Stock Analysis & Valuation Suntory Beverage & Food Limited (2587.T)

• Previous Close: ¥4,873.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	5217.11	7
Intrinsic value (DCF)	2133.50	-56
Graham-Dodd Method	3079.38	-37
Graham Formula	4370.20	-10

Strategic Investment Analysis

Company Overview

Suntory Beverage & Food Limited (2587.T) is a leading global soft drink company headquartered in Tokyo, Japan. As a subsidiary of Suntory Holdings Limited, it manufactures and markets a diverse portfolio of beverages, including mineral water, coffee, tea, carbonated drinks, sports drinks, and health-focused beverages. The company operates across Japan, Europe, Asia, Oceania, and the Americas, leveraging well-known brands such as Suntory Tennensui, Boss Coffee, Orangina, Lucozade, and Ribena. With a strong emphasis on innovation and health-conscious products, Suntory Beverage & Food has established itself as a key player in the non-alcoholic beverage sector. Its strategic acquisitions and brand expansions, such as the Pepsi Japan partnership, reinforce its competitive positioning in both domestic and international markets. The company’s diversified product range and global footprint make it a resilient player in the consumer defensive sector.

Investment Summary

Suntory Beverage & Food presents a stable investment opportunity with its strong brand portfolio, global diversification, and consistent cash flow generation. The company benefits from its parent company’s backing (Suntory Holdings) and a defensive business model, as beverage demand remains relatively stable even in economic downturns. However, risks include intense competition from global beverage giants, fluctuating commodity prices (e.g., coffee and sugar), and potential regulatory pressures on sugar content in soft drinks. The company’s low beta (0.033) suggests lower volatility compared to the broader market, appealing to conservative investors. Dividend investors may find the ¥110 per share dividend attractive, supported by healthy operating cash flow (¥193.7 billion).

Competitive Analysis

Suntory Beverage & Food competes in the highly saturated non-alcoholic beverage industry, where brand strength, distribution networks, and innovation are critical. Its competitive advantages include a diversified product portfolio (spanning bottled water, RTD coffee, and functional beverages), strong domestic market share in Japan, and strategic international acquisitions (e.g., Lucozade and Ribena in Europe). The company’s joint venture with PepsiCo in Japan (Pepsi Japan) strengthens its carbonated soft drink segment. However, it faces stiff competition from global giants like Coca-Cola and PepsiCo, which have larger scale and marketing budgets. Suntory’s focus on health-oriented beverages (e.g., Iyemon Tokucha) differentiates it, but regional competitors like Kirin Holdings in Japan and Tingyi in China pose challenges. Its capital expenditures (¥108.3 billion) indicate ongoing investments in production and innovation, but maintaining margins amid rising input costs remains a key challenge.

Major Competitors

• The Coca-Cola Company (KO): Coca-Cola dominates the global beverage market with unparalleled brand recognition and distribution. Its extensive portfolio includes Coca-Cola, Sprite, and Minute Maid. While Suntory has a strong regional presence in Asia, Coca-Cola’s global scale and marketing power give it an edge. However, Coca-Cola faces criticism over sugar content, whereas Suntory’s health-focused brands may appeal more to wellness-conscious consumers.
• PepsiCo, Inc. (PEP): PepsiCo competes directly with Suntory in carbonated drinks and snacks. Its diversified portfolio (Pepsi, Gatorade, Tropicana) and strong F&B integration provide resilience. However, Suntory’s partnership with Pepsi Japan allows it to leverage PepsiCo’s brand while maintaining autonomy in other segments. PepsiCo’s larger scale benefits cost efficiency, but Suntory’s regional expertise in Asia is a counterbalance.
• Kirin Holdings Company, Limited (2503.T): Kirin is a major Japanese competitor with a strong presence in beverages (e.g., Kirin Ichiban) and health sciences. While Suntory focuses more on soft drinks, Kirin’s alcoholic beverage segment diversifies its revenue. Both compete in functional beverages, but Suntory’s global footprint (via Orangina, Lucozade) gives it an advantage outside Japan.
• Ito En, Ltd. (2593.T): Ito En specializes in tea-based beverages, competing directly with Suntory’s Iyemon and green tea lines. Its focus on premium and organic teas differentiates it, but Suntory’s broader product range and international presence provide more diversification. Ito En’s smaller scale limits its global competitiveness compared to Suntory.
• Uni-President Enterprises Corp. (3222.T): Uni-President is a key Asian competitor with strong market share in China and Southeast Asia. Its RTD tea and instant noodle businesses overlap with Suntory’s segments. However, Suntory’s premium branding and European acquisitions (e.g., Orangina) differentiate it in higher-margin markets.