NORM WESLEY: “WE’RE INTERESTED IN BUYING ABSOLUT, NO MATTER WHAT PROCESS.”
Fortune Brands chief Norm Wesley said the 2nd quarter was much better for the company, thanks to strong wine and spirits growth that helped make up for the downturn in the U.S. housing market. The company’s continued focus on building its premium wine and spirits helped increase consumer demand for Jim Beam, Sauza, Maker’s Mark, Teacher’s and Clos du Bois, along with a successful integration of Allied Domecq brands. Year-to-date spirits and wine case volumes are up at a mid-single-digit rate overall.
BOURBON AND TEQUILA HELP DRIVE GROWTH. Again, president Bruce Carbonari highlighted the importance of growing premium spirits. Beam Global’s bourbon and tequila brands led growth, which includes Jim Beam, Makers Mark and Sauza. Bruce said that not only is the bourbon category continuing to grow, but Sauza’s new super-premium version, Tres Generaciones, in the US has dramatically helped the brand’s overall success. Beam plans to launch new marketing campaigns in the second half with a double-digit increase in brand spending and new, updated packaging.
Fine wine brands continue to gain momentum thanks to an increased focus on distribution and a double-digit increase in store counts for Clos du Bois, Geyser Peak, and Wild Horse.
Spirits and wine overall sales reached a new record, up 6%, while YTD global case volume grew mid-single digits. Strong volumes and favorable mix/shift reflected consumers trading up, while case volume for major premium and super-premium brands continue to grow twice as fast as national and regional brands.
The wine and spirits brands got a majority of their volume growth from the international market, perhaps as the spirits category continues to dwindle in the US. Internationally, YTD volumes were up high single-digits led by Jim Beam, Sauza, Courvoisier and Teachers.
In the US, YTD spirits and wine volume grew low single-digits led by mid single-digit growth by major premium brands and favorable depletion trends.
Jim Beam increased mid-single digits worldwide benefiting from growth in the US, Australia and Germany. Sauza grew at a double-digit rate, while Makers Mark and Courvoisier rose at a high single-digit range. Meanwhile, volumes for Canadian Club were also up high single-digits.
Wine volume jumped high single-digits led by strong demand for Geyser Peak, Wild Horse and Clos du Bois.
ANALYSTS “SIGNIFICANTLY UNDERESTIMATE” FORTUNE AND V&S. In his closing remarks, Norm included a strong statement on V&S claiming that Fortune has a much better chance of acquiring Absolut than many analysts are letting on. It remained the focus of much of the Q/A as well, so here’s a peak at what took place.
“They [Swedish government] have not yet announced a time table for the sales process...we believe Fortune Brands is the most suitable long-term partner for the company. We believe the success of our six year partnership demonstrates that our companies are an excellent fit...a natural step forward that would create value for the Swedish government, for the V&S workforce and importantly for our shareholders.”
“We’ve seen some analysts’ estimates...that we believe significantly underestimate our ability to create value for shareholders in this potential transaction. We see this as a very attractive opportunity and we look forward to participating in the process.”
During the question and answer portion, Norm was asked to expand on his comment regarding V&S. This is what he said:
“Several analysts have estimates out there that have us diluted in the range of $0.50 per dollar and we just don’t see that...its very early in the process, they haven’t really started the process...but we just think those estimates underestimates how we’d deliver value. But we don’t want to be real specific now how we’d approach it and finance it.”
Norm also said he doesn’t know when they’ll see an IPO from V&S.
“They’ve not declared if they’re going to conduct a sale, if there going to do an IPO or sale, or if they do if they’re going to sell in one piece or in separate pieces. We’ve expressed that we’re interested in buying, no matter what process, the whole or the premium brands which we’re most interested in .”
“It’s very difficult for the people not engaged in the details that we are to understand it...we’ve always been dedicated to increasing shareholder value so if it was that diluted we wouldn’t do it.”
NOT WORRIED ABOUT SPIRITS. Furthermore, Norm claimed, as he did in the last conference call, that as far as he’s concerned, spirits are doing just fine in the U.S.
“There’s been comments about the market slowing and quite frankly we’ve not seen it. It hasn’t had an appreciable change one way or the other on the market.”
BOURBON AND TEQUILA HELP DRIVE GROWTH. Again, president Bruce Carbonari highlighted the importance of growing premium spirits. Beam Global’s bourbon and tequila brands led growth, which includes Jim Beam, Makers Mark and Sauza. Bruce said that not only is the bourbon category continuing to grow, but Sauza’s new super-premium version, Tres Generaciones, in the US has dramatically helped the brand’s overall success. Beam plans to launch new marketing campaigns in the second half with a double-digit increase in brand spending and new, updated packaging.
Fine wine brands continue to gain momentum thanks to an increased focus on distribution and a double-digit increase in store counts for Clos du Bois, Geyser Peak, and Wild Horse.
Spirits and wine overall sales reached a new record, up 6%, while YTD global case volume grew mid-single digits. Strong volumes and favorable mix/shift reflected consumers trading up, while case volume for major premium and super-premium brands continue to grow twice as fast as national and regional brands.
The wine and spirits brands got a majority of their volume growth from the international market, perhaps as the spirits category continues to dwindle in the US. Internationally, YTD volumes were up high single-digits led by Jim Beam, Sauza, Courvoisier and Teachers.
In the US, YTD spirits and wine volume grew low single-digits led by mid single-digit growth by major premium brands and favorable depletion trends.
Jim Beam increased mid-single digits worldwide benefiting from growth in the US, Australia and Germany. Sauza grew at a double-digit rate, while Makers Mark and Courvoisier rose at a high single-digit range. Meanwhile, volumes for Canadian Club were also up high single-digits.
Wine volume jumped high single-digits led by strong demand for Geyser Peak, Wild Horse and Clos du Bois.
ANALYSTS “SIGNIFICANTLY UNDERESTIMATE” FORTUNE AND V&S. In his closing remarks, Norm included a strong statement on V&S claiming that Fortune has a much better chance of acquiring Absolut than many analysts are letting on. It remained the focus of much of the Q/A as well, so here’s a peak at what took place.
“They [Swedish government] have not yet announced a time table for the sales process...we believe Fortune Brands is the most suitable long-term partner for the company. We believe the success of our six year partnership demonstrates that our companies are an excellent fit...a natural step forward that would create value for the Swedish government, for the V&S workforce and importantly for our shareholders.”
“We’ve seen some analysts’ estimates...that we believe significantly underestimate our ability to create value for shareholders in this potential transaction. We see this as a very attractive opportunity and we look forward to participating in the process.”
During the question and answer portion, Norm was asked to expand on his comment regarding V&S. This is what he said:
“Several analysts have estimates out there that have us diluted in the range of $0.50 per dollar and we just don’t see that...its very early in the process, they haven’t really started the process...but we just think those estimates underestimates how we’d deliver value. But we don’t want to be real specific now how we’d approach it and finance it.”
Norm also said he doesn’t know when they’ll see an IPO from V&S.
“They’ve not declared if they’re going to conduct a sale, if there going to do an IPO or sale, or if they do if they’re going to sell in one piece or in separate pieces. We’ve expressed that we’re interested in buying, no matter what process, the whole or the premium brands which we’re most interested in .”
“It’s very difficult for the people not engaged in the details that we are to understand it...we’ve always been dedicated to increasing shareholder value so if it was that diluted we wouldn’t do it.”
NOT WORRIED ABOUT SPIRITS. Furthermore, Norm claimed, as he did in the last conference call, that as far as he’s concerned, spirits are doing just fine in the U.S.
“There’s been comments about the market slowing and quite frankly we’ve not seen it. It hasn’t had an appreciable change one way or the other on the market.”
posted at 11:17 AM
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