Fortune Brands is increasing advertising spend behind its major spirits brands, after reporting a pick-up in sales in the third quarter of 2009.

"Fortune Brands continues to benefit from the stability of its spirits business," said group CEO and chairman Bruce Carbonari at the firm's third quarter results conference call today (23 October).

Third quarter declines in Fortune's golf and home businesses, albeit narrower than earlier in the year, saw the US-based group report net sales down 11% to US$1.72bn in the three months to the end of September.

But, spirits sales were flat for the quarter (up 0.1%), against the same period of last year, reducing year-to-date sales decline for the division to 2%.

The result for Fortune's drinks business, Beam Global Spirits & Wine, compares favourably to third quarter sales falls for industry heavyweights Pernod Ricard and Diageo. It will also increase a budding sense of optimism in the drinks sector that the effects of the economic downturn are subsiding.

Fortune is increasing advertising spend behind key Beam brands in the fourth quarter.

"We're ramping up brand investment for fourth quarter for the holiday season and we're going to continue that for 2010," said Fortune's chief financial officer, Craig Omtvedt.

When questioned further by one analyst, Carbonari said: "In the first half of the year we had underspent against where we had originally targeted in the plan. This is really bringing us back to where we had targeted to be for the full-year."

He added that some of the spend would inevitably be used to fend off pricing pressure in some categories. "We're responding to that as well," he said.

Among the advertising campaigns planned, Beam Global has launched a series of high-profile ads for its Cruzan Rum brand, while new Jim Beam Bourbon began on major US television networks this week.

There have been differing performances for the group's range of brands in the first nine months of 2009.

Year-to-date case volumes for Jim Beam rose 1% in the US, turning positive in the third quarter, partly thanks to popularity of the newly launched black cherry-infused version of the brand, Red Stag.   

Maker's Mark Bourbon has shown strong international growth, particularly in Australia, off a small base, the company said, while Cruzan Rum volumes are up by double digits. High-end Sauza Hornitos Tequila also grew in the US.

Among others, Courvoisier Cognac volume sales have slipped in double digits this year, reflecting a tough Cognac market in the US and UK, while "soft" volumes of Laphroaig and Teacher's Scotch whiskies in the UK offset growth for the brands internationally - the US for Laphroaig and Brazil and India for Teacher's. Canadian Club volumes are "off slightly", against the same nine months of last year.

Omtvedt reaffirmed that Beam Global expects flat operating profits for the full-year, excluding one-time costs and the effects in 2008 of the Australian tax hike on ready-to-drink beverages.

He also reaffirmed that Beam expects a $30m full-year, one-time charge on distribution changes, such as the group's reorganistion following the break-up of the Maxxium partnership in April. The business also expects to see foreign exchange charges of between $10m and $15m for the year, due to the weakening US$.

Commenting briefly on fourth quarter-to-date performance, Omtvedt indicated that distributor destocking in the US has become less of an issue: "we're comping normally against last year's fourth quarter."

Earlier this week, Fortune announced that it would realign the Beam business into six units, three in the US and three international divisions.

just-drinks has since confirmed that the group plans to cut jobs at Beam Global, as part of the restructuring move.

Overall, Carbonari said that Fortune would look to cut more costs, enhance its supply chain and improve cashflow over the coming months.

Fortune's third quarter net profits plunged 63% to $125m, partly as a result of a one-off gain in the same period of last year, as well as restructuring costs. Operating profits fell by 20% in the quarter, to $204.5m, but by only 2% for the nine months, to $458m.

However, Fortune predicted full-year earnings per share are likely to be between US$2.1 and $2.3, against a previous range of $2 to $2.3, thanks to stabilisation in the US house-building market.

Fortune's shares had risen by $1.68 to $44.81 by 11:30am (Eastern Time) on the New York Stock Exchange today.