Fortune: Spirits “Sustainable” in 2008
In a presentation at the Baird’s Growth Stock Conference today, Fortune Brands ceo Bruce Carbonari talked about the spirits biz today and tomorrow. The company’s top initiative is growing its major premium spirits business, where Fortune is #4 in the world. But is premium spirits growth possible during a recession? Here’s what Bruce had to say about the past, present and future of Fortune’s spirits brands:
PREMIUMIZATION. “[Premium spirits] is a favorable market profile really driven by the consumer. The consumer is very active in what we call the premiumization of the spirits business, and that’s not only in the United States but otherwise. That means they are moving up. They are selecting and calling brands at bars or moving up in price points as they go to their local liquor store. It’s an affordable luxury, and as an affordable luxury we’ve seen great sustainability in this market during good and bad times.”
When asked how spirits is performing in the slowing economy versus beer, Bruce said the following:
“We’ve seen quite a sustainability in the spirits business...In 2008 I think we will be closer to the 2% side of the business. What is interesting also is we continue to see premiumization. The one thing you might question is the mix and what people are willing to drink. Will they be trading down? The only trend we’re starting to see here is on-premise versus off-premise...we’ve seen a shift from on-premise slowing to more off-premise which are liquor stores or the Safeways of the world where you can buy spirits. We’ve seen a shift to people buying off-premise accelerating, which is about 80% of the market.”
UNITED STATES. “The growth here in the United States has been between 2-4% over the near history, and whether that is good times or bad times. That’s supported by this cocktail culture that we see. That is also supporting the gain we are seeing in spirits versus beer here in the United States.”
INTERNATIONAL. “The international profile is just as robust. Actually we are seeing more in the high single digits range growth in the international market as we see most of the emerging markets, the brick countries if you will, really growing and starting the premiumization of the global spirits there from the local spirits that has been a part of their tradition,” said Bruce.
“When we purchased the Allied Brands, as I said, two years ago, we really went through a major transformation from basically a large single brand U.S. company to a global multi-spirits business. We purchased over twenty brands that had a global presence and that really allowed us to move our business split 50/50 between U.S. and international.”
BUZZ MARKETING. “About a year ago we created a new vision around the company. And that vision is centered around building brands that people want to talk about. That is really creating that buzz out there, the pull that people get excited about as they call our brands and call their respected drinks.”
“We are doing that in a non-traditional fashion. We are looking at the occasions when people go out to socialize, whether it be for a birthday party or a get together with friends, and understanding what those occasions are. And not just doing TV ads and print billboards but finding non-traditional ways to make it a personal experience, whether that be on the internet or more on-site, on-premise vehicles. We started that campaign supporting Canadian Club, Courvoisier and Sauza Hornitos in the second half of last year.”
EXPANDING CAPACITIES. “We are also expanding our capacities, again bourbon, scotch and tequila, and we’ve made quite an investment there to support the profile we see for the future.”
CAMPARI HAS SLOW FIRST QUARTER
Italian drinks group Campari said it performed as planned in a tougher environment in the first quarter ended March 31. The small quarter was hurt by the weak US dollar, destocking issues with Skyy Vodka in the US, tough comps and overall slowness in the spirits biz. Campari also lost its Tequila 1800 distribution contract in the US in December 2007.
“In a tougher environment we are performing as planned. Having executed important portfolio changes in the small Q1, we expect our business to build its momentum across key regions in the quarters ahead. Overall, our outlook for 2008 remains unchanged,” said Bob Kunze-Concewitz, ceo.
SKYY sales declined by -13.2% at actual exchange rates, due to the planned destocking in the US, ahead of SKYY Infusions and SKYY Vodka new pack launch in April 2008. The US market registered an organic decrease of -7%
In its outlook, Campari said the US business is expected to return to growth following the completion of portfolio changes in Q1. However, negative effects from the US dollar are expected to continue.
WSD BRIEFS:
GOV. SONNY PERDUE SIGNED HB 1061, which will allow wineries to ship wine directly to consumers. Georgians can now order as many as 12 cases of wine a year directly from wineries over the internet or telephone. Previously, residents were required to make face to face purchases at wineries in order to have up to five cases of wine shipped home.
PERNOD HAS ADDED A MOCHA FLAVOR to its Kahlua line, set to hit the U.S. in June. Kahlua Mocha is the latest extension in the flavor portfolio, joining French Vanilla and Hazlenut.
FRENCH BILLIONAIRE BERNARD ARNAULT will joint Carrefour’s (the world’s second-largest retailer) supervisory board, replacing Robert Halley.
Until tomorrow, Megan
“Death is more universal than life; everyone dies but not everyone lives.”
A. Sachs
--------- Sell Day Calendar ----------
Today's Sell Day: 10
Sell days this month: 22
Sell days this month last year: 23
This month ends on a: Fri.
This month last year ended on a: Thurs.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
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Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
PREMIUMIZATION. “[Premium spirits] is a favorable market profile really driven by the consumer. The consumer is very active in what we call the premiumization of the spirits business, and that’s not only in the United States but otherwise. That means they are moving up. They are selecting and calling brands at bars or moving up in price points as they go to their local liquor store. It’s an affordable luxury, and as an affordable luxury we’ve seen great sustainability in this market during good and bad times.”
When asked how spirits is performing in the slowing economy versus beer, Bruce said the following:
“We’ve seen quite a sustainability in the spirits business...In 2008 I think we will be closer to the 2% side of the business. What is interesting also is we continue to see premiumization. The one thing you might question is the mix and what people are willing to drink. Will they be trading down? The only trend we’re starting to see here is on-premise versus off-premise...we’ve seen a shift from on-premise slowing to more off-premise which are liquor stores or the Safeways of the world where you can buy spirits. We’ve seen a shift to people buying off-premise accelerating, which is about 80% of the market.”
UNITED STATES. “The growth here in the United States has been between 2-4% over the near history, and whether that is good times or bad times. That’s supported by this cocktail culture that we see. That is also supporting the gain we are seeing in spirits versus beer here in the United States.”
INTERNATIONAL. “The international profile is just as robust. Actually we are seeing more in the high single digits range growth in the international market as we see most of the emerging markets, the brick countries if you will, really growing and starting the premiumization of the global spirits there from the local spirits that has been a part of their tradition,” said Bruce.
“When we purchased the Allied Brands, as I said, two years ago, we really went through a major transformation from basically a large single brand U.S. company to a global multi-spirits business. We purchased over twenty brands that had a global presence and that really allowed us to move our business split 50/50 between U.S. and international.”
BUZZ MARKETING. “About a year ago we created a new vision around the company. And that vision is centered around building brands that people want to talk about. That is really creating that buzz out there, the pull that people get excited about as they call our brands and call their respected drinks.”
“We are doing that in a non-traditional fashion. We are looking at the occasions when people go out to socialize, whether it be for a birthday party or a get together with friends, and understanding what those occasions are. And not just doing TV ads and print billboards but finding non-traditional ways to make it a personal experience, whether that be on the internet or more on-site, on-premise vehicles. We started that campaign supporting Canadian Club, Courvoisier and Sauza Hornitos in the second half of last year.”
EXPANDING CAPACITIES. “We are also expanding our capacities, again bourbon, scotch and tequila, and we’ve made quite an investment there to support the profile we see for the future.”
CAMPARI HAS SLOW FIRST QUARTER
Italian drinks group Campari said it performed as planned in a tougher environment in the first quarter ended March 31. The small quarter was hurt by the weak US dollar, destocking issues with Skyy Vodka in the US, tough comps and overall slowness in the spirits biz. Campari also lost its Tequila 1800 distribution contract in the US in December 2007.
“In a tougher environment we are performing as planned. Having executed important portfolio changes in the small Q1, we expect our business to build its momentum across key regions in the quarters ahead. Overall, our outlook for 2008 remains unchanged,” said Bob Kunze-Concewitz, ceo.
SKYY sales declined by -13.2% at actual exchange rates, due to the planned destocking in the US, ahead of SKYY Infusions and SKYY Vodka new pack launch in April 2008. The US market registered an organic decrease of -7%
In its outlook, Campari said the US business is expected to return to growth following the completion of portfolio changes in Q1. However, negative effects from the US dollar are expected to continue.
WSD BRIEFS:
GOV. SONNY PERDUE SIGNED HB 1061, which will allow wineries to ship wine directly to consumers. Georgians can now order as many as 12 cases of wine a year directly from wineries over the internet or telephone. Previously, residents were required to make face to face purchases at wineries in order to have up to five cases of wine shipped home.
PERNOD HAS ADDED A MOCHA FLAVOR to its Kahlua line, set to hit the U.S. in June. Kahlua Mocha is the latest extension in the flavor portfolio, joining French Vanilla and Hazlenut.
FRENCH BILLIONAIRE BERNARD ARNAULT will joint Carrefour’s (the world’s second-largest retailer) supervisory board, replacing Robert Halley.
Until tomorrow, Megan
“Death is more universal than life; everyone dies but not everyone lives.”
A. Sachs
--------- Sell Day Calendar ----------
Today's Sell Day: 10
Sell days this month: 22
Sell days this month last year: 23
This month ends on a: Fri.
This month last year ended on a: Thurs.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 11:47 AM
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