NORM WESLEY: CONFIDENT IN PREMIUM WINE AND SPIRITS
Fortune Brands reported a strong sales growth (23%) at today’s 3rd-quarter conference call that was helped in part by the company’s enhanced wine and spirits portfolio.
Chairman and CEO Norm Wesley named Jim Beam, Sauza, and Maker’s Mark for pushing “strong sales gains” that helped “fuel our third quarter performance.” He told listeners that it was a strong quarter for the company’s spirits and wines brands as they achieved a new record of quarterly incomes.
Net sales were up 88% in the nine months to September 30, while operating income was up 87.7% for Beam Global Wine and Spirits.
The wine and spirits division benefited from the Allied acquisitions, especially in the premium and super-premium wine and spirits category where Fortune experienced high growth.
“We’re confident in the premium end of our wine and spirits brands,” said Norm.
Spirits case volumes grew at a mid-single digit rate, but were up low single-digits in the U.S. specifically. Maker’s Mark, Jim Beam and Sauza tequila grew double digits fueled by growth in the U.S., while wine volume, helped by the Clos du Bois and Geyser Peak brands, also posted solid growth year-to-date.
"We drove strong profit growth and higher margins in spirits and wine, benefiting from a strong increase in worldwide case volumes and the synergy benefits of last year's acquisition,” said Norm.
When asked about the Allied brands, Norm replied: “Some of the brands from Allied were off this year, like Courvoisier, and will take some extra investments which we are prepared to do.”
Norm stated that some of the Allied brands were a little too expensive, with “a little price promotion going on, which is not how we think you should build brands for the long-term.”
So far, Fortune appears to be making very good process in integrating Allied but hopes to continue building margins. “We feel that we have narrowed the gap so our margins are going to be mid-to-high twenties this year,” Norm continued. “Do I think we can further improve margins? Yes, but I’m not a slave to trying to return to those Beam margins of 2004.”
The Allied brands have not only given Fortune more clout on a global scale, but will help the company build share internationally.
“We have lower shares globally than we do in the U.S. which is why in part we took on these new brands to help build shares internationally.”
Success in the premium and super-premium sectors might encourage Fortune to increase prices soon, but Norm was hesitant to get specific when questioned about pricing. “Spirits is one of those categories where we’ve been able to get price increases but carefully look at it brand by brand," said Norm. “It’s not something we forecast in advance. We budget it but don’t forecast it.”
It’s no secret that Fortune’s golf division isn’t doing so hot, which has led to rumors that Fortune will offload the golf unit to focus more on spirits. Crain’s Chicago Business reported this week that if Fortune is ever going to become a serious competitor to the likes of, say, Diageo, it’s going to have to focus more on building and adding brands.
One possible solution? Taking on Absolut. It would greatly benefit Fortune to acquire Absolut from Vin and Spirit with whom Fortune currently has a distribution deal. Passing over Absolut has more of a chance to hurt Fortune than it would other spirits companies, according to the article.
Chairman and CEO Norm Wesley named Jim Beam, Sauza, and Maker’s Mark for pushing “strong sales gains” that helped “fuel our third quarter performance.” He told listeners that it was a strong quarter for the company’s spirits and wines brands as they achieved a new record of quarterly incomes.
Net sales were up 88% in the nine months to September 30, while operating income was up 87.7% for Beam Global Wine and Spirits.
The wine and spirits division benefited from the Allied acquisitions, especially in the premium and super-premium wine and spirits category where Fortune experienced high growth.
“We’re confident in the premium end of our wine and spirits brands,” said Norm.
Spirits case volumes grew at a mid-single digit rate, but were up low single-digits in the U.S. specifically. Maker’s Mark, Jim Beam and Sauza tequila grew double digits fueled by growth in the U.S., while wine volume, helped by the Clos du Bois and Geyser Peak brands, also posted solid growth year-to-date.
"We drove strong profit growth and higher margins in spirits and wine, benefiting from a strong increase in worldwide case volumes and the synergy benefits of last year's acquisition,” said Norm.
When asked about the Allied brands, Norm replied: “Some of the brands from Allied were off this year, like Courvoisier, and will take some extra investments which we are prepared to do.”
Norm stated that some of the Allied brands were a little too expensive, with “a little price promotion going on, which is not how we think you should build brands for the long-term.”
So far, Fortune appears to be making very good process in integrating Allied but hopes to continue building margins. “We feel that we have narrowed the gap so our margins are going to be mid-to-high twenties this year,” Norm continued. “Do I think we can further improve margins? Yes, but I’m not a slave to trying to return to those Beam margins of 2004.”
The Allied brands have not only given Fortune more clout on a global scale, but will help the company build share internationally.
“We have lower shares globally than we do in the U.S. which is why in part we took on these new brands to help build shares internationally.”
Success in the premium and super-premium sectors might encourage Fortune to increase prices soon, but Norm was hesitant to get specific when questioned about pricing. “Spirits is one of those categories where we’ve been able to get price increases but carefully look at it brand by brand," said Norm. “It’s not something we forecast in advance. We budget it but don’t forecast it.”
It’s no secret that Fortune’s golf division isn’t doing so hot, which has led to rumors that Fortune will offload the golf unit to focus more on spirits. Crain’s Chicago Business reported this week that if Fortune is ever going to become a serious competitor to the likes of, say, Diageo, it’s going to have to focus more on building and adding brands.
One possible solution? Taking on Absolut. It would greatly benefit Fortune to acquire Absolut from Vin and Spirit with whom Fortune currently has a distribution deal. Passing over Absolut has more of a chance to hurt Fortune than it would other spirits companies, according to the article.
posted at 1:40 PM
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