News Release

Suntory Spirits Limited Business Strategy for 2018

The 2017 sales of Suntory Spirits Limited, the Japan business of Beam Suntory, exceeded the previous year due to favorable performance of whisky products such as Kakubin, Jim Beam, Torys〈Classic〉and Maker’s Mark, as well as RTD products such as -196ºC Strong Zero and canned highballs.
In 2018, Suntory Spirits Limited will aim for further business growth by continuing to develop and strengthen its key strategic brands in core categories including whisky and RTD. Furthermore, in order to help consumers enjoy even higher quality products, Suntory Spirits Limited will conduct activities focused on quality, as well as adding value for consumers by promoting new ways to enjoy our products.

Whisky
●Review of 2017
The whisky market in Japan continued to grow, due in large part to increasing popularity of highballs. During the 10th year of our highball campaign, we capitalized on this trend by promoting highballs with an even greater focus on their quality, centering on key strategic brands such as Kakubin, Jim Beam, Torys〈Classic〉and Maker’s Mark. All of these brands grew sales significantly, with total volume of the Kakubin brand up 7%^*1, the Jim Beam brand up 25%^*1, the Torys brand up 20%^*1 and Maker’s Mark up 24% versus the prior year. We also conducted activities to promote the quality of our premium whiskies to visitors at our distilleries. Hibiki, Yamazaki and Hakushu received numerous awards in international spirits competitions, highlighting the excellent reviews our products receive around the world.
The sales of the whisky business of Suntory Spirits Limited grew 10%^*2 year on year.

*1 Total combining bottles, cans and so on. Volumes for cans and so on were converted based on the alcohol content of standard bottles as a standard unit

*2 Total combining bottles, cans and so on

●Strategy for 2018
As Japan’s whisky leader, Suntory Spirits Limited will drive new demand through strategic brands including Kakubin, Jim Beam, Torys〈Classic〉, and Maker’s Mark. In addition, we will promote our premium whiskies through brand communication and seminars at our distilleries, which will emphasize our company's unique whisky craftsmanship and commitment to quality. We will also actively invest in expanding capacity to capture future whisky demand.

▼ Kakubin
We will accelerate on-premise promotion with a focus on quality and also undertake communication activities for the Kakubin brand, including promoting home consumption of canned Kaku Highball.For the Kakubin brand, we are targeting sales of 5.01 million cases (level with the prior year)^*3.

▼ Jim Beam
We will aim to further expand our fan base by promoting the satisfying taste of the world’s #1 Bourbon through our television commercials featuring television personality Rola, as well as new ways to enjoy “Beam Highballs.” For the Jim Beam brand, we are targeting sales of 810 thousand cases (up 11% year-on-year)^*3.

※the world’s #1 Bourbon: Sales volume in 2016 by IMPACT NEWSLETTER February 1&15 2017.

▼ Torys
We will seek to attract new consumers and increase fans through our popular television commercials featuring actress Yuriko Yoshitaka, promotion of highballs at retail stores and communication activities that link Torys〈Classic〉 with canned Torys Highball. For the Torys brand, we are targeting sales of 2.5 million cases (up 17% year-on-year)*3.

*3 Total combining bottles, cans and so on. One case has a volume of 8.4 liters. Volumes for cans and so on were converted based on the alcohol content of standard bottles as a standard unit.

▼ Maker’s Mark
With this strategic brand, we will promote the depth and range of this delicious premium whisky and show whisky’s versatility. We will seek to expand on-premise consumption occasions by promoting “Maker’s Craft Highballs,” served with an orange peel to enhance the whisky’s smooth taste and exquisite flavor, as well as other delicious drinks made with this whisky. We are aiming to sell 60 thousand cases (up 52% year-on-year)^*4.

*4 One case has a volume of 9 liters.

RTD
●Review of 2017
Japan’s RTD market is estimated to have grown by 9% versus the previous year, due to increasing demand for drinks to pair with meals. Leveraging this trend, our sales volume grew significantly, and we sold 72.1 million cases^*5 (up 10% year-on-year), our 13^th consecutive record-setting year.
-196℃ Strong Zero showed favorable movement with sales of 35.37 million cases (up 13% year-on-year), thanks to promotions for the product’s compatibility with food. Horoyoi was well-received by consumers in a wide range of legal-purchase-age groups thanks to strong promotions and broad appeal, with sales volumes growing to 15.04 million cases (up 2% year-on-year). Kokushibori Premium appealed to the palate of many consumers and drove the premium RTD^*6 market with sales of 1.1 million cases (up 44% year-on-year). Canned highballs also performed well, particularly canned Kaku Highball, canned Torys Highball and canned Jim Beam Highball, growing significantly with sales of 14.02 million cases (up 27% year-on-year).
Non-aru-kibun, a non-alcoholic RTD, showed favorable movement with sales of 2.74 million cases (up 1% year-on-year), thanks in part to the popularity of its new television commercials and video content on digital platforms.

*5 One case is equivalent to twenty-four (250 mL) cans, excluding non-alcoholic RTDs.

*6 RTDs of a higher price range than typical canned Chu-Hi and cocktail beverages
Excluding canned highballs and bottled RTDs with a suggested retail price of 160 yen (172 yen including tax) or higher

●Strategy for 2018
With the total market for RTD beverages in Japan expected to continue growing, Suntory Spirits Limited will strengthen its efforts to capture demand for drinks to pair with meals, cultivate demand for premium RTDs and create new demand by promoting the unique value of our brands, to further grow the market. We will aim for an RTD total of 80.6 million cases^*7 (up 12% year-on-year).

*7 Excluding non-alcoholic RTDs

▼ -196℃ Strong Zero
The Kajitsu Shikkari series’ strong fruity taste and the Amakunai series’ exquisite bitter, dry taste form two pillars to promote the brand for pairing with food. In addition, we will introduce limited-edition products in various flavors, with the aim to achieve total brand sales of 39.3 million cases (up 11%).

▼ Horoyoi
Starting from February, we will renew Sukkiri Horoyoi Lemon and Sukkiri Horoyoi Aoringo(Green Apple), which feature light and refreshing tastes, and we will launch our new standard product Sukkiri Horoyoi Cider Clear on March 13 to enhance our lineup. We will also aim to further expand contact with consumers through communication activities featuring actress Erika Sawajiri. We are targeting total brand sales of 16.5 million cases (up 10% year-on-year).

▼ Ashita-no Sour
On January 9, we launched limited-edition product Ashita-no Sikuwasa Sour to complement Ashita-no Lemon Sour and Ashita-no Ume Sour, products developed with the concept of “enjoy today for a better tomorrow!” We will also aim to further expand contact with consumers through communication activities featuring comedians Teruyoshi Uchimura and Tetsuro Degawa. We are targeting total brand sales of 2.1 million cases (up about 3.4 times year-on-year).

▼ Kokushibori Premium
We will continue to promote the fine quality body and long-lasting aftertaste that are popular among consumers, while launching limited-edition seasonal products. Through efforts to increase demand for premium RTDs, we are targeting total brand sales of 1.4 million cases (up 27% year-on-year).

▼ Canned highballs
We will promote canned Kaku Highball’s compatibility with food, as well as leverage the marketing activities of the Kakubin brand. For canned Torys Highball, we will continue airing television commercials that feature actress Yuriko Yoshitaka and Uncle Torys, while conducting marketing activities that are linked with Torys (Classic). For canned Jim Beam Highball, we will aim to further increase consumer touchpoints through marketing activities linked with bottled Jim Beam. We anticipate increasing consumer demand through these activities and are targeting total sales volume of 15.7 million cases (up 12% year-on-year) for canned highballs.

▼ Non-aru-kibun
To encourage more consumers to enjoy this non-alcoholic drink with its refreshing taste, we will release Chichukai Orange (Mediterranean Orange) as a standard product on March 6, while introducing limited-edition products in various flavors. We will also continue our communication activities featuring actress Ryoko Hirosue and comedian Ryuji Akiyama to further stimulate the market. We are targeting total brand sales of 3 million cases (up 10% year-on-year).

White Spirits and Liqueurs
●Review of 2017
Ice Gin and Ice Vodka, both enduring and popular products 23 years after their launch, were renewed in April to achieve a flavor that goes exceptionally well with soda. Sales were strong, driving the expansion of the gin market. Japanese Craft Gin ROKU, launched in July, was well-received for its uniquely delicate and smooth taste derived from Japanese botanicals. We also increased consumption occasions by promoting Sauza Farm Sour, a new drink made with fresh fruits, vegetables and Sauza Blue tequila, and “Gin Toni!!” (gin and tonic) using Beefeater London Dry Gin for compatibility with meat. These efforts contributed to the growth of the white spirit market.

●Strategy for 2018
We will focus on creating new value for consumers to increase demand for our products. On February 27, we will release Lemon Sour-no-moto (lemon sour mix), enabling consumers to easily make lemon sours at home simply by mixing with soda. We will also promote Japanese Craft Gin ROKU to dining establishments (on-premise occasion) showcasing the appeal of gin as a drink with food, in addition to bars, and duty-free shops. Leveraging our wide-ranging portfolio including Sauza Tequila, Beefeater Gin and Pinnacle Vodka, we will continue to promote various ways to enjoy our products.