FORTUNE ACCUSED OF UNFAIR ADVANTAGE IN RACE FOR ABSOLUT

The auction for Absolut was hit with criticism just a few hours after it was officially announced. According to a report in the Telegraph today, investment bankers are warning that the sales process could be slanted toward Fortune brands and therefore flawed. Vin & Sprit’s joint-venture with Fortune in the U.S. (aka Future Brands) is believed by some to give Fortune an unfair advantage because it currently holds the distribution rights for Absolut in the U.S.

According to the article, one banker said: “The government could have a problem given the toxic distribution contract. There is a real question mark over whether they can run a credible process. How can the others make a competitive bid?”

However, other City analysts point out that although Fortune has an advantage in the U.S., there’s no denying the fact that its bigger rivals, Diageo, Pernod and Bacardi, will pose as tough competitors.

Most analysts believe Bacardi is the most likely rival to Fortune. As WSD has mentioned before, Diageo will likely face competition issues in the U.S. because of Smirnoff, while Bacardi is a private company and has more leeway in deciding what price to pay. If V&S does go to another company, that company will likely have to cover the cost of any break-fee from its distribution agreement with Fortune. Considering Vin & Sprits’ auction is one of the last opportunities to acquire a premium brand, we have a feeling bidders will jump through a lot of hoops to get it.