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Interview With Bill Newlands, President, North America, Beam Global

May 6, 2011

As Fortune Brands prepares to divest its golf and home products businesses and focus solely on spirits, Beam Global Spirits & Wine is seeing some of its best results in recent memory, including a 17% jump in net sales to $673 million during 2011’s first quarter. Shanken News Daily recently caught up with Beam’s North American president Bill Newlands to get an update on what’s driving growth for the largest U.S.-owned spirits company.

SND: How are conditions in the U.S. spirits market shaping up so far in 2011?

NEWLANDS: Overall I’d say the marketplace is not yet strong, but it’s strengthening. It’s a two-fold scenario. First, we’re starting to see some improvement in the on-premise. Last year that arena was down, but most projections have it rising by a point or two this year. And second, we’re beginning to see some premiumization again, which certainly didn’t occur during the worst of the economic downturn.

SND: Within those trends, which Beam brands are performing best?

NEWLANDS: Our business is pretty aggressively outperforming the industry. If you look at Nielsen, our dollar sales grew 8.7% against industry growth of 3.3% in the most recent 13-week period. That reflects growth across a whole series of categories. Our Bourbon business is on fire, whether it be Jim Beam, Red Stag, Maker’s Mark or Knob Creek. Each of those is doing very well. The second area is the flavor component, beginning with Red Stag. In vodka, we just introduced Effen Cucumber, as well as our Pucker vodka line, which is purely designed around flavors. Flavors are usually add-ons, but we’ve introduced this dedicated line to go right after the market. Then there is Skinnygirl, which we recently acquired. That brand has a life of its own in a quite positive way. We’ll be adding a White Sangria to Skinnygirl early this summer, and we think the platform has ample room to be extended even further.

SND: Last year you raised the marketing spend quite aggressively. Is that continuing this year?

NEWLANDS: We’re budgeting double-digit growth in our spend again this year, across a number of brands. Our new Jim Beam “Bold Choice” campaign that rolled out a month ago is certainly getting a piece of that, as is Red Stag. We’re doing the first-ever TV spots for Maker’s Mark starting this May. Hornitos Tequila will get TV time again this year after its television debut last year. Our relationships with both ESPN and Kid Rock, which have been tremendous for us in our Bourbon sector, are continuing. And of course we’ll support both the Skinnygirl and Pucker launches. So you’ll see a pretty significant double-digit increase in our total advertising spend this year.

SND: How has your new distributor-oriented sales model worked out in the early going?

NEWLANDS: More than anything, it has improved our communication through our sales channels and put us closer to our customer. We now have a unified approach to selling, no matter what the market. That’s been highly beneficial. It has allowed us to ensure that our goals and our distributors’ goals are the same, with our performance-based contract layout. One logistical problem in this business is that you might have the same distributor in Florida and California, but with a geographically-aligned sales structure, you might not communicate the same things across those markets. Our restructuring has aligned our message all the way through to the consumer.

SND: Taking into account your other geographical responsibilities, how are Beam’s prospects in Canada and Mexico?

NEWLANDS: Mexico is an important market for us largely because of Tequila, our second-biggest category after Bourbon. It seems to be coming along. There’s a lot of growth in whisk(e)y, which for us plays very nicely, and it appears there’s been some stabilization of the Tequila business as well. So we view Mexico as an opportunity market, and we’re investing in it appropriately. Canada has been resilient—probably better all the way along than the U.S. economy. We’re doing many of the same things there that we’re doing in the U.S. as far as innovation. Then there’s Canadian Club, which is really the flagship there. Canada did very nicely in the first quarter for us after finishing strongly last year. We think that will continue for the rest of this year.

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