PRICE INCREASES AND STRONGER INVESTMENTS BOOST FORTUNE’S SPIRITS
Backed by price increases and new marketing campaigns, Fortune’s wine and spirits business helped offset the negative impact of the U.S. housing sector and is geared for the next quarter. Norm Wesley, chairman and chief of Fortune Brands, said that “as we enter the biggest [fourth] quarter, we feel good about the health of our brands and growth prospects.”
In the third quarter, sales were impacted by higher prices on premium wine and spirits brands, favorable mix shift and synergy costs. The company also increased brand spend behind global advertising campaigns for Sauza Tequila, Courvoisier Cognac and Canadian Club Whiskey.
When coo Bruce Carbonari was asked about the marketing investment, he said the campaigns are “spread” evenly throughout the world.
“It’s global...It [the campaigns] is very selected and targeted to an audience and geographic market targeted towards a specific brand,” he said.
“We're benefiting from higher pricing on certain premium spirits brands, the favorable trend of consumers trading up to higher end brands, and further synergies from our acquisition of the Allied Domecq brands,” continued Norm.
Wine and spirits sales rose 2% in the third quarter, impacted in part by soft revenue performance for select regional brands. Net sales for the nine months ending Sept. 30 were down -0.1%. As Bruce said in the conference call, premium brands continue to outperform regional brands.
Worldwide and U.S. case volumes (based on depletions) were both up low-single digits. Worldwide case volumes for Jim Beam grew low-single digits ytd, while revenues were up in the high-single digits due to price increases. Similarly, Sauza Tequila volumes rose low-single digits and revenues increased in the mid-single digit range. Maker’s Mark and Courvoisier case sales grew in the impressive high-single digit range, while Teacher’s was up double digits. DeKuyper and Canadian Club failed to show similar growth, as they were “off slightly” and flat, respectively.
“We continue to see the US market to be solid, good strong growth, strong mix with premium vs. regional,” said Bruce. He stated that Europe and the U.S. remain strong, while Australia and India continue to be Beam Global’s two fastest growing markets.
Meanwhile, wine brands grew in the high-single digit range with especially strong performance from Clos du Bois, Geyser Peak and Wild Horse.
In the forecast, Bruce predicted wine and spirits to be up in the high and mid-single digit range in the fourth quarter.
During the question and answer portion of the conference, Bruce was asked if he’d seen a slowdown in the shift from spirits to beer. Here’s what he had to say:
“We have not. Monthly numbers have volatility all the time but as we look over the year we do not...premium brands are doing very well but regionals are not doing as well...the cocktail culture is alive and the innovation that we’ve all brought to that culture continues motivating the consumer to purchase premium level spirits.”
In the third quarter, sales were impacted by higher prices on premium wine and spirits brands, favorable mix shift and synergy costs. The company also increased brand spend behind global advertising campaigns for Sauza Tequila, Courvoisier Cognac and Canadian Club Whiskey.
When coo Bruce Carbonari was asked about the marketing investment, he said the campaigns are “spread” evenly throughout the world.
“It’s global...It [the campaigns] is very selected and targeted to an audience and geographic market targeted towards a specific brand,” he said.
“We're benefiting from higher pricing on certain premium spirits brands, the favorable trend of consumers trading up to higher end brands, and further synergies from our acquisition of the Allied Domecq brands,” continued Norm.
Wine and spirits sales rose 2% in the third quarter, impacted in part by soft revenue performance for select regional brands. Net sales for the nine months ending Sept. 30 were down -0.1%. As Bruce said in the conference call, premium brands continue to outperform regional brands.
Worldwide and U.S. case volumes (based on depletions) were both up low-single digits. Worldwide case volumes for Jim Beam grew low-single digits ytd, while revenues were up in the high-single digits due to price increases. Similarly, Sauza Tequila volumes rose low-single digits and revenues increased in the mid-single digit range. Maker’s Mark and Courvoisier case sales grew in the impressive high-single digit range, while Teacher’s was up double digits. DeKuyper and Canadian Club failed to show similar growth, as they were “off slightly” and flat, respectively.
“We continue to see the US market to be solid, good strong growth, strong mix with premium vs. regional,” said Bruce. He stated that Europe and the U.S. remain strong, while Australia and India continue to be Beam Global’s two fastest growing markets.
Meanwhile, wine brands grew in the high-single digit range with especially strong performance from Clos du Bois, Geyser Peak and Wild Horse.
In the forecast, Bruce predicted wine and spirits to be up in the high and mid-single digit range in the fourth quarter.
During the question and answer portion of the conference, Bruce was asked if he’d seen a slowdown in the shift from spirits to beer. Here’s what he had to say:
“We have not. Monthly numbers have volatility all the time but as we look over the year we do not...premium brands are doing very well but regionals are not doing as well...the cocktail culture is alive and the innovation that we’ve all brought to that culture continues motivating the consumer to purchase premium level spirits.”
posted at 11:57 AM
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