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Suntory CEO Says Coronavirus Will Not Stop Japanese Firms Buying Abroad

Published on Dec 21 2020 12:58 PM in Drinks tagged: Suntory

Suntory CEO Says Coronavirus Will Not Stop Japanese Firms Buying Abroad

The chief executive of Japanese beverage maker Suntory Holdings has said that the coronavirus crisis and other geopolitical risks will not deter his company or other Japanese firms from overseas acquisitions.

Shrinking demographics, low borrowing costs and years of slow economic growth have forced Japanese companies to turn to overseas acquisitions for growth. Suntory's $16 billion purchase of Kentucky bourbon maker Beam in 2014 is a prime example.

"A 'post-pandemic' world will eventually arrive, and considering the low cost of financing, if opportunities arise we'd want to pursue them," Suntory CEO Takeshi Niinami said, although he said that his firm has no immediate acquisition plans.

Suntory, which has annual sales of approximately 2.6 trillion yen ($25 billion), is one of the most familiar consumer companies in Japan, with brands including "The Premium Malt's" beer, "Boss" canned coffee and "Yamazaki" whisky.

In addition to Jim Beam, it has acquired several Scotch whiskies such as Laphroaig and Bowmore, as well as soft drink brands such as Lucozade.

"There's no growth if you're only looking at domestic demand," Niinami said, adding that India, Southeast Asia and China are the most interesting markets for Suntory.

Niinami, who is an economic adviser to Japan's government, said that he hopes that US president-elect Joe Biden will rebuild multilateral relations and stabilise US ties with major trading partners.

Niinami is more cautious about the outlook for Japan's domestic restaurant and bars, which are key customers for Suntory. He said that conditions have worsened since June when he said that more than 20% of bars and restaurants could fail.

"I would say everyone's understanding is that things are more severe compared with that time," he said.

"Through December, January into February, we may see 20, 30% of these businesses close down," he said. "The first quarter of next year is likely to be a very tough period."

Japan's capital city,Tokyo, raised its COVID-19 alert level on Thursday December 17 to the highest of four stages as the number of new coronavirus cases spiked to a record daily high of 822.

Vaccines, Tests And The Olympics

Niinami said that the availability of vaccines and virus tests will be crucial for restoring Japanese consumer confidence, and for successfully staging the Olympic Games in the summer.

"If the vaccine and other measures help to slow the spread of the coronavirus, and if we are able to hold the Olympics in August, that will mark a positive turnaround for the world, not just for Japan," he said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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