Fortune Brands to invest in liquor business

AP News
Posted: Apr 13, 2011 12:43 PM
Fortune Brands to invest in liquor business

A slimmed-down Fortune Brands Inc. plans to pour money into marketing its liquor brands like Jim Beam and Maker's Mark as it prepares to become a standalone spirits company.

A top executive said it is also keeping an eye out for possible acquisitions as the conglomerate sheds units that make Titleist golf balls and Moen faucets, a top executive said.

The world's fourth-largest premium spirits business is spinning off its home and security business, which also includes MasterBrand cabinets, to shareholders. Fortune's golf business will be either spun off or sold.

That leaves its spirits business, which generated 2010 revenue of $2.7 billion and also includes brands such as Canadian Club whiskey and Sauza tequila.

"We will be set up as a stand-alone business that has got the financial strength, the cash flow and the balance sheet to ensure we keep investing appropriately and seizing opportunities as they come our way," said Matthew J. Shattock, president and CEO of Beam Global Spirits & Wine, the spirits subsidiary of Deerfield, Ill.-based Fortune Brands.

Fortune Brands expects to shed the two businesses by late this year, he said.

The commitment to its spirits business comes amid signs of a rebound in U.S. liquor sales at bars and restaurants, Shattock said. That crucial segment, known in the industry as on-premise, took a big hit during the recession, as fewer people ventured out to drink.

"It's certainly not back to where it was pre-recession, but there are enough signs and enough anecdotal evidence that the on-premise is making its way back," Shattock said.

Fortune's bourbon segment, led by Jim Beam and Maker's Mark, will be at the forefront of the company's increased marketing and product development, Shattock said in a phone interview.

"Bourbon sits front and center as being the most important category we operate in, and the one that will be the first core for our investment going forward," he said.

Maker's Mark, the premium bourbon recognizable by its red wax seal, is in the midst of an expansion at its picturesque distillery near Loretto in central Kentucky.

The expansion, costing tens of millions of dollars, will increase production by nearly 50 percent and significantly boost bottling capacity and warehouse storage. The brand surpassed 1 million cases bottled for the first time in 2010.

Rob Samuels, who is taking the helm of the brand started by his grandparents in the 1950s, projects near double-digit yearly growth for Maker's Mark in the coming decade. He said the brand could surpass 2 million cases late this decade.

Samuels is taking charge of the brand with the retirement this week of his father, Bill Samuels Jr., who oversaw Maker's Mark for 35 years.

Last year, Maker's Mark introduced its first new product _ Maker's 46 _ a close cousin of the original but with a different aging method in the final weeks to give the whiskey a distinct taste.

Jim Beam soon will roll out a new high-end product called Jim Beam Devil's Cut. It features liquid whiskey extracted from the aging-barrel wood itself that is blended with six-year-old Jim Beam bourbon.

Investing in its existing brands remains the top priority, but the company is keeping an eye on possible acquisitions, Shattock said.

"If we see incremental opportunities which make sense, we will seize upon those," he said.

Fortune Brands recently acquired the Skinnygirl spirits brand of low-calorie, pre-mixed cocktails.

Fortune Brands added 11 of its top 15 brands in the past six years, since its acquisition of the Allied Domecq brands, which doubled Fortune's size.

In that time, international sales have gone from accounting for 25 percent to about 45 percent of spirits revenue. Maker's and Courvoisier Cognac were among the brands purchased from Allied.

"We still believe we have lots of opportunity to grow our brands and our markets around the world," Shattock said.