Brown-Forman to Sell Southern Comfort, Tuaca Brands for $543.5 Million -- 2nd Update
2016年1月15日 - 2:09AM
Dow Jones News
By Tripp Mickle
Brown-Forman Corp. said Thursday it agreed to sell its Southern
Comfort and Tuaca liquor brands for $543.5 million to Sazerac
Co.
The deal comes amid a prolonged slump for Southern Comfort. The
sweet, whiskey-flavored liquor has struggled as bigger whiskey
brands have added flavors and pushed into its category with
products such as Brown-Forman's Jack Daniel's Tennessee Honey and
Diageo PLC's Crown Royal Regal Apple.
Southern Comfort was also hurt by Sazerac's Fireball Cinnamon
Whisky, which has unseated it as the flavored whiskey shot of
choice at many bars.
Sales volumes of Southern Comfort fell 7% in the six months
ended Oct. 31, after declining 4% to 2.2 million nine-liter cases
in the year ended April 30. By contrast, sales volumes of
Brown-Forman's Jack Daniel's family of brands rose 7% to 21.3
million nine-liter cases for the year.
Brown-Forman, which acquired Southern Comfort in 1979, began
shopping the brand last year. The sale fits into the company's
strategy of divesting challenged brands and noncore brands such as
the wine business it sold in 2007 to focus on Jack Daniel's and
Woodford Reserve, which have grown in recent years behind a surge
in American whiskey sales.
The sale to Sazerac is expected to close March 1. Brown-Forman
said it would provide more details about what it plans to do with
cash generated from the sale during its earnings conference call
later that month.
In acquiring Southern Comfort, privately-held Sazerac is picking
up a well-known global brand as it continues to expand sales of
Fireball, which has become one of the world's fastest-growing
brands. Sales volume for Fireball soared to 4.6 million nine-liter
cases in the U.S. last year from just 100,000 cases in 2010,
according to industry tracker Impact Databank. Sazerac also makes
bourbons such as Buffalo Trace and Eagle Rare.
American whiskey sales have jumped in the U.S. in recent years
as drinkers increasingly choose brown spirits over clear,
flavorless liquor such as vodka. Bourbon and Tennessee whiskey
sales in the U.S. have grown about 7% annually since 2012, and
exports rose to $1.5 billion in 2014 from around $800 million in
2005, according to the Distilled Spirits Council of the United
States.
Brown-Forman tried to shore up Southern Comfort as consumers
shifted to more traditional whiskey and flavored variations of
well-known brands such as Jack Daniel's and Crown Royal. It poured
marketing dollars into Southern Comfort last year even as it looked
for a buyer. It released a video and song "ShottaSoCo" featuring
actor Danny McBride that Brown-Forman Chief Executive Paul Varga
said was a top-10 viral effort, according to Spotify.
"That's evidence that the brand continues to get support and we
continue to try to put our best foot forward in a really
competitive environment for it," Mr. Varga said during an earnings
call with analysts in December.
Sazerac President Mark Brown said Brown-Forman had "done an
excellent job of building" the brand. He added, "We are looking
forward to many more years of successful brand building."
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
January 14, 2016 11:54 ET (16:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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