UPDATE US: Fortune Brands in confident spirits
Fortune announced yesterday (29 January) that revenue and net income for 2008 fell by 11% and 58% respectively.
Beam Global, which accounts for around 60% of group operating income, reported full-year revenue down 4.8% to US$2.48bn, damaged by a 16% sales slide in the fourth quarter. Operating income for Beam fell by 29% to US$543.7m for the year.
Faced with a sales decline and one of the worst economic downturns for decades, Fortune CEO and chairman Carbonari refused to be downbeat in yesterday's results conference call, however.
He said that 2008 saw the group seize greater control of disribution and sales units, and that an extra US$30m will be invested in developing routes to market internationally in 2009.
"Six months ago we had 90% sales going through shared organsiations, but with this investment and the moves we're making now, we'll have over 70% of sales [handled] by a dedicated sales force." He added: "The bottom line is that we'll have more feet on the street that are focused on nothing but our brands."
Beam Global ended its US distribution contract for Absolut vodka last autumn, following Pernod Ricard's takeover of Absolut owner Vin & Sprit. It will also form a new international alliance with The Edrington Group this April, following the upcoming break-up of the Maxxium Worldwide venture at the end of March.
This week, Beam extended its distribution agreement with Southern Wine & Spirits of America, to include the new states of Kentucky and Arizona.
Carbonari said that Beam Global's spirits brands remained "resilient" to recession and that the category in general was performing better than other consumer products sectors.
There was a mixed performance from Beam's brands in 2008. Scotch whisky brand Laphroaig grew in mid-single digits and "as fast as its supply will allow", according to Fortune's chief financial officer Craig Omtvedt. Courvoisier Cognac reported low single-digit volume growth on a global basis, with market share gain in the US.
Bourbon flagship Jim Beam suffered in Australia and the US, but expanded in double-digits in Germany, the UK and China. Sauza Tequila volumes fell for the year, although Maker's Mark volumes rose in high single-digits.
Bill Newlands, president of Beam's US business, told just-drinks yesterday that the firm has noted consumers switching to the off-trade and also trading down a price point. He said that Beam would "not radically change our approach", however.
In the group's outlook, Carbonari said that volume growth of 1% in spirits in 2009 would be at the high end of its expectations. He said that he expected improved profitability, but that foriegn currency rates would cost Beam around US35m-40m.
A raft of recent reports looking at the US spirits market have suggested that, while times are tough in the country, they could be a whole lot worse. Chris Mercer takes a closer look at the numbers t...
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