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Pinnacle May Become Beam’s Biggest-Volume Brand By Year-End

April 23, 2012

Beam Inc.’s announcement this morning that it will pay $605 million to acquire Pinnacle vodka and Calico Jack rum from White Rock Distilleries has instantly transformed it into a leading vodka player in the U.S.—and Pinnacle also could become Beam’s biggest-volume brand in the U.S. market by year-end, overtaking its flagship Bourbon. Shanken News Daily tweeted news of the deal early today.

Thriving on the dynamic performance of its Whipped dessert-flavor range, Pinnacle sold 2.7 million cases on 93% growth last year, according to Impact Databank. White Rock CEO Paul Coulombe recently told Shanken News Daily he expects “at least 50% growth” on the brand for 2012, and that prediction was made before Pinnacle gained the scale advantages of Beam’s 18-million-case U.S. portfolio. Growth of 50% this year would bring Pinnacle to just over 4 million cases, well ahead of Jim Beam Bourbon, which rose 4% to 3.4 million cases in 2011. The deal comes just three months after Beam became a major player in the fast-rising Irish whiskey category when it acquired Cooley Distillery for $95 million.

Beam CEO Matt Shattock said the company will “substantially increase brand investment” in Pinnacle, which unveiled its first TV ads this year behind a $7-million 2012 ad budget under White Rock. Since losing the U.S. joint distribution (with V&S Group) of Absolut in 2008 when Pernod Ricard bought that brand, Beam’s presence in the U.S. market’s top spirits category has been limited to Gilbey’s, Pucker, Effen, Vox and, recently, Skinnygirl vodkas (the company revealed in recent days it would transition its low-priced Kamchatka and Wolfschmidt vodka brands into liqueurs). On a pro forma basis, including Pinnacle and Calico Jack, Impact Databank estimates Beam’s U.S. volume is now above 22 million cases.

Meanwhile, White Rock has achieved its second blockbuster vodka sale in five years. In 2007, it divested Three Olives vodka to Proximo Spirits for an undisclosed sum. Following that deal, White Rock quickly reloaded its vodka stable with Pinnacle. It remains to be seen if the Maine-based brand-builder can again start from scratch now that it’s sold off its top two brands (Calico Jack was up 16% to 400,000 cases in 2011). One possible contender to replace Pinnacle is White Rock’s newer Epic vodka brand, released last year and priced a few dollars less per bottle, roughly even with Heaven Hill’s Burnett’s in the $10 segment. Epic already has Cake, Gummy, Whipped and Orange Whipped flavors. “We think we have more expertise in vodka than elsewhere, and it’s also where most of the growth lies,” Coulombe said.

Besides Epic, the White Rock stable also includes Raynal brandy (-24% to 65,000 cases in 2011), McClelland’s single malt Scotch whisky (+2% to 55,000 cases), Tenure vodka (-14% to 30,000 cases), Baja Cream liqueur (-14% to 30,000 cases), El Charro Tequila (+36% to 30,000 cases) and Blackmaker liqueur (+50% to 15,000 cases).


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