Suntory Spirits Limited Business Strategy for 2015

Suntory Spirits Limited saw a growth in sales due to the favorable performance shown by core brands such as Kakubin, Hibiki, Yamazaki, Hakushu, Jim Beam, -196°C Strong Zero, Horoyoi, and Funwari Kyogetsu, as well as the proposals for new value such as the Sumiwataru Umeshu. Further, management was integrated with that of Beam Suntory Inc. as of October 1 to take a new step forward.

In 2015, Suntory Spirits Limited will aim for year-on-year growth by continuing to cultivate and strengthen its brands further in growing categories including highballs, premium whiskies, bourbons, RTDs, and RTSs. The company name Suntory Liquors Limited has changed to "Suntory Spirits Limited" as of January 1, 2015 and is the Japan business of Beam Suntory, the world's third largest premium spirits company.

Whisky

Review of 2014: The whisky market in Japan is estimated to have grown by 6% compared to the previous year, due to expanding demand for highballs and growth in premium category. With that, Suntory Spirits' core brands including Kakubin and Jim Beam showed favorable movement, growing 6% compared to the previous year along with the market.
As for domestic premium whiskies, Hibiki, Yamazaki and Hakushu brands made favorable movement, up 26% compared to the previous year, as a result of bolstering the marketing activities for promoting the value of Japanese whiskies. In addition, the quality of Suntory whiskies were rated highly worldwide, as can be seen at the worldwide liquor competition International Spirits Challenge (ISC) 2014, with the Hibiki 21 Years Old winning the "Trophy" award, the top prize in the whiskey category, and Suntory Liquors Limited (Suntory Spirits Limited as of January 1, 2015) being named "Distiller of the Year" for the fourth time and also at the whisky guide book called "Jim Murray's Whisky Bible 2015" with the Yamazaki Sherry Cask 2013 awarding "World Whisky of the Year".
With regards to Kakubin, in addition to the efforts in expanding its recognition by re-launching its communication in February, promotional activities related to food pairing, and activities to let consumers experience the high quality of the highballs were strengthened, resulting in significant growth with a total of 3.29 million cases (up 10% year-on-year) to set a new high sales record since sales began in 1937.
Imported whiskies made favorable movement, up 13% compared to the previous year, due to expansion of contact with consumers, with a focus on bourbons such as Jim Beam and Maker's Mark.
Strategy for 2015: As a leading whisky company, Suntory Spirits' aim is to further activate the whisky market to achieve year-on-year growth once again in 2015, through the strengthening of value promotion for premium whiskies centered on Hibiki, strengthening of marketing activities for Kakubin, and efforts in demand creation for bourbons including Jim Beam and Maker's Mark.

Hibiki JAPANESE HARMONY: In order to further establish its position both in Japan and overseas, sales of a premium whisky embodying Suntory's various malts and superior blending techniques will be launched. In addition to the launch on March10 in Japan, an overseas launch utilizing outlets of Beam Suntory Inc. that was integrated last October will follow this year from spring onwards, in order to globally develop value promotion activities of the premium whisky.
Kakubin: Suntory Spirits will strengthen its marketing activities related to Kakubin using good flavor and food pairing as major themes. In conjunction with television commercials featuring actress Haruka Igawa, Suntory will make appeals at shops to consumers involving how to create delicious Kaku highballs and the allure of Kaku highball as drinks to go with food, while also working with drinking establishments to further bolster activities related to quality at the point of consumption. Further, Suntory Spirits will develop area marketing by introducing region specific advertisements in an effort to further expand Kaku highball fandom.
Jim Beam and Maker's Mark: Suntory Spirits will continue aiming to further improve brand recognition and desirability through new television commercials for Jim Beam , the world No1*¹ bourbon whisky, with a popular personality Rola. In addition, Suntory Spirits will work to attract new consumers to the bourbon category by actively proposing a new way of drinking called the Jim Beam citrus highball that uses citrus fruits with a focus on drinking establishments. As for Maker's Mark, Suntory Spirits will make appeals based on the high quality of each and every carefully distilled bottle through seminars and events in order to reinforce its leading position in premium bourbon whisky. Further, bourbons such as Knob Creek that are devoted to small-quantity production will be called "craft bourbon" in an effort to create new demand with a focus around bars.

RTDs

Review of 2014: With the total market for RTD beverages continuing to grow, Suntory Spirits has sold 50.5 million cases*² (up 7% year-on-year) to break set a new high sales record for the tenth year running.
-196°C Strong Zero grew significantly, selling 23.06 million cases (up 11%year-on-year). Among these, -196°C Strong Zero DRY acquired many new consumers by promoting its appeal as drinks to go with food, showing extremely favorable movement with a growth of 75% compared to the previous year. As for Horoyoi, its new product Cola Sour and others were well received, selling 12.16 million cases (up 7% year-on-year).
Canned highball products showed favorable movement at 7.26 million cases (up14% year-on-year) with contributions from promotional activities related to the appeal of canned Kaku Highball's food pairing, and also from introduction of television commercials promoting the new perspective of the canned Torys Highball.
Strategy for 2015: With the total market for RTD beverages expected to continue growing, Suntory Spirits aims to cultivate and strengthen -196°C Strong Zero, Horoyoi, canned highballs, and more, as well as to introduce new products with new value including Kokushibori and The O.N.E, in an effort to further stimulate the market. Suntory will aim for total RTD sales of 53.1 million cases (up 5% year-on-year).

-196°C Strong Zero: In an effort toward further strengthening brand recognition, all items will be renewed by February, and television commercials featuring actor Hidetoshi Nishijima and actress Yuki Amami will be actively introduced. Among these, the promotion activities related to food pairing of -196°C Strong Zero, which is showing remarkable growth, will be strengthened, in an effort to build demand within a wide swath of consumers including beer drinkers to aim for total sales of 24.4 million cases (up 6% year-on-year).
Horoyoi: In addition to efforts toward strengthening core products and actively introducing seasonal products, Suntory Spirits is aiming to use television commercials featuring new television personalities and social networking services and more to further expand contact with a focus on consumers in their 20s, with a goal of 12.5 million cases (up 3% year-on-year).
Kokushibori: The new brand, Kokushibori, using plenty of fruit juice and fruit liqueur to provide a rich fruity feel and a deep body that cannot be brought out by fruit juice alone, will be launched on February 10.At the time of its launch, active marketing activities will be developed through the introduction of television commercials that convey the particulars of Kokushibori, and more.
The O.N.E: The O.N.E, a new product with an alcohol content of one percent that can create additional occasions to enjoy drinking, will be launched on March 10. This product was developed for occasions where consumers want to enjoy a great-tasting lower alcohol drink, and our techniques cultivated from developing whisky, liqueur, wine, etc. were utilized in achieving this dry-type chu-hi drink with a quality taste.
Canned highballs: As for the canned Kaku Highball, promotion activities to appeal to its compatibility with food will be strengthened through the introduction of television commercials featuring actress Haruka Igawa, and new year-round products will be launched in an effort toward further growth of demand. As for the canned Torys Highball, in addition to introducing television commercials that continue to feature Yuriko Yoshitaka and Uncle Torys, its product lineup will also be strengthened. Through these activities, Suntory's aim is to sell a total of 7.54million cases (up 4% year-on-year) of its canned highballs.
Non-aru-kibun: Products with newly added value will be introduced so that more consumers can experience the product feature of this non-alcoholic beverage that creates a feeling of an alcoholic drink, in an effort toward strengthening the core products.

RTSs, Liqueurs, Spirits

Review of 2014: Suntory Spirits' RTSs*³ grew significantly with 2.11 million cases*⁴(up 140%year-on-year), steadily creating a new market. As for Funwari Kyogetsu,in addition to efforts toward actively strengthening its lineup, it was well received as a new alcoholic beverage with a fruit flavor, and showed favorable movement with 123% growth compared to the previous year. Sumiwataru Umeshu, launched in last April, sold well as it was well received as a transparent plum liqueur that goes well with meals.
Suntory Spirits has also actively worked at making proposals to consumers for enjoying genuine liqueur and spirits by holding events like the 21stCocktail Award, an annual Cocktail competition.
Strategy for 2015: As for RTSs, Suntory will continue to engage in marketing activities through the strengthening of the Funwari Kyogetsu and Sumiwataru series lineup, the introduction of new television commercials, and more. Suntory will also introduce products with newly added value, with a goal of 2.7 million cases (up28% year-on-year) in a total of RTS products.
As for liqueur and spirits, proposals will be made for new ways of drinking such as the Lejay Fruit Jar Cocktail for enjoying Lejay cocktails in a bottle container and the Kahlua Milk Bottle for enjoying Kahlua Milk in a milk bottle. Further, efforts will be made toward acquiring new consumers by strengthening sales promotion activities for bottled RTD products, such as Sky Blue and Beefeater Gin &Tonic, that are popular among young adult legal-purchase-age consumers.

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