just On Call - Beam Inc bullish despite Skinnygirl slump
Skinnygirl posted a 23% sales drop in H1
Beam Inc's CEO has blamed bad weather for the abrupt halt to Skinnygirl's “explosive growth” but said new innovations for the brand's burgeoning wine label will help put it back on track.
In an analysts' call today, CEO Matt Shattock said that Skinnygirl suffered from a tough comparison over last year's first half, when sales climbed by 81%, and cold weather throughout the US.
“Because it's an impulse item, it's probably two-to-three times more sensitive than spirits,” he said. “If the weather's not there, we won't get the display.”
Shattock added that Beam “still sees good prospects for it” and said Skinnygirl's wine range, which now accounts for 40% of the brand's sales, will soon add varietals to the three blends available.
“We also have a great partner in (brand founder and TV show host) Bethenny Frankel,” Shattock said. “She'll be coming back to the airwaves with a new daytime talk show in the fall.”
Shattock said Beam's compliance review in India cost the company US$2.2m in the second quarter but that the company has “largely” restored its distribution in the country. Beam launched a probe into its India unit after allegations of possible violations of the US Foreign Corrupt Practices Act. The disruption has affected sales of Teacher's in the country, and in today's H1 results, global sales for the Scotch brand dropped by 17%.
Shattock said Beam expects “one more difficult quarter” in India before operations return to normal.
Meanwhile, Beam CFO Bob Probst said price increases on Beam's premium brown spirits, “particularly premium Bourbon”, will be offset by discounting on “softer” white spirits.
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