Spirits giant Suntory Holdings Ltd. believes the worst is over as nations ease social distancing measures, allowing bars and restaurants to reopen after months of curbs that hit its business.
“Cities are slowly starting to reopen, and business is starting to get better,” said Suntory’s CEO Takeshi Niinami, who thinks his firm’s global sales hit bottom last month. It could take more than six months for business to return to normal, he said, provided there is no second wave of coronavirus infections.
Japan, which has so far managed to contain the outbreak better than its Asian peers China and India without imposing a nationwide lockdown, has slowly begun getting back to business. A national state of emergency order was lifted in the Tokyo region late last month and establishments from gyms to schools are now reopening their doors.
Nevertheless, Niinami said he predicts that more than 20 percent of bars and restaurants could fail due to the pandemic.
Japan’s vibrant dining scene, from izakaya (traditional Japanese pubs) and restaurants to Tokyo’s high-end eateries boasting the largest number of Michelin stars of any city, mostly shut down in April as the government declared the state of emergency.
Even with the emergency status lifted, many restaurants are reopening with caution and with limiting seating and opening hours as customers remain wary of dining out. Niinami said he feared the culture of eating out could be hurt for good.
“If you ask me how much will return, I’d say roughly, around 80 percent will be back,” Niinami said.
Niinami said that while the government’s extra spending for projects worth ¥117 trillion approved last month was substantial, the government needed to be ready to provide more if a second wave of infections hits.
“I think it would be good to have 80 percent of them return, although of course I really want 100 percent back,” he said. “Given the current coronavirus situation, what I’d like to see is for them to make it through the next two to three years until we can allow for more noisy, intimate get-togethers.”
Privately-held Suntory, the world’s third-largest whisky maker and owner of well-known brands like Yamazaki and Hibiki, is dependent on the survival of the dining industry, as an outlet for its drinks. The domestic dining industry is worth ¥25 trillion by some estimates.
Suntory is also one of Japan’s largest beer makers. Domestic beer sales were unlikely to return to previous year’s levels anytime soon, said Niinami, who is also an economic adviser to Prime Minister Shinzo Abe’s government.
The company is backing a new dining app called Saki-meshi, meaning meal in the future. It allows consumers to support their favorite restaurants by paying for meals up to 180 days in advance, to provide restaurants with much needed cash to survive until business returns.
Niinami added his weight to calls for easier access to coronavirus tests, to allow people to more confidently resume business activity.
Niinami, who joined Suntory as chief executive soon after its $16 billion buyout of bourbon maker Jim Beam in 2014, said no big acquisitions were in the works but the company may do smaller deals to bolster some business segments. Market valuations of companies are too high right now comparative to the economic situation, he said.
“What’s important for us now is to unlock new demand and tap into new trends,” he said. “Things like cheaper products or value-added higher-priced goods, as well as cocktails at home are all important.”