Whisky Advocate

Beam Inc. buys Cooley Distillery: good or bad?

December 16th, 2011

The news is out. Beam Inc. has purchased the Cooley Distillery in Ireland (makers of Tyrconnel, Kilbeggan, Connemara, Greenore, and a slew of private label whiskeys). Details here. Now, all the major Irish whiskey distilleries and brands are owned by companies located in foreign countries. (Diageo owns Bushmills, Pernod has Midleton, and William Grant owns Tullamore Dew.)

John Teeling, Cooley’s founder, was quoted saying that it will allow the brands “to reach their potential.”

What do you think? Is this good for Irish whiskey drinkers worldwide or not? And why?

39 Responses to “Beam Inc. buys Cooley Distillery: good or bad?”

  1. Horst Draper says:

    If you read three sentences from a press release from Cooley, one of those sentences would’ve mentioned how they were the only privately owned Irish distillery, with the implication being that made them better than Bushmills or Jamesons. What are they gonna claim now? “Hey, we make whiskey and are owned by a large conglomerate just like everyone else now! We made it!” The honeymoon is over.

  2. JohnM says:

    Hard to know how to feel about it, good and bad, I suppose. It will hopefully help grow the brand with further investment, but then there’s not fully Irish distilleries anymore.

    I’m hoping it will, ultimately, result in the reintroduction of the Daly stills at Kilbeggan.

    It’s a great distillery, Cooley. Hopefully they’ll help it reach its full potential.

    John

  3. JC Skinner says:

    Sad to see, no offence to Beam. It’s a pity not one distillery in Ireland is in Irish hands.

  4. Vince says:

    In one respect I think it is sad simply because I like privately owned distilleries. On the other hand I think it will be beneficial to Cooley. I think Beam will add to the financial resources of the distillery. Beam owns Makers Mark and that product has, for the most part, been left un-touched, with the Samuels family still having a strong say in the company.

    I think it is a positive overall

  5. Ryan says:

    I am one customer who bought into the “only privately owned Irish Distillery.” I sought out Cooley products over Bushmills and Jameson products for that reason. Now all of the sudden they are on completely equal footing with the other giants. I’m not going to boycott Cooley or anything, but I’m not going to give them an advantage anymore, and I can’t imagine I’m the only one who thinks that way. So, in my estimation, bad move. You’ve lost a powerful marketing advantage, Cooley. I’m not sure if my opinion was justified or if being privately owned made any tangible difference, but my opinion was there nonetheless.

    • PeteR says:

      Ryan,
      If there were many who like you were purchasing their products only because they were the only ones owned by Irish people, then the only way for them to maintain or improve their sales is to improve the product. I say that’s a win for the rest of us.

      • Ryan says:

        Pete, I hope they do keep up or improve the quality! Like I said, I’ll continue to buy the Cooley products that are better than their counterparts. I would just use the fact that they were privately owned as something of a tie-breaker if I were deciding between two similar products. Now, it’ll be based solely on quality and price – they’ve lost their tie-breaker.

      • Hoke Harden says:

        Sorry, Peter, but that’s simply not so when you say “the only way for them to maintain or improve their sales is to improve their product”. There’s increased advertising, increased distribution, additional sales emphasis, manpower, etc., etc., etc. The global realities of the liquor industry demand return on investment…and that often, quite often, means not improving product but in some instances diminishing it (eliminating unprofitable brands, cutting costs, etc.).

    • sam k says:

      True, Ryan, but Cooley still retains the product diversity (if not innovation) advantage.

  6. PeteR says:

    As a casual Irish Whiskey drinker, I cannot tell if the quality of Bushmills or Jameson products have declined or gotten better since they were acquired by Diagio and Pernod, but I can say that I like the products that are being released today. In part it may be because they were distilled and barreled before they were acquired, but they don’t seem to have suffered in being owned by non-Irish companies.

    The fact that these corporations have made a significant investment in acquiring distilleries that were not in financial trouble indicates that they want to benefit from the good products that those distilleries are producing. Those benefits can only continue if the quality of the products continues to be good.

    I cannot see how this type of foreign investment in Irish Whiskeys will hurt.

    • EricH says:

      Foreign investment can even lead to major improvements. Look at what Kirin has done for Four Roses Bourbon. Since Beam has let their Scotch distilleries continue to do their own thing, I have a feeling it will be business as usual for Cooley.

  7. JC Skinner says:

    I’d rather see conglomerates investing in new distilleries rather than snapping up existing ones. I know that some of the Scots have been eyeing up Irish opportunities (resurrecting old brands, etc) but so far all we’ve seen is Grants purchase of Tullamore.
    It would have been great to see Beam for example get in behind the moves to create distilleries in Dingle and Belfast, for example. But I suppose they wanted a more instant foothold in the market.
    I expect Cooley’s favour profle will now change a little as they switch from Heaven Hill barrels to whatever Beam insists on providing. Hopefully that won’t be detrimental.

    • Tom D says:

      Great point JC! I have been a fan of many Cooley products and would have loved to have seen them stand on their own. In the end, it is all business. It really would be great to see the big boys invest in new distillieries and expand on the current Irish offerings. Like you said, instant customer base.

      And thanks to my Irish roots, my family is from Montaigh in Claregalway, I must have some of that fierce independent streak running through me.

      • JC Skinner says:

        Fair play, Tom. It’s a pity no one has thought to locate a distillery in that region. Plenty of workers available in the Galway city area, and the estimable reputation of the sadly now lost Persse’s distillery to live up to.

        • Tom D says:

          Perhaps someone will decide to put all of those idle cranes you see in nearly every county these days to good use.

  8. Tim D says:

    I’m not a big fan of Beam’s American whiskey, for the most part, especially their “stock” offerings, but I continue to love Laphroaig and enjoy each and every expression – which has expanded nicely over the past few years. Beam’s stake in that company has done no harm, IMHO – in fact the prices have come down and diversity has increased, both are great outcomes. And Ardmore’s prices are a steal in my neck of the woods – under $30 for a great offering in Ardmore Traditional. Maybe that marginalizes the brand’s image, but from a cost-to-value ratio, for me it’s a steal!

    I also really enjoy Connemara – but have found it to be ridiculously overpriced in most of the places I shop. So, if the same aspect follows suite, I’ll have more options at better prices.

    Also gives Beam more UK synergy for marketing and brand expansion, which as long as quality doesn’t suffer is a great thing.

    Remains to be seen, of course, but I’m excited about it.

  9. JohnM says:

    Cooley whiskey is expensive, that’s for sure.

    • Tom D says:

      I wonder where price goes from here. In the current stock market environment, firms are under incredible pressure to show profits on a near immediate basis. Despite BEAM’s forward looking statement that this will not impact it’s 2012 profits and should show a positive return by 2013,I am not convinced of the same given the current economic conditions in Ireland, the States, and the EU.

      Funny to talk about investing in a beverGe company after the discussion of investing in whisky itself.

  10. thomas mckenzie says:

    I do not see it as such a bad thing. They may have set a goal every year and this year found out it was unreacheable due to needing capital and with the economy and the shape it is in, especially with the shape the Irish banks are in, they might have seen this as the best way ahead. More power to them I say. If I am not mistaken, they would have went under in the 90’s had it not been for the Shapira’s at Heaven Hill.

  11. Ben says:

    I don’t know what it will mean for the quality of the whiskey. Perhaps nothing. But I do think it’s sad to see an Irish distillery in American hands — the same way it’s sad to see American fast food joints all over Europe.

  12. Jeff says:

    It’s hard to have too much sympathy for Ireland in this case. Ireland has a very low tax rate and has attracted much US foreign investment because of this. I don’t see Irish complaining because Microsoft and Google set up facilities there to serve the European market, use a well educated English speaking workforce, and utilize Irish tax laws to their advantage to pay overall extremely low tax rates to the US fisc. Americans would love to have these jobs. I would take the billions of dollars US companies have averted from the US fisc by investing in Ireland for the independence of Cooley any day.

    As an American should I be angry that I see Stella Artois at every US grocery store I visit since a Belgian company took over Budweiser? Did John H or anybody on this forum ask if George Dickel would somehow be diminished because it is owned by a British copmany (Diageo)? No, I doubt it, this is a part of globalization.

    In the scheme of things, the fact that a whisky company is (or is not) in Irish/American/Chinese/British hands does not matter much.

    • JC Skinner says:

      Unsure what your point is, Jeff. Americans can no more make Irish whiskey than Irish people can make bourbon.
      It isn’t the nationality of the ownership that people are concerned about so much as the absorption of the last standing independent distiller into conglomerate ownership.

    • JohnM says:

      Jeff. I don’t understand your point at all. The US can lower its tax rates if it wishes. You seem to think Ireland is doing something underhanded? You’re not obliged, of course, to feel sorry for Ireland.

  13. Jason Beatty says:

    I am all for a company from Clermont, KY buying the Irish distillery and adding to their prestige and financial prowess. Wild Turkey just got a new distillery and I saw SKYY Vodka bottles all over the place because they now own them. One of the Kirin Ichiban executives went into Bourbons Bistro and ordered sprite with his whiskey and complained because they did not carry his beer. Even though he has bad taste, at least he has made the 4 Roses quality much better than it used to be.

  14. Jeff says:

    I am a tax professional so I see many things through the prism of tax. While there are more abstract, intellectual points that touch on tax and economic issues, I don’t think these have much to do with whisky per se so my initial points were kind of far afield. The only very generalized point i would make is that part of being a member of organizations like the WTO, EU and OECD requires a certain openness, e.g., as a WTO member there are limits to tariffs against imported goods, as an EU member one cannot set undue restrictions against other EU nationals purchases of real property, etc.. There are definite benefits of openness for countries such as increased investment from other countries. However, a possible negative consequence of being open is that sometimes independent companies may be bought out by foreign companies. My point in my initial post was just to stress that Ireland has benefited tremendously (from my perspective at least in the last 20 years notwithstanding the consequences of the financial crisis of the last few years) and Cooley being bought by Beam ought to be seen as an overall minor negative point in what has otherwise been a long run of tremendous benefits from openness to the Irish economy.

    As far as whisky, there was a point made that Beam might prefer to have its former barrels used to age Cooley product and this could lead to taste deviations. Points like this are well taken. Although I am far from an expert, i don’t think investors that buy up brands want to kill the goose that lays the golden egg so to speak and completely trash a brand.

    • JC Skinner says:

      The concerns relate not to foreign ownership per se, though it’s sad that none of our national distilling heritage is locally owned, and especially not to American ownership, but to the fact that Cooley is not now independently held but instead owned by a multinational conglomerate.
      Unlike most FDI in Ireland, which as you say has been positive for us, MNC involvement in our distilling industry has not all been roses. Bushmills has effectively been neglected terribly by Diageo from a connoisseur perspective – only one new whiskey release in the last decade or more, and it’s a limited edition now selling out. Yet we in the Irish Whiskey Society know that Bushmills has amazing stocks sitting on ice, ignored, Bush 20 years and older in cognac casks, rum casks, all manner of exciting, aged and exotic Bushmills, that has not and will not see the light of day.
      IDL has done slightly better under Pernod-Ricard, but it was not always thus, and only this year after literally decades of consumer demand, have they finally conceded to their distillers the right to release some new poststill whiskeys.
      My concern is that the fantastic tradition of experimentation and diversity at Cooley could come to an end as Beam chases the bottom line of returns, focusing on a small number of brands (Tyrconnell, Kilbeggan, Connemara the most likely) as they rationalise the operation and eradicate other, smaller brands from their output. Or that they stymie the tradition Cooley has of trying innovative new things (Connemara Bog Oak, a Kilbeggan potstill) in order to focus on what is guaranteed to produce profit.
      I hope, in short that Beam won’t treat Cooley as the two other distillers in Ireland have been treated for the most part by their corporate MNC owners. They’ve been a quirky, innovative and imaginative distiller so far, largely because they had to be. It would be tragic now if they received funding for twice as many stills in return for a halving of their brand diversity and an axing of their innovation and experimentation.

      • DAJ king says:

        Of all the comments yours hits the nail on the head JC, diversity is the name of the game. Where bush and middleton bring out a limited run every few years, cooley was coming up with endless experiments and giving their master blender (almost) free reign to innovate. By bending to the will of sharholders, and i’m sorry to say the neo-liberal work ethic, such experiments may be shunned as ‘wasteful’ when there are existing brands that can be rebranded and reintroduced.

        If they hold true then power to them, beam has an excellent distribution network which will catapult cooleys whiskeys around the world getting their authentic and truly irish flavour to a far larger consumer base. As i live in china i’m looking forward to seeing greenore sat beside jameson on the shelves here and elsewhere, something that may’ve never happened without beam.

  15. kallaskander says:

    Hi there,

    well gentlepersons I woul like to add a historic dimension to the discussion. If you delve into the founding years of Cooley you will find fight and resistance right from the start. The sole owner of the Irish whiskey business was French company Pernod Ricard then.

    They were not too fond nor too keen in any way to have an independent Irish distiller growing next to them. John Teeling has told stories how it was impossible for him to buy any distillery equipment in Ireland and he ended up ordering stuff in Scotland and so on.

    Many had expected and PR had been waiting for the newcomer to go broke within the first year. When that did not happen PR waifted their cheque book and said ok boys this has been going on long enough sell us your petty company and let’s be done with.

    Today you have Pernod Ricard, Diageo and now The Glenfiddich Grants in Irish distilling as the key players.

    Even as Cooley has won the title distiller of the year again and again and various other prizes over the years and has done wonders for Irish whiskey as a whole let us ask: how long can you compete with the money that now plays in the Irish whiskey sector as a family business?

    What were the options? Going public big style? Perhaps.

    I can understand that John Teeling sold to another big spirits company and one from the US at that because the French the English and the Scots are already there.

    To stay in business in a competitive way Cooley needs to expand and to grow in a way which needs lots of capital. So selling now to a biggy was one of the options.

    Not the only one most probably but a feasible one.

    Greetings
    kallaskander

  16. Red_Arremer says:

    It’s interesting acquisition choice for Beam. I wonder how long they’ll hold onto it as– They only kept Laphroaig for a few years…

  17. Danny Maguire says:

    All it really proves is that the big bucks win out in the end. Beam will have offered him a price he couldn’t refuse. But as kallskander says, it will now give them the financial muscle to expand rapidly. Good or bad? As long as they don’t interfere with the product, neutral.

  18. JWC says:

    So an IRISH distillery was acquired by an American company. Cooley’s marketing will have to change a bit but I think that is about it. In this day and age, economic nationalism is outdated. Wild Turkey was acquired by a French company (Pernod) back in 1980 and then an Italian company (Campari) in 2009. I don’t think the nationality of the parent corporation affected Wild Turkey. At the end of the day, ALL economic entities want to do the same thing: make money. I’m assuming that Beam will use its resources to increase production and distribution of the Cooley brands. Hopefully the quality doesn’t go down and if they are smart, it won’t.

  19. John Moriarty says:

    I provide whiskey tastings from time to time for our guests. I was so proud of the line “Cooley Ireland’s only independent distillery” sadly I now have to change this. I had an email recently from Cooley and to see the Beam logo at the bottom is heart breaking. (john Moriarty)

  20. JohnM says:

    Beam cutting lots of jobs at Kilbeggan Distillery. A sad day for all the staff there. Very disappointing.

    John

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