As Beam Inc. Emerges, Potential Suitors Diageo And Pernod Appear Cool To The Idea Of A Bid
September 6, 2011With Beam Inc. set to become a stand-alone spirits company effective October 4, it’s been widely viewed as a potential acquisition target. But in recent days two leading possible bidders—Diageo and Pernod Ricard—have downplayed the idea of acquiring the top U.S.-based spirits firm.
Pernod Ricard chief financial officer Gilles Bogaert told the press in London today that the company is “open to tactical moves that would be consistent with our deleveraging objectives,” such as its recent tie-up with Avión Tequila, but added that “a massive acquisition is not on the short-term agenda.” Beam is valued at around $9 billion, and even flagship brand Jim Beam alone—which would fill a major gap in either the Pernod or Diageo portfolio—would likely be worth billions. Pernod didn’t immediately respond to a request for further comment.
Diageo CEO Paul Walsh admitted last week that his company’s presence in Bourbon—including the George Dickel and Bulleit brands—is “light,” but thus far he too has played down interest in Jim Beam, clearly the biggest target available in the category. A Diageo spokesperson today would only say that the company will continue to look at acquisition opportunities, pursuing targets which “make strong strategic sense for our business and where the valuation is sensible.” Diageo has sat out the two biggest recent spirits deals—the acquisition of Allied Domecq in 2005 (won by Pernod Ricard and Beam) and the purchase of Absolut vodka in 2008 (by Pernod Ricard). The company has been active on the M&A front this year, but the focus has been on emerging markets—including deals for either full control or increased shares of local players in Turkey (Mey Içki), China (Shui Jing Fang) and Vietnam (Halico).
Beam, of course, would make an attractive target for a number of other drinks industry suitors. But the reticence of the top two global drinks players may make it more likely that Beam will remain independent, at least for the near term. Beam certainly seems to be prepared for the challenge, having upped its marketing spend by double digits both this year and last year and posting a 14% increase in sales to span.38 billion in the six months through June.
| Beam Inc. – Leading Distilled Spirit Brands Worldwide (millions of nine-liter cases) |
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| 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% | |
| 1excludes RTDs 2addition of columns may not agree because of rounding. 3based on unrounded data. Source: IMPACT DATABANK |
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Tagged : Beam Global, Beam Inc, Bourbon, Diageo, Jim Beam, Pernod Ricard, spirits
