US/INDIA: Beam Inc misconduct allegations stifling growth - analyst
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.
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 o...
- Spirits - Where does 'Craft' End and 'Mass' Begin?
- Brewers go Crazy over Flavoured Malt “Cocktails”
- What do A-B InBev results mean for SABMiller deal?
- Mike’s Hard Lemonade Could Be a Hard Sell
- Anheuser-Busch InBev's FY Performance by Region
- Diageo "smart bottle" targets consumers at home
- Suntory whiskey seeks to "eclipse" Diageo, Pernod
- Tesco reinstates Dan Jago following suspension
- Diageo adds Dubai to Johnnie Walker skyline series
- Tough US hits Mast-Jagermeister volumes in 2014
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- Wine, 2014 and the future
- Spirits and RTDs, 2014 and the future
- Global RTD/RTS insights - market forecasts, product innovation and consumer trends research
- Beam Suntory Inc. - Strategy and SWOT Report