just-drinks.com editor's weekly highlights
In This Issue...
The American thirst for premium spirits shows no sign of abating and, once again, Constellation Brands has moved to snap up one of the fastest growing brands in the country.
Last week’s acquisition of Swedish vodka brand Svedka once again demonstrates Constellation’s desire to bolster its spirits stable, a portfolio that now includes no less than 13 (mainly low-price) vodkas.
At first glance, the US$384m fee to buy Svedka and its brand-owner Spirits Marque One does look a tad high. A number of analysts had quizzical looks after Constellation said the acquisition would hit earnings per share for the next three years. One analyst even called the deal “a major violation” of Constellation’s acquisition strategy.
Another analyst also questioned the impact the Svedka buy would have on Constellation’s earnings, but pointed to the brand’s booming US sales as a reason for optimism.
Svedka is one of the top-selling imported vodkas in the US and is knocking on the door of the top ten vodkas overall. Sales shot up by 60% to 1.1m cases last year thanks to the success of its futuristic and ‘adult’ advertising campaign, SVEDKA_Grl.
Mark Swartzberg, an analyst at US bank Stifel Nicolaus called the campaign “offensive”, adding: “Human sexuality is beautiful. Why not treat it that way?” In the run up to Valentine’s Day, such sentiments are noble, but leaving criticisms of Svedka’s advertising to one side, the acquisition has a lot of long-term potential for Constellation.
The brand has carved out a unique brand proposition in the eyes of consumers, similar to the way 42 Below has done. However, Svedka’s sales in the US dwarf those of the New Zealand vodka and, purely from the point of view of sales growth, Constellation is right to leave the brand’s direction unchanged.
Spirits sales account for a small portion of Constellation’s annual revenues and the popularity of Svedka should give the US-based drinks giant a sound platform on which to grow that side of the business.
However, one question remains: will this be the only Swedish vodka that Constellation targets this year?
On a separate note, we have introduced fresher, more user-friendly look to our news pages at just-drinks last week. I hope it gives you even more of the information you are looking for. Feel free to let me know your thoughts here.
Until next time...
Olly Wehring, Managing Editor
The health and wellness boom has precipitated huge growth in the low-cal and no-cal soft drinks market, and with it great strides in the development of artificial sweeteners. Annette Farr reports on how consumers, in their eagerness to reduce their calorie intake, have embraced the likes of aspartame, sucralose and acesulfame-K.
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