Coca-Cola and Beam Suntory end Australian partnership

Beam Suntory has announced it is ending its partnership with Coca-Cola Europacific Partners (CCEP) in Australia and New Zealand.

Following a successful 16-year manufacturing, sales, and distribution partnership in the exciting spirits and alcoholic Ready-to-Drink (RTD) categories, the two companies will move forward independently.

Beam Suntory will merge its alcoholic and non-alcoholic businesses to create a $3 billion-a-year company called Suntory Oceania.

Suntory has started building a $400 million manufacturing and distribution facility at Ipswich in Queensland and will also be hiring well over 400 new roles.

The new facility is on track to be operational in mid-2024 with the ability to produce 20 million cases on start-up and over 50 million cases in the future.

Beam Suntory’s brands include Canadian Club, Jim Beam, Maker’s Mark, Knob Creek, Yamazaki, Hakushu, Hibiki and Toki Japanese whisky, Laphroaig and Bowmore Scotch whisky, Sipsmith and Roku gin and Midori liqueur.

Beam Suntory also produces the cult hit -196 Double Lemon RTD, which is the number one RTD launch in Australia the past five years and is the number two light RTD in the market.

Frucor Suntory CEO Darren Fullerton said: “This new venture is all about bringing the best of Suntory to Oceania. With the ability to accelerate our growth trajectory, we strongly believe it will redefine market dynamics and offer more consumer beverage moments from sunrise to sunset, unlocking innovation for our customers across retail and hospitality industries.”

Mark Hill, Managing Director of Beam Suntory Oceania said: “This collaboration demonstrates our belief in the growth potential of the Australian and New Zealand markets. When other businesses are pulling back, we are forging ahead, bringing Suntory’s spirit of bold ambition to life.”

Fullerton told the Australian Financial Review that the timing, for a number of reasons, was right, while Hill said Coca-Cola entities had done a good job in overseeing the alcohol brands.

“It was the end of the agreement. It’s nothing against them,” he said.

“We are immensely grateful for our long and successful relationship with Coca-Cola Europacific Partners, which will continue through to 2025,” Hill said.

CCEP looks on the bright side

CCEP said splitting with Beam Suntory would allow the company to “fully leverage their respective capabilities and reflect their broader strategies in alcohol”.

This will come into effect when the contract expires in Australia on 30 June 2025, and in New Zealand on 31 December 2025. 

Since 2007 in Australia and 2015 in New Zealand, CCEP has been responsible for the sales and distribution of the Beam Suntory spirits portfolio, as well as the manufacture, sales, and distribution of its alcoholic RTD portfolio. 

CCEP Regional Managing Director for Australia, Pacific and Indonesia Peter West said: “We are incredibly proud of the results and capabilities we have built over the last 16 years. It’s been an exceptionally successful partnership, achieving rapid growth and driving strong category leadership including recently becoming the MAT market leader in alcoholic RTD in Australia.” 

“Until the contracts end, it remains business as usual for our customers, and the great service we deliver. We intend to continue maximising our business performance and the category performance for the remainder of the contracts.” 

The future for CCEP in alcohol

CCEP said it plans to continue to participate in alcohol beyond the expiry of the Beam Suntory contracts and views alcoholic RTD beverages as an “attractive proposition given its explosive growth in Australia and New Zealand, and its demonstrated synergies with CCEP’s existing knowledge and technical prowess”. 

It said the expiry of the contracts will continue to drive CCEP’s business ambition to further align as a bottler of its brand partner, The Coca-Cola Company, and will free up much needed capacity to support its growing portfolio in Australia and New Zealand. 

West added: “Our understanding of the spirits and alcoholic RTD market has never been stronger, and beyond the expiry of the Beam Suntory contracts we plan to launch new scalable offerings in both Australia and New Zealand aligned with The Coca-Cola Company.

“Alcohol is a dynamic and important category, and when you look at the growth in alcoholic RTD beverages around the world, two of the most developed markets are Australia and New Zealand. CCEP’s experience in manufacturing alcoholic RTD beverages, our relationships servicing over 21,000 customers across the sector, and our deep consumer and customer knowledge all position CCEP well for a great future in alcohol.” 

A deeper look at The Coca‑Cola Company’s emerging business in alcohol

In 2018 in Japan, The Coca‑Cola Company launched Lemon-Dou, its first ready-to-drink alcohol beverage. Lemon-Dou was an experiment in Japan’s fast-growing Chu-Hai drinks category. Lemon-Dou was also the company’s first entry in the alcohol beverage market since the late 1970s, when Coca‑Cola owned a winemaker in California.

Today, the company has a small yet growing portfolio of alcohol beverages. The latest addition is ready-to-drink Jack Daniel’s & Coca‑Cola, inspired by the iconic bar cocktail.

The pre-mixed cocktail is rollling out around the world and will be available in Australia next year.

“We keep consumers at the center of everything we do in expanding our portfolio,” said Coca‑Cola Chairman and CEO James Quincey.

“We are consumer-focused and offering more choices, including in rapidly expanding flavored alcohol beverages.

”Jack Daniel’s & Coca‑Cola joins a portfolio of flavoured alcohol beverages that uses company brands, including Lemon-Dou, which is currently available in Japan, China and the Philippines; Topo Chico Hard Seltzer, available in more than 20 markets; Schweppes Pre-Mixed Cocktails, currently available in Brazil; and the new Simply Spiked Lemonade and Fresca Mixed in the United States.”  

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