Andy Morton

US/INDIA: Beam Inc misconduct allegations stifling growth - analyst

By | 4 February 2013

Beam Inc says it is "making progress" with its review

Beam Inc says it is "making progress" with its review

Beam Inc's misconduct review in India has damaged sales more than expected and looks set to hamper growth for most of the year, an analyst has claimed.

The US spirits maker has been forced to "ramp down" sales to India in the wake of allegations of financial impropriety, analyst CLSA said today (4 February). The ongoing investigation will be a “headwind” at least until the third quarter of the calendar year, CLSA said.

In October, The Times of India reported allegations of possible violations of the US Foreign Corrupt Practices Act involving Beam's operations in the country. 

Beam executives on Friday deflected questions over the review, saying that the investigation is “making progress” but that it is still too early to speculate on how much it will cost the company.

Beam brand Teacher's is the top-selling Scotch in India, according to CLSA.

Meanwhile, the analyst said that Diageo's acquisition of Beam remains a “reasonable possibility” despite the UK company claiming it intends to focus on high-end tequila in the wake of a breakdown in talks with Jose Cuervo. Some commentators viewed Beam's Sauza tequila brand as a possible replacement for Cuervo and predicted a Diageo swoop for its owner.

CLSA said Suntory is another potential buyer after it announced an IPO to raise M&A capital this year.

In full-year results announced last week, Beam posted a healthy rise in Bourbon sales, with last year's Pinnacle vodka acquisition also performing strongly.

Expert analysis

Beam Inc. (BEAM) - Financial and Strategic SWOT Analysis Review

Beam Inc. (Beam), formerly known as Fortune Brands, Inc, is a premium spirits company. The company offers branded distilled spirits products. The product portfolio of the company consists of bourbon whiskey, Scotch whisky, Canadian whisky, tequila, cognac, rum, cordials, and ready-to-drink pre-mixed cocktails. The renowned brands offered by the company include Jim Beam Bourbon, Canadian Club Whisky, Maker’s Mark Bourbon, Sauza Tequila, Courvoisier Cognac, Teacher’s Scotch, Laphroaig Scotch, Knob Creek Bourbon, Cruzan Rum, Basil Hayden’s Bourbon, Kilbeggan Irish Whiskey, Hornitos Tequila, Skinnygirl Cocktails, EFFEN Vodka, Pucker Vodka and Sourz Liqueurs among others. The company’s major markets includes North America, Australia and Europe, and also maintains presence in the markets of India, Brazil, Russia, Central Europe, Asia, and other geographies. The company is headquartered in Illinois, the US. The company is expanding its operations as evident from its recent acquisition related agreement with White Rock Distilleries to acquire the fast-growing Pinnacle Vodka and Calico Jack rum brands and other related assets for $605m in cash.

Sectors: Corporate social responsibility (CSR), Emerging markets – BRIC, Spirits

Companies: Beam Inc, Diageo, Suntory

There are currently no comments on this article

Be the first to comment on this article

Related research

Suntory Holdings Ltd in Soft Drinks (Japan)

Suntory Holdings aims to reinforce its core business, carry out internal synergies in the Suntory Group, and develop new businesses. In order to achieve this, the company targets further cultivation of its focus brands, such as Suntory Boss, Iyemon, ...

Global market review of cachaça – forecasts to 2016

Cachaça is the ninth-largest global spirits category at 82.67m nine-litre cases, deriving the vast majority of this volume from the domestic market, selling some 81.8m cases in Brazil in 2011. It has been widely tipped as the next big international s...

Global market review of Tequila – forecasts to 2016

Beginning with an Executive Summary, the report scopes out the challenges ahead, how higher qualities might gain, retail value, premiumisation potential, expanding Tequila's horizon, Tequila's versatility, reducing complexity, industry structure, the...

Related articles

just For Subscribers - The week in drinks

Here are the ten most viewed, subscriber-only items on just-drinks this week:

Research in Focus - Ready for More Growth: RTDs Continue to Defy Doom-Mongers

The ready-to-drink (RTD) category continues to offer growth potential for spirits producers while giving their brands access to consumption occasions they were traditionally excluded from and the opportunity to attract new consumers through product innovation.

CHINA: Diageo's Don Julio to "take advantage" of new Tequila rules

Diageo has welcomed the lifting of China's ban on high-methanol Tequila and said its Don Julio brand is well placed to capitalise on the market's projected growth.

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page