NORM WESLEY: “2006 WAS AN EXCELLENT YEAR
In commenting on the full-year guidance, Norm Wesley, chairman and CEO stated: “2006 was an excellent year for Fortune Brands.”
The company achieved its quarterly and full year target, and was especially helped by the wine and spirits business (Beam Global), which offset losses by home and hardware.
“The benefits of our wine and spirits acquisition accelerated as the year unfolded,” said Norm. “This is the first full year in our history where our wine and spirits sector was the main profit contributor.”
Beam Global has also enjoyed a growing influence in foreign markets since acquiring a portion of Allied Domecq’s brands. Almost 45% of the case volume came from foreign markets, said Norm.
The wine and spirits segment benefited from strong spirits shipments in the U.S. and Asia Pacific regions, as well as strong case volume growth for Beam Global’s wine brands in the U.S.
“We were very pleased with margins for the year for wine and spirits,” said Craig Omtvedt, senior vp and cfo of Fortune. “It reflects one of the best margins in the industry and was helped by strong volumes.”
Global case volume for wine and spirits grew 2-3% in 2006, while net sales were driven to high single digits by strong growth in the premium end of the market. Full year depletions for the U.S. grew at a low-single digit rate with premium and super premium brands growing even faster (trading up was key).
Jim Beam grew mid-single digits on a global volume scale, helped by its most popular markets: U.S., Australia and Germany. Maker’s Mark experienced double digit volume growth thanks to strong consumer demands in the U.S., while Sauza tequila also grew high-single digits with help from the U.S. (Sauza’s fastest growth came from its ultra premium and super-premium persuasions.) Courvoisier gained momentum as the year progressed, closing the year at a low-single digit volume growth. Canadian Club was the only major spirits brand that had lower volume growth for the year.
Although Norm stated there were no “big surprises on any front,” he did remark that Jim Beam did a little better than expected, and Canadian Club did a little worse. “It’s more a brand by brand basis,” he said.
No comment when asked about future acquisitions (Absolut anyone?)
Overall, super-premium and premium brands grew the most in all wine and spirits brands.
As far as wine goes, depletions for Clos Du Bois grew at low-single digits, while Geyser Peak and Wild Horse increased at a double digit rate.
“Consumers continue to trade up, and spirits and wine continue to gain share from beer in the U.S. With the successful integration of our acquisition behind us, we’re looking forward to another very good year in this business,” said Norm.
To help further build long-term equity across all of Beam Global’s priority brands, the company is planning a double-digit reinvestment plan in 2007.
Says Norm:
“We felt that some of the brands we’ve acquired were promoted too much on price, so we want to invest behind those brands and build them in what we would consider a more rational way in the long run. So we have a double digit brand investment built into our plan for next year, and that includes supporting some of these global brands that we feel were promoted too much on price, and in particular supporting some of the international opportunities we see across our portfolio, including India and China for example.”
“Our guidance for next year is to be up in the high-single digits which we think is quite good and reflects solid growth as well as continuing to benefit from synergies in bringing these two portfolios together.”
The company achieved its quarterly and full year target, and was especially helped by the wine and spirits business (Beam Global), which offset losses by home and hardware.
“The benefits of our wine and spirits acquisition accelerated as the year unfolded,” said Norm. “This is the first full year in our history where our wine and spirits sector was the main profit contributor.”
Beam Global has also enjoyed a growing influence in foreign markets since acquiring a portion of Allied Domecq’s brands. Almost 45% of the case volume came from foreign markets, said Norm.
The wine and spirits segment benefited from strong spirits shipments in the U.S. and Asia Pacific regions, as well as strong case volume growth for Beam Global’s wine brands in the U.S.
“We were very pleased with margins for the year for wine and spirits,” said Craig Omtvedt, senior vp and cfo of Fortune. “It reflects one of the best margins in the industry and was helped by strong volumes.”
Global case volume for wine and spirits grew 2-3% in 2006, while net sales were driven to high single digits by strong growth in the premium end of the market. Full year depletions for the U.S. grew at a low-single digit rate with premium and super premium brands growing even faster (trading up was key).
Jim Beam grew mid-single digits on a global volume scale, helped by its most popular markets: U.S., Australia and Germany. Maker’s Mark experienced double digit volume growth thanks to strong consumer demands in the U.S., while Sauza tequila also grew high-single digits with help from the U.S. (Sauza’s fastest growth came from its ultra premium and super-premium persuasions.) Courvoisier gained momentum as the year progressed, closing the year at a low-single digit volume growth. Canadian Club was the only major spirits brand that had lower volume growth for the year.
Although Norm stated there were no “big surprises on any front,” he did remark that Jim Beam did a little better than expected, and Canadian Club did a little worse. “It’s more a brand by brand basis,” he said.
No comment when asked about future acquisitions (Absolut anyone?)
Overall, super-premium and premium brands grew the most in all wine and spirits brands.
As far as wine goes, depletions for Clos Du Bois grew at low-single digits, while Geyser Peak and Wild Horse increased at a double digit rate.
“Consumers continue to trade up, and spirits and wine continue to gain share from beer in the U.S. With the successful integration of our acquisition behind us, we’re looking forward to another very good year in this business,” said Norm.
To help further build long-term equity across all of Beam Global’s priority brands, the company is planning a double-digit reinvestment plan in 2007.
Says Norm:
“We felt that some of the brands we’ve acquired were promoted too much on price, so we want to invest behind those brands and build them in what we would consider a more rational way in the long run. So we have a double digit brand investment built into our plan for next year, and that includes supporting some of these global brands that we feel were promoted too much on price, and in particular supporting some of the international opportunities we see across our portfolio, including India and China for example.”
“Our guidance for next year is to be up in the high-single digits which we think is quite good and reflects solid growth as well as continuing to benefit from synergies in bringing these two portfolios together.”
posted at 2:44 PM
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