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As Beam Moves Toward Pure Play Status, Rivals Will Assess Strengths and Weaknesses

April 27, 2011

With Fortune Brands receiving shareholder approval for its spinoff plan yesterday, the company now is poised to reinvent itself as a pure play spirits company in the second half of this year. As the process unfolds, Beam’s global rivals will be assessing its various strengths and weaknesses.

The newly named Beam Inc will have a spirits portfolio with some gaps. Most notably, it lacks a super-premium vodka of significant scale (Beam’s Effen brand sells less than 50,000 cases annually) and no major Scotch brand, with the exception of Teacher’s, whose main strengths are in India and other developing markets. The company is strong in Tequila and Bourbon, with Maker’s Mark being the fastest-growing Bourbon in the U.S. market, posting a 13.7% advance last year to 915,000 cases.

Importantly, Beam has a global distribution network largely unfettered by partnerships. The company now controls around 75% of its global distribution operations, up from less than 10% a few years ago. Beam’s primary distribution partnership is with the Edrington Group, as it works with Edrington in 24 markets worldwide. Thanks largely to the Teacher’s brand, Beam is strong in emerging markets—most notably India, where Teacher’s is the leading Scotch at more than 300,000 cases.

But clear gaps remain in the Beam portfolio, with its main liqueur brand, De Kuyper, owned by Beam in the U.S. only, and a lack of vodkas and other liqueur brands. Its recently acquired RTD brand Skinnygirl Margarita has shown promise, but isn’t yet a major brand, selling 89,000 cases in 2010. It’s therefore likely that the new stand-alone Beam will have two options: either acquire more brands to broaden its portfolio or become an acquisition target itself.

Beam Inc – Leading Distilled Spirit Brands Worldwide
(millions of nine-liter cases)
Percent Change3
Brand1 Type 2008 2009 2010 2008-2009 2009-2010
Jim Beam Bourbon 5.16 5.07 5.25 -1.8% 3.6%
Sauza Tequila 3.13 2.68 3.10 -14.4% 15.8%
DeKuyper Cordials 2.78 2.58 2.48 -7.2% -3.7%
Canadian Club Canadian Whisky 1.96 1.91 1.92 -2.5% 0.5%
Teacher’s Scotch Whisky 1.96 1.74 1.89 -11.5% 8.6%
Courvoisier Cognac 1.19 1.03 1.20 -13.2% 16.1%
DYC Spanish Whisky 1.22 1.19 1.17 -2.2% -1.9%
Kamchatka Vodka 0.95 1.00 1.05 4.3% 5.8%
Maker’s Mark Bourbon 0.84 0.88 1.03 5.8% 16.8%
Windsor Supreme Canadian Whisky 0.99 1.01 1.01 2.1% -0.1%
Larios Gin 1.04 0.97 0.99 -6.7% 1.7%
Total Leading Brands2 21.22 20.06 21.09 -5.5% 5.2%

1 excludes RTDs

2 addition of columns may not agree because of rounding.

3 based on unrounded data.

Source: IMPACT DATABANK

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