just On Call - Southern Comfort seeing "dramatic" recovery - Brown-Forman

By | 13 December 2012

Brown-Forman is reporting an on-going recovery for Southern Comfort

Brown-Forman is reporting an on-going recovery for Southern Comfort

Southern Comfort is bouncing back for Brown-Forman with a “dramatic improvement” in US sales, the company has said. 

During an investors' presentation yesterday (12 December), the company's North America president admitted that the liqueur brand, which accounts for 8% of Brown-Forman's volumes but is its second most profitable brand after Jack Daniel’s, had suffered “several years of decline”.

But, a new TV campaign, entitled Whatever's Comfortable, appears to have stopped the rot.

Keyes said the campaign had captured the attention of US spirits consumers. “We believe that the consistent delivery of our message with 36 weeks of television advertising will drive unaided brand awareness and that this schedule, coupled with the new creative and with exciting new line extensions like Bold Black Cherry will continue to grow the brand,” he added. 

Keyes flagged that Southern Comfort brands are up in the firm's most recent quarter by 3.2% in value terms.

The group issued its H1 results last week, which revealed a 16% rise in net profits for the six-month period.

Nomura analyst Ian Schackleton noted yesterday's event had a “positive tone” as US spirits are on the up and Brown-Forman is “heavily exposed to the sweet spot of American whiskey”. 

"The US and Jack Daniel's brand remain key to the company," he noted. The US accounts for 35% of the global value for spirits and Brown-Forman has the most premium portfolio of the top five spirits companies, with around 75% of sales coming from a US$15+-per-bottle price point.

On Jack Daniel's, Shackleton said it could overtake Bacardi in global retail value in 2012 to become the third largest spirits brand behind DIago's Smirnoff and Johnnie Walker. “However, the average price point for Jack Daniel’s is higher than for these brands,” he added. 

Internationally, Russia is performing particularly well for the company, Shackleton noted. Net sales are up by nearly 30% in 2012 with the company holding a 15% share of the country's premium spirits market, through Jack Daniel's and Finlandia vodka.

Expert analysis

Brown-Forman Corporation (BF.B) - Financial and Strategic SWOT Analysis Review

Brown-Forman Corporation (Brown-Forman) is one of the largest American-owned spirits and wine companies in the world. The company is engaged in the manufacture, bottling, import, export, and marketing of a wide variety of alcoholic beverage brands. It offers a wide range of whiskies, vodka, gin, liqueur, tequila, and champagne through a portfolio of more than 30 brands, including Jack Daniel's, Southern Comfort, Canadian Mist, Fetzer, and Korbel. The company offers its products in more than 135 countries across the world. It's largest operations are in the United States, Poland, Australia, the United Kingdom, Mexico, and Germany. The company is headquartered in Kentucky, the US.

Sectors: Spirits

Companies: Brown-Forman, Southern Comfort, Jack Daniel’s, Bacardi, Smirnoff, Johnnie Walker, Finlandia

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