Brown-Formans CEO Paul Varga was addressing analysts in New York this week

Brown-Forman's CEO Paul Varga was addressing analysts in New York this week

The head of Brown-Forman has hinted at the prospect of the company building its own Scotch or Irish whisk(e)y production facility as an alternative to an acquisition in either category.

During an investors' conference in New York this week, Paul Varga, CEO of the Jack Daniel's owner, was quizzed about the idea of building a distillery in either Ireland or Scotland, as potential acquisition targets in the two whisk(e)y categories are limited. 

“That's absolutely an avenue, if you don't have availability through acquisition, and that is an obvious arena for investment for the company,” he told the audience. “It fits pretty nicely, quite honestly, with Brown-Forman, where we'll have a longer horizon.”

He added: "The things that we would find to be attractive aren't available.”

Earlier, Varga admitted that the global whisk(e)y opportunity is “attractive” to the company. “We are going to look at the wisest way to enter those attractive markets without taking our focus off the primary focus, which is American whiskey,” he said.

On potential M&A in other categories, Jill Jones, the group's North & Latin America president, responded to a question on whether the firm would consider making a move for Tito's Handmade Vodka. “We would not carte blanche disregard a whole category,” she said.

“Tito's is resonating with consumers ... the hand-crafted message is bucking the trends in the rest of vodka. If we think it could do well in our hands we would look at it, but it would have to meet our typical criteria ... the type of brand that resonates with consumers, that is premium priced and can grow.” 

Last week, Varga, whose company owns the Finlandia vodka brand, said that the growth of emerging vodka brands had created a "brutally competitive" vodka category in the US.

Meanwhile, on the issue of age-statements for whisk(e)y, Varga argued that American brands now have an advantage over Scotch because they have not used age as a defining metric for quality. “I think we are benefiting from that hugely today,” he said.

“We can adjust on cycles of ageing that are more like four to seven to eight (years) whereas the people that are playing at our price point in Scotch often built their brands on the basis of 12 years of age and higher, so they have less agility. 

“You are starting to notice a lot of age statements coming off super-premium brands," Varga continued. "As a result, they are moving a little bit more towards the American style of maturation and marketing.”

Last week, Brown-Forman reported a slight rise in first-half net profits and sales