out markets that continue to grow and we’re gearing up to take advantage of that. Where things are tough like Spain, which has 20 percent unemployment, and the UK, we’re hunkering down and doing our best to keep our heads above water.”

In India, the Teacher’s Scotch brand has experienced double-digit growth in the past five years, presenting an exciting market opportunity for Beam Global.

In the UK, where the high-end Cognac category has been declining, Beam Global has successfully reinvigorated market leader Courvoisier with events like Courvoisier The Future 500. Now in its third year, Courvoisier 500 is an exclusive network of rising stars across the UK, chosen by a panel of judges each year. The program has helped bestow a more progressive image to the brand, making it more relevant to younger consumers.

Beam Global also has a strong position in Spain, due in large part to two brands unknown in the US market—Larios Dry Gin and DYC Whisky. Although both the gin and whisky categories are declining in Spain, Beam Global has been able to leverage new innovations, such as Larios 12, a super premium gin that contains 12 different botanicals, to not only bring growth back to those categories, but also use them as a platform for building other spirits categories in Spain.

In the US market, Beam Global is aggressively acquiring and developing new brands as a way to gain entry into fast-growing spirits categories, as with the purchase of Cruzan rum and the introduction of ultra premium rye whiskey (rî)1 (pronounced “rye one”) in 2008 and the acquisition of Effen vodka last year. In addition, the company launched Red Stag by Jim Beam black cherry-infused bourbon, the brand’s first major launch since Jim Beam Black Label over 10 years ago.

With a strong portfolio of premium brands, Beam Global has positioned itself for long-term growth and is ready to hit the ground running when the economy recovers. “We must make sure we have the right blend of people with the right levels of enthusiasm and experience to exploit what these brands can do during our period of custodianship. If we can get that message across to everybody, then we have a successful formula for how to run in this business,” Gaynor says.

From Beverage World February 15, 2010