Fortune on the Offense


Dear Client:

"We're on offense in all of our businesses," said Fortune Brands chief Bruce Carbonari. Beam Global reported higher total sales in the fourth quarter, with gains from Jim Beam and Maker's Mark, and high single digit gains in Moen. Beam says that total spirits sales in the US are flat to up 1% in the US. Beam's US sales were up 4%, while case volumes were down 2%, reflecting higher pricing, and flat revenues.

For next year, Beam management sees the spirits industry being flat to up 1%. "To the degree we're going to see upside, it's going to be in volume, rather than price or mix," says Bruce. Fortune says pricing and mix will remain under pressure in 2010.

Bruce also said the holidays didn't bring any surprises. More volume shifted to off-premise, and promotion activity "was about what we expected.....There really wasn't a lot of difference in the spirits business itself" except the fact that spirits have outperformed beer all year. One surprise for Beam was the success of new Red Stag, which Bruce says "brought new consumers to the bourbon category," and "blew away our forecasts." They shipped more than 100k cases after the intro in May, which was three times what they forecasts. Margarita in a box also outstripped their expectations.

Beam will be increasing its brand marketing spending double digits in 2010. Beam had pulled back on investment in the first half of 2009 as it restructured its business to "become closer to the consumer and customer." In 2010, look for more TV spending on Jim Beam and more "high profile" advertising for 9 year old Knob Creek. Beam also says it's more aligned with wholesalers as they "entered into new performance based contracts with our largest distributors" and "aligned business into fully integrated category teams. We see excellent prospects to improve performance in the spirits business."

Regarding acquisitions, Bruce isn't ruling anything out, but it "will remain disciplined like we always have been." The deal flow has been normal but "finding quality acquisitions remains a challenge" but that they will look to round out their portfolio by "adding a rum" or a vodka.


BevForce, a career network for the beverage industry, and BevNet recently conducted a survey assessing current and future attitudes on beverage employment, staffing and job security. They found that although nationwide unemployment rates are still high, beverage industry members believe 2010 will be a better year than 2009 with few layoffs and internal restructuring. Other survey results revealed a positive view:

. 75% of respondents anticipate positive growth for their company is 2010.
. 67% of respondents think that their company will be hiring in 2010.
. 75% of respondents feel secure in their current position, despite the current economic climate.
. 6% of respondents think that their company will conduct a round of layoffs in 2010, while 25% conducted a round of layoffs in 2009.
. 15% of respondents think that their company will go through a reorganization in 2010, while 34% reorganized in 2009.
. 71% of respondents anticipate making new hires in 2010, while in 2009 67% hired new employees and in 2008 69% hired new employees.

More than 1,000 beverage professionals in both the alcoholic and non-alcoholic space participated in the online survey, including wholesalers/distributors, manufacturers/suppliers, retailers and service providers. Respondents included primarily executive level, marketing and sales professionals in the beverage industry.


AUSTRALIA'S GRAPE CRUSH was down -5.4% in 2009, according to data from the Australian Bureau of Statistics. The vintage weighed 1.7 million tons, and yields dropped to 10.7 tons per hectare. The crush produced 1.2 billion liters of wine, down -5.9% from last year. Red and rosé production reached 630 million liters, down -6.8%, while white wine produced 542 million liters, down -4.5%. ABS reports that inventory levels remain at 1.9 billion liters

Until Monday, Megan

"It's really too bad a lot of crumby stuff is a lot of fun sometimes."
J. D. Salinger

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