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Constellation Deal For Brown-Forman Would Create 20M-Case U.S. Spirits Player

May 24, 2017

Yesterday, news broke that Constellation may be lining up its next acquisition target, Louisville, Kentucky-based Brown-Forman. Such a deal remains highly uncertain, given that Brown-Forman’s fifth-generation controlling shareholder, the Brown family, has long preferred to remain independent. But the prospect of a blockbuster tie-up set the drinks industry abuzz with talk of its potential impact.

Constellation, already a juggernaut in both beer and wine—with revenues of $7.3 billion annually—would instantly become one of the world’s leading whiskey companies if it were to corral Brown-Forman, which has sales of $4 billion and is known for the Jack Daniel’s, Woodford Reserve, Early Times and Old Forester brands among others. While Constellation currently owns Black Velvet Canadian whisky and recently acquired craft player High West, the addition of Brown-Forman’s whiskey stable would be a game-changer. Jack Daniel’s alone would add 5 million cases of premium American whiskey volume to Constellation’s ledger in the U.S. market, while Woodford, at 400,000 cases, would give it critical mass in the fast-rising super-premium segment.

Constellation would also gain more than 1 million cases of flavored whiskey business from Jack Daniel’s offshoots Tennessee Honey and Tennessee Fire, as well as a higher profile in Tequila, where it already owns the small but growing Casa Noble brand. Brown-Forman’s El Jimador and Herradura Tequila labels are both in double-digit growth, rising 17% to 520,000 cases and 13% to 160,000 cases last year, respectively, according to Impact Databank.

Such fast-rising brands would fit well alongside Constellation’s existing spirits range, which is led by Svedka vodka at 4.3 million cases, and Black Velvet and Paul Masson brandy at 2 million cases each. Altogether, a Brown-Forman/Constellation combination would create a company with U.S. spirits volume of 20.1 million cases, which would rank fourth overall in the market behind only Diageo, Sazerac and Beam Suntory. —Daniel Marsteller

Brand	Origin/Type	2015	2016	Percent Change¹
Brown-Forman’s Leading Spirit Brands in the U.S. (millions of nine-liter case depletions)
Jack Daniel’s²	Tennessee Whiskey	5.06	5.18	2.3%
Canadian Mist	Canadian Whisky	1.36	1.22	-9.8%
Jack Daniel’s Tennessee Honey	Flavored Whiskey	0.68	0.69	1.0%
Early Times	Kentucky Whisky	0.52	0.52	-0.2%
El Jimador	Tequila	0.44	0.52	16.7%
Woodford Reserve	Bourbon	0.34	0.40	17.6%
Gentleman Jack	Tennessee Whiskey	0.35	0.36	3.4%
Total Leading Brands		8.74	8.88	1.6%
Other Spirits		2.72	2.70	-0.7%
Total Brown-Forman³		11.46	11.58	1.0%
1 based on unrounded data 2 excludes Single Barrel 3 addition of columns may not agree due to rounding Source: IMPACT DATABANK

Brand	Origin/Type	2015	2016	Percent Change¹
Constellation’s Leading Spirit Brands in the U.S. (millions of nine-liter case depletions)
Svedka²	Imported Vodka	4.20	4.32	2.9%
Black Velvet	Canadian Whisky	2.03	2.00	-1.2%
Paul Masson Grande Amber²	American Brandy	1.82	2.00	9.9%
Total Leading Brands		8.05	8.32	3.4%
Other Spirits		0.26	0.27	4.6%
Total Constellation		8.31	8.59	3.5%
1 based on unrounded data 2 includes flavors Source: IMPACT DATABANK