Japan shouldn't buy America's bourbon industry

Sure, Suntory makes fine hooch. But if anyone outside the US should purchase Beam, it's Australia.

By The Week Jan 14, 2014 1:43PM

File photo of bourbon barrels at the Woodford Reserve distillery in Versailles, Ky. (© Ed Reinke/AP)By Peter Weber, The Week

Japanese beverage company Suntory's pending purchase of Beam (BEAM), the maker of most of the biggest names in bourbon, is kind of like AOL (AOL) buying Time Warner back in 2000.

It's David buying Goliath. It just seems wrong.

Suntory is the No. 15 spirits company in the world, as measured by sales, and Beam is No. 4.

Assuming the $13.6 billion all-cash deal goes through, as expected, Suntory jumps to No. 3, after Britain's Diageo (DEO) and France's Pernod Ricard.

But there's more to it than size: Beam doesn't just distill Jim Beam; it also owns Maker's Mark, Knob Creek, Basil Hayden, Booker's, Baker's, Old Crow, Old Grand-Dad, and Old Overholt (the world's best deal in rye whiskey).

Beam Inc., in other words, is practically the entire top-shelf American whiskey industry.

The only U.S. whiskey producer larger is Brown-Forman, which makes Jack Daniel's -- not bourbon, technically -- Woodford Reserve, the storied Old Forester, and Early Times.

There's a certain element of wounded national pride here: Bourbon, after all, is as American as apple pie. Time Magazine's Eric Dodds offers five suggestions for "the patriotic bourbon drinker" who wants to ditch Beam's Japanese-owned whiskeys; among his picks are Woodford Reserve and the wonderful Buffalo Trace.

That may seem like jingoistic nonsense, and perhaps it is. Beam Inc., for example, is headquartered in Deerfield, Ill., not the rolling hills of Kentucky.

And maybe it's a little hard to feel bad about a Japanese company snapping up a U.S. conglomerate that also owns Scotland's Laphroaig single-malt whisky, Canadian Club, Mexico's Sauza and Hornitos tequilas, France's Courvoisier cognac, Spain's Fundador brandy, and other assorted foreign conquests.

But the Beam family, starting with German immigrant Jacob Boehm (the family's pre-Americanized surname), has been distilling whiskey in Kentucky since at least 1795. It's still a family business, at least in spirit. One of Jacob's sons, David Beam, took over the family whiskey business and the other son, John Beam, founded the Early Times Distillery in 1860.

From the relaunch of the post-prohibition James B. Beam distillery in 1935 until 1998, the master distiller was always a Beam or Noe -- Booker Noe, Jim Beam's grandson and "one of the most colorful and delightful men in the business," according to Gary Regan and Mardee Haidin Regan's Bourbon Companion, was in charge for more than 40 years, until 1998. In 2007, his son, Fred Noe, took over again, becoming the seventh generation Beam in charge of the family still.

The Beams don't own Beam Inc., but they are its public face. Suntory is buying that history. And its big Japanese rival, Kirin, paved the way in 2002, buying Four Roses, a distillery in Lawrenceburg, Ky., founded in about 1886.

Now, Suntory is also a family business with a long, noble history, dating back to 1899. It has been distilling whiskey since the U.S. was in Prohibition, and its flagship Yamazaki single malts are delightful.

There are lots of great articles on why the deal makes perfect sense: Japan's aging, shrinking population means its companies have to look elsewhere for growth, says Quartz's John McDuling -- in Suntory's case, some 80 percent of revenue comes from Japan; Bloomberg's Justin Bachman explains that bourbon is getting hot across Asia and Suntory will be "far more knowledgeable about selling liquor in Asia than Beam could become"; The Wall Street Journal's Alex Frangos and Aaron Back describe the deal's "perfect synergy" as Japan gains "access to the perfect Manhattan."

David A. Mann at Louisville's Business First notes that Kirin and Italy's Gruppo Campari, which bought Wild Turkey in 2009, have either left their Kentucky distilleries alone or put serious money in upgrading the facilities. Suntory will probably let Beam continue to run the Beam family of bourbons.

So why shouldn't Suntory buy many of America's best bourbons, all in one shot? Because Japan isn't a particularly big market for bourbon. This is about money, not love.

Do you know the biggest market for U.S. whiskey? Per capita, it's apparently Australia, where Jim Beam is also the most popular individual liquorQuartz's Roberto A. Ferdman has this remarkable chart.

I count at least 14 countries that would appreciate owning Beam more than Japan. France drinks the most whiskey per capita, period (followed by Uruguay), and in terms of raw numbers, populous India wins the whiskey race hands down. Japan never even cracks the top 10. Bourbon deserves better.

More from The Week

Jan 14, 2014 5:42PM
Was just in Kentucky over the Thanksgiving Holiday. Toured the Makers Mark, Beam and Baker distilleries. A lot of history there. A Beautiful part of our country. What a sad day.
Jan 14, 2014 5:37PM
Jan 14, 2014 5:06PM
One more American ICON gone to corporate greed, and when the japs, take over workers will get screwed , seen it before and it will happen again. They will bring in their own ways and management will follow or look for another job. Tis a sad day in the hills
Jan 14, 2014 5:32PM
This is Bull,American companies are selling us all out,I use to love Jim Beam ,But now I will switch to drink an American Brand. Good luck Japan as we Americans drop Jim Beam. I think you overpaid as you will not get your money back if we all refuse to drink it.
Jan 14, 2014 5:29PM
Foreign ownership worked out so well for Budweiser.........
Jan 14, 2014 5:40PM
If it goes through I will remove all there products from my bars!
Jan 14, 2014 6:08PM
We lost most of our jobs to China.  Just another nail in the coffin. By the time we ever do anything about it, corporate greed will have ruined this country and it will be too late.
Jan 14, 2014 5:24PM
hope jack Daniel's don't get got by a foreign place!!!!!!!!!!!!
Jan 14, 2014 6:31PM
It's a plot to get us drunk so they can pull a surprise attack on us. Oh - wait. That was 1941.
Jan 14, 2014 6:36PM
Now would be a good time to look to local small craft distiller's.  There is a new movement towards artisanal whiskey's and bourbon going on across the United States.  Check out the American Distilling Institute website or www.cadsp.org for information on how to find someone in your area.  Small batch, hand made with locally grown ingredients.
Jan 14, 2014 5:54PM
Jan 14, 2014 6:17PM
My wife and I both like red stag by Jim Beam. Now I will have to find something else.
Jan 18, 2014 9:37AM

Anyone know where our people will get a job maybe in Japan, I heard its going ballistic over

there.  They took the car industry, motorcycles, cameras, TV, VCR's and now booze to just name

a few. Go ahead pour down the Members Mark or Jim Beam while you salute those who died at Pearl Harbor. Japan won and you thought it was  America, it just took a little time.  Don't forget Bud and Miller those countries need you greenbacks. Anyone remember the Alamo, I didn't think so.

Congress seems oblivious to all of this and the consequences of their free trade laws and decisions.  Detroit is just the beginning of the greatest train wreck in history.  I wonder when the working class stops working who will pay their salaries maybe China or Japan? 

Jan 14, 2014 5:28PM
What in the hell are you talking about. Japan China India Mexico Taiwan  Indonesia make 90% of the stuff here now.
Jan 18, 2014 12:04PM
So the writer cries about a foreign owned company buying an American company but it is alright for the American company to own foreign companies.  What a knot head.
Jan 18, 2014 5:13PM

Get over it and stop blaming other countries for our own greed and poor politics. Most

of our problems and world decline are self inflicted.

Jan 15, 2014 12:58AM
 Who knows. Maybe we will have a opportunity to buy them back at a discount like many of purchase that Japan made in this country in the 1980's.
Jan 16, 2014 1:25PM
Anyone who knows good whiskey will tell you that Beam whiskeys are just one step above rot gut. Look at what the Japanese did for Four Roses, they lifted it out of the gutter of truly being rot gut, and made it one of the best in it's price range. They left the other recipes alone of the brands they have bought. Let them buy Beam if they want it, maybe they will improve the brand, sure can't hurt it any. Maybe they will make Old Grand Dad fit to drink again. The only thing Beam is good at is marketing, making people believe they are drinking good bourbon {when they aren't}. Their sales prove how stupid the average American consumer is.
Jan 14, 2014 6:08PM
my dad was a beam drinker all his life and he was in the Korean war he is rolling over in his grave
Jan 14, 2014 7:57PM

I think it is time to forgive Japan and Germany for the war they caused !  I know of a few Air Force officers who had do so,,namly my father a Major in the Air Force was shot down in a B-17 or B-24

and lived to talk about it ..fought Japan and Germany ! After the wars he meet pilots from both counties and had drinks with them and both sides apologized and that was enough for my father.

as for Japan buying Jim Beam ?   what ever the japanese buy into they find ways to improve that

product ! look what happened to cars and tv's we showed them how to make !  now they want to

make whiskey---hey they just might come up with a better drink ! I forgive them and the war is over.

let's just enjoy the good whiskey ! gyy

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