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Drinks

Coronavirus Won't Stop Japanese Firms Buying Abroad, Says Suntory CEO

By Dayeeta Das
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Coronavirus Won't Stop Japanese Firms Buying Abroad, Says Suntory CEO

The chief executive of Japanese beverage maker Suntory Holdings said on Thursday the coronavirus crisis and other geopolitical risks would 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 his firm had no immediate acquisition plans.

Suntory, which has annual sales of around 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' whiskey.

Acquisition

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.

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

Niinami, an economic adviser to Japan's government, said he hoped US President-elect Joe Biden would rebuild multilateral relations and stabilise US ties with major trading partners.

He was more cautious about the outlook for Japan's domestic restaurant and bars, key customers for Suntory, saying conditions had worsened since June when he had said more than 20% of bars and restaurants could fail.

'Things Are More Severe'

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

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"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 of Tokyo raised its COVID-19 alert level on Thursday to the highest of four stages as the number of new cases spiked to a record daily high of 822.

Niinami said the availability of vaccines and virus tests would 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 ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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