In this interview for WARC’s Marketers Toolkit 2023, Jessica Spence, President of Brands at Beam Suntory, discusses the company’s plans around premiumization, sustainability and first-party data with WARC's US Commissioning Editor Cathy Taylor.

WARC subscribers can access the full Marketer’s Toolkit 2023 here. Non-subscribers can access a sample version here.

Jessica Spence

Jessica Spence, President of Brands, Beam Suntory

Beam Suntory just moved its headquarters to New York. What does that say about where the company is headed?

There were a few things that drove that decision. Beam Suntory is relatively young in its current form. But the acquisition was in 2015, when we became part of the Suntory family. When I joined, which was just about three years ago, there was a clear set of imperatives around what we were trying to change about the organization. The first one was we're trying to become much more global. Historically, we’ve been quite a US and Japan dominated business. The second was, we wanted to shift our focus from being very commercially-led to being really a brand-led organization. The third was that we were looking to premiumize the portfolio, whether that's taking pricing across the range, or whether that's really building at the top in the kind of luxury prestige areas.

As we looked at that, and started mapping out the capabilities, and also the talent that we were going to need, we felt the best location for us to do that was going to be New York. It's part of America, but it's very outward-facing, and the talent pool here supports that.

It gave us a chance to signal a change in the ambition for the company, of being a leader in premium spirits.

You mentioned going the premium route. What's really important to the company over the next few years?

What we're seeing is that, still, thankfully, the category is very robust, but the shape of where the growth is coming from is really changing. Particularly when you look at the younger consumers coming into the category and hitting legal drinking age and how they're looking at it, we're seeing them drinking better. Some of the biggest, most passionate consumers of the most premium and luxury spirits are actually relatively younger than they were, say 15 or 20 years ago. That's really where we see the category going.

When we look across all of the brands, we're looking at the innovation plans and really looking to get a lot more growth from pricing than we have historically. We've been quite volume-driven. We're looking to shift that to price and mix and expand margins, and enable us then to reinvest into the brands and continue building. And that has implications for the team we're building, the capabilities we want to have, the focus that we put for the team. It's a huge transformation of different levels across the company.

Do you know why younger people, of legal drinking age, are more interested in some of the higher-end brands?

There are a few dynamics taking place. One of the most exciting things we're seeing, for instance, is that the young Chinese consumer is very different, and has moved from a stage of conspicuous consumption to being much more interested in quality, authenticity, real depth of history and story.

What we've seen in the rest of the world, in the US and in Europe, is a more mindful approach to alcohol consumption overall. There's increased health consciousness. That expectation of control over your body, control over what you're consuming, and being very mindful in that, is pushing people away from cheaper alcohol consumption actually into, “I want to be a participant in this category.”

A lot of it has shifted away from the functional, to a more emotional connection with it, and wanting to be very choiceful about those moments and very choiceful about the product. We often say, “Drinking less, but better.” If you're only going to have one drink in an evening, which is what we see quite a lot of these younger consumers doing, then they might as well have that more expensive scotch.

To talk more about pricing, we are in an inflationary time. What kind of decisions are you making around price?

I think everyone is struggling with this volatility, and you're seeing very different patterns across the world. We are seeing a much sharper downturn in consumer confidence across Western Europe then we are in the US. As we saw through the pandemic, people were very choiceful about where they spent their money. Our definition of every single brand starts from the desired consumption experience. How should that feel? Where should it be? Where do you transport somebody to in that moment?

The most interesting thing we found in the pandemic is that the substitutes for certain behaviors were not the obvious ones. When we were talking to consumers and trying to understand where the in-home consumption was coming from, what we heard was, “This has replaced my commute. My commute used to be the moment when I changed my brain, and I changed my being from “work” me to “personal time” me. Now, I'm sitting at home. I haven't gotten dressed properly all day, the world is blurring. I need that moment.”

We have to ask ourselves about the things consumers have options to spend money on. What are the alternatives the consumer has? Where do you have to match up to as an experience to earn their dollars? People love the cocktail suggestions, the recipes, the food pairing. All of that supports your pricing.

Premiumization isn’t just talking pricing; it's earning that price. Your job is making sure what you're delivering is genuinely worth it. We have a ton of data now which can tell us what that is. In particular in markets where we have a lot of e-commerce data, you can really understand what they're willing to pay for and what makes the difference on that trade up.

Is there particular data that you’ve learned more from?

One of the areas I've been interested in is looking at the power of somebody's search behavior, and where in the portfolio you can pitch them and push them. The power of tailoring content based on those signals in their search behavior changes the shape of a lot of our online sales. You're not seeing this half a percentage point difference. Sometimes those strategies are making 15 percentage points of difference.

While some gravitated toward premium segments, some people traded down. How does that all work together?

We think that's going to continue. As we are looking at 2023, we are expecting a bit of a bifurcation, probably across western Europe and in the US. I don't think we'll see that too much in Asia. There are definitely going to be people who are going to be trading down across their entire basket of goods and there are people who will continue to trade up.

What we’re feeling overall is that it's quite a favorable situation for us, firstly, because we do fit into that affordable luxury phenomenon. Premium spirits and premium growth remains very resilient, but the portfolio is really balanced in terms of price. You've got to make sure all of your entry points are covered. But long-term, that focus and investment behind the top is going to play out for us really well.

Can you continue with your sustainability efforts at a time when the economy is difficult?

It's a great question. We are in a very fortunate position of being privately owned, and that helps. When you look at sustainability, some of the private companies have been more committed for longer, because they have more flexibility. For us, there's literally never been a question of changing the speed and ambition of the sustainability goals.

There are a few reasons for that. One is that we are fundamentally an agricultural business, so climate for us is not esoteric, Climate change in somewhere like Cognac, or in Scotland, Kentucky, has a fundamental impact on our ability to maintain and sustain our business. It's a matter of life and death for our business, so sustainability is much more core to our being, perhaps then it is for some others. and we're super conscious of the biggest risk.

I'm very hopeful, at least talking across our industry, that this is spurring us to do more and accelerate. I would be hugely disappointed if I saw that being reversed in some other industries, because we're finally beginning to get some real commitments and some real results.

Have you had issues with product availability? How are you protecting against that?

Our supply chain team did an amazing job of securing availability, of building options for us, and being flexible, making changes sometimes because we had to deal with stuff we've never seen before. While our products generally are very local, in terms of how they they're made, you have components coming from all over the place. We feel we're coming out of the worst of it now.

With sustainability often comes greenwashing. What is your approach to avoiding that?

Greenwashing is something everyone should be incredibly aware of. Consumers, particularly Gen Z, have a very high threshold for what they expect to see. They really are the first generation for whom, "do no harm," is not going to cut it. They are actively asking you to make a positive contribution. They've moved from the” leave no trace" mindset to "leave a tangible impact."

There are two schools of thought on sustainability. Is it a differentiator or not? I fundamentally believe that it probably isn't, because anything you're doing that is brilliant, you should be willing to share.

Another theme in the Toolkit this year is the backlash over big tech. How are you navigating this?

We're at a really interesting point. It’s a combination of factors – the demise of the cookie and the falling out of love with the major platforms, I think that's going to continue. Now, that's coming together with frustration on the lack of transparency around data and walled gardens to create a perfect storm.

We were working on this a year or two back. We felt we needed to step up in terms of wanting to own the consumer relationship and earn the consumer data. That comes with responsibilities. We need to be incredibly thoughtful and vigilant about how we use that data, but we want to own that relationship and have that dialogue much more directly because it’s the only way that we’re going to get access to the quality of data that we need to really do our marketing well.

There is the demise of big tech, but the bigger piece that we’re really focused on is, “What is our first-party data strategy?”

Do you still feel the need to market on the major platforms?

It's so hard to get around the fact that the reach of some of these big platforms is huge. You need to think about how you want to be showing up on those, and how they fit within your broader ecosystem. But I don't think you can escape them at this point. What marketers are doing is moving from a place where that was 90% of their energy and to a place where they're thinking about that becoming a much smaller percentage. Every time we engage with the consumer on any platform, we want to get to know them better. We're now looking at the role Facebook or Instagram can play through that mindset of, "What does this give us versus just the eyeballs?”

Are there any first-party data strategies that are working especially well?

We work in a very fortunate space, where a lot of the most beautiful things we do are fundamentally limited in their nature. If we're doing a unique finish or blend, we're finding that leveraging scarcity to get engagement and to get access is phenomenal… because that’s when you get very high-quality data. It’s been the most powerful way of getting the high-quality data at the scale that we want.

How do you leverage the community you build through these offerings?

We're in this category where people really do feel like they're joining a tribe.

We suddenly realized that there's a very deep emotional connection people get with our brands, and you can leverage that.

We had this phenomenal insight from the data that bourbon drinkers create other bourbon drinkers… You always come through a recommendation, and now, it's more and more online. What you see is the power of people. As they get more and more engaged in bourbon, their willingness and ability to bring people into the category increases. It's really intimate word-of-mouth, and our job, again, is to give them something that enables them to have that piece of magic that recruits somebody else.

Understanding that as the core driver is incredibly important with how we've designed out all of our digital plans, and why CRM is a part of it. But the big part is creating that ability for that enthusiasm to flow through these communities and let them have the tools in their hands to reach out and give people reasons they should join.

Do you have a specific example?

We have a phenomenal consumer response team who deal particularly with those deep, expert, and passionate people. We are giving them content or experiences that they will want to talk about, and that we can then work with them to amplify.

For instance, we had a wonderful situation where a man got married, and we gave him engraved glassware for his entire wedding party. A very good part of his speech on his wedding day was about the whiskey, and every person at that wedding took a picture of it and shared it.