Brown-Forman Names New Chief Marketer

FILED SEPTEMBER 1, 2009

Dear Client:

Brown-Forman has appointed John Kristin "Kris" Sirchio as its new chief marketing officer, effective November 16. The New Jersey native joins Brown-Forman after working the last five years at Syngenta AG, one of the world`s leading agribusinesses based in Basel, Switzerland, where his title was Global Head, Professional Products. Before that he spent 13 years at Procter & Gamble’s European operations. As a native of New Jersey, he received his bachelor’s degree from Duke University and his master’s from Southern Methodist University in Dallas. He and his family will relocate to B-F’s headquarters from Basel, Switzerland.

B-F chief Paul Varga said Kris’ reputation as “a hands-on leader with a reputation for strong brand building, marketing, innovation, and team-based success...make Kris the right choice to become Brown-Forman`s new chief marketing officer."

Kris succeeds Mark McCallum who was recently promoted to executive vp and coo of the company. Tomorrow B-F will announce its first quarter results, so stay tuned...

SPIRITS VOLUMES GROW 1.2% IN JULY

Spirits volumes in control states grew 1.2% based on NABCA data, reports UBS analyst Melissa Earlam. Dollar sales grew 1.8% and price/mix slowed to 0.6%. Diageo lost overall share in July with volumes down -1.6%. It gained share in Scotch, cocktail and cordials, but lost share in Canadian whiskey, gin, vodka, rum and tequila. On a rolling 12 month basis Diageo volumes grew 1.1%.

Pernod’s volumes fell -5.8% in July. The company gained share in Irish whiskey, rum and most notably Cognac/brandy, but lost share in vodka, gin and cordials. Volumes fell -3.6% for Brown-Forman, and Remy Cointreau declined -9.6%. Skyy Spirits, meanwhile, grew 7% in July.

FURTHER COVERAGE OF DIAGEO’S RUM TAX GAIN

The Chicago Tribune has picked up on the news that Diageo will reportedly receive “billions” in US tax dollars over the next 30 years after uprooting its Captain Morgan distillery to St. Croix. As you’ll recall, a similar story surfaced several months ago claiming Diageo was receiving TARP funds, and was then slammed by Diageo.

It is true, though, that Diageo will receive tax credits and other benefits worth $2.7 billion over 30 years from St. Croix, including the $165 million it takes to build a state-of-the-art distillery on the island of St. Croix in the U.S. Virgin Islands.

The deal was struck to entice Diageo to move its distillery from Puerto Rico, where Captain Morgan is still being produced. The money comes from a special tax on every bottle of rum sold in the US, which was first imposed in 1917, and is then sent to rum-producing US territories in the Caribbean to boost their economy. Puerto Rico is of course critical of the move, claiming that 300 works will lose their jobs once Diageo moves to St. Croix. Puerto Rico stipulates that 90% of its rum tax money go towards public welfare.

Diageo spokeswoman Zsoka McDonald counters that St. Croix’s offer “helped us decide to stay in the US,” and will therefore save jobs. Otherwise they may have moved to another country such as Guatemala or Jamaica.

Puerto Rico non-voting rep tried to pass legislation to limit the agreement but received little backing by Congress.

RESTAURANTS SEE SOME IMPROVEMENT IN JULY

A bit of good news for the on-premise: restaurants saw an improvement in July although same-store sales are still negative, according to a monthly business survey by the National Restaurant Association. Restaurateurs were also more optimistic about the outlook for the restaurant industry than they’ve been in months. The association’s composite index, which tracks the health and outlook of the restaurant industry, grew 0.3% to 98.1 from its June outlook.

A total of 31% of restaurant operators expect to have higher sales in six months, up from 24% in June. But 33% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in 2008, which was also reported the previous two months.

A total of 26% surveyed reported same-store sales gains in July from the same period a year earlier. This leaves a majority of 58% who reported negative sales, down from 61% in June. Customer traffic levels improved in July 2009 from July 2008, but the numbers were still negative for the 23 consecutive month.

Generally speaking, 32% said in July that they expect the economy to improve in six months. To view the full report, click here.

WSD BRIEFS:

TOYOTA SAID Monday it was developing anti-drunk driving equipment that would lock the ignition of a vehicle if high levels of alcohol are detected in the driver. The system features a hand-held breathalyzer, equipped with a digital camera, that detects alcohol consumption and photographs the driver's face for identification, and can send a message to fleet administrators. The device is intended for fleet vehicles of government and companies.

FINGER LAKE GRAPE PRICES DWINDLE. Grape prices in New York’s Finger Lakes district are down, reports Wines & Vines, and so is overall production with an expected drop from 172,000 tons last year to 140,000 in 2009. Declines in tourism and wine sales have been a “major factor” in dropping prices. Gewürztraminer has reportedly taken the biggest hit, selling for a high of $1,638 to $1,440 in 2009. Riesling dropped $167 from $1,584 in 2008 to $1,417 in 2009. And finally, Cabernet Franc lost $154, from $1,396 to $1,242. Lemberger, Pinot Noir, Cabernet Sauvignon, Pinot Gris and Chardonnay also sold for less this year.

AV IMPORTS, which is wholly owned by Spain's Codorníu Group, has changed its name to Aveníu Brands. "The name Aveníu Brands reflects our proud heritage as a Codorníu company," said president Roy Danis. The company currently markets close to thirty brands from nine different regions from California, Argentina, Spain, Italy, Chile and South Africa.

PORTUGUESE WINE PRODUCTION SET TO RISE. The Portuguese Ministry of Agriculture expects a “great wine harvest” this fall with production increasing 9% from last year 610 million liters of wine. The group says sales of Portuguese table wines have jumped by 40% since 2007 in the United States and Portuguese red wine sales increased 125%.

MARNIER-LAPOSTOLLE GROUP, producer of Grand Marnier, appointed R. Scott Green to senior vp marketing and sales – North America in June. Prior to joining the group in 2008, he was the vp marketing of imported brands and innovation at Skyy Spirits.

FRANCE RESUMES TITLE OF TOP PRODUCER. France is expected to overtake Italy this year as the world’s largest wine producer after taking second place last year, according to industry trade groups from both countries. It’s estimated that France will produce about 4.8 billion liters this year, while Italy will produce 4.7 billion after being incentivized by the European Union to dig up unprofitable vines.

BERINGER TO SPONSOR PGA TOUR. Foster’s Beringer Vineyards will be the “Official Wine of the PGA Tour” in 2010. This marks the first wine brands to partner with the Tour. Financial details were not disclosed.

THE WORLD ASSOCIATION OF THE ALCOHOL BEVERAGE INDUSTRIES (WAABI) has named Duncan Cameron of Virginia as their new executive director.

CLARIFICATION. We want to clarify that Skyy Spirits doesn’t produce Christian Brothers Brandy and that the proper name for their Infusions line is “Skyy Infusions.”


Until tomorrow,
Megan

“Truth is more of a stranger than fiction.”
Mark Twain

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