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cowdery
12-08-2010, 05:23
Fortune Brands, owner of Jim Beam, Maker's Mark, Knob Creek, Booker's, Baker's, Basil Hayden's, Old Grand-Dad, and Old Crow, announced today that it is getting out of all non-beverage businesses. It will spin-off its home and security products businesses (Moen faucets, MasterCraft cabinets, Master Lock security products, etc.) as a new, independent company, and either sell or spin-off its golf products businesses (Titleist golf balls, etc.).

This has been approved by the board in principle but they still have to figure out exactly how they're going to do it, so the actual deed is months away, at least.

Since Beam Global is Fortune's only distilled spirits business, one of those names probably will go away and it probably won't be Fortune.

More here (http://chuckcowdery.blogspot.com/2010/12/owner-of-jim-beam-knob-creek-and-makers.html).

jmpyle
12-08-2010, 14:44
Kind of sad that the Beam Global name will likely dissapear.

ethangsmith
12-08-2010, 15:20
To me, this seems like good news. Now Fortune should be able to focus solely on their liquor and spirits. I wonder what changes, if any, will occur with Beam.

White Dog
12-08-2010, 22:02
To me, this means nothing. Basil Hayden will still be an 80proof. Yawn.

OscarV
12-09-2010, 00:15
To me this says that the people that are in the bourbon business have a very optimistic view for the future of bourbon.
So much so they said let's ditch all the other stuff, bourbon is all we need.

p_elliott
12-09-2010, 08:18
Or they think the economy is in the shitter and those other enterprises will go broke and everyone will just become a bunch of helpless drunks. :grin:

dean_martin
12-09-2010, 14:48
"Insiders suggest Diageo could be interested in cherry-picking Fortune's bourbons, including Maker's Mark, to expand its bourbon presence in the US. But the UK based company is unlikely to be able to bid for the whole liquor business because of competition issues that take into account distribution agreements with LVMH Moet Hennessy on cognac and with Casa Cuervo for Jose Cuervo tequila.

Because of that, rivals such as Pernod Ricard or Davide Campari-Milano would have to be interested in joining an auction for the remaining assets."

From The Telegraph (UK) but there was mention of this in the business section of my local paper this morning. It appears that the break-up arises from William Ackman described as an "activist investor" who has built up an 11% stake. He reportedly stands to make a $260 million profit (as a result of the break-up, I'm assuming, but it's not clear).

Josh
12-09-2010, 14:56
Competitive issues never stopped Diageo before...

But seriously, I'm glad they're getting rid of their balls. It's about time.

cowdery
12-09-2010, 15:49
Plainly, the Telegraph didn't read the news release. The spirits business isn't for sale, nor is the home and security business. The golf business might be.

Ackerman, as the largest shareholder, could reject the actual separation plan once it's submitted but nothing is pointing to that. This appears to be exactly what he wanted Fortune to do. Regardless, it takes Fortune out of play for the time being.

The question of Diageo wanting to get back into the American whiskey business is a completely separate matter, albeit an interesting one. Their timing getting out of that business was as bad as it could possibly have been so I imagine they'll be very careful getting back in. They've been tinkering at the margins but nothing serious.

rocky480
12-09-2010, 15:53
Whether it's spin or not, I have no idea, but Fortune's Board claimed that they already were working on plans to break up the company.

It's not surprising to see one of the last of the conglomerates being broken up in this day and age. The unfortunate thing is the uncertain future that I think the Beam bourbon business faces as all indications both here and overseas are that Diageo will figure out a way to buy the new Fortune Brands, or at least the Beam bourbon business. While I'm sure there will always be JBW, I wonder what Diageo will do with the OGD lines and whether the recent movements towards producing more unique products like the Knob Creek SB will be continued?

cowdery
12-09-2010, 20:10
I suspect Ackerman is more in the middle of this than anyone dare admit, but it doesn't matter. The powers that be at Fortune had to jetison something so they dumped everything except the liquor business. That tells you all you need to know about where this is going.

White Dog
12-10-2010, 07:23
Whether it's spin or not, I have no idea, but Fortune's Board claimed that they already were working on plans to break up the company.

It's not surprising to see one of the last of the conglomerates being broken up in this day and age. The unfortunate thing is the uncertain future that I think the Beam bourbon business faces as all indications both here and overseas are that Diageo will figure out a way to buy the new Fortune Brands, or at least the Beam bourbon business. While I'm sure there will always be JBW, I wonder what Diageo will do with the OGD lines and whether the recent movements towards producing more unique products like the Knob Creek SB will be continued?

Yikes. If that happens I can hear my wife now. "What are gonna do with another friggin' case of OGD 114?!?"

bvscfanatic
12-12-2010, 22:07
If you ask me, Jim Beam needs to get out of the bourbon business.

Special Reserve
12-13-2010, 05:13
If you ask me, Jim Beam needs to get out of the bourbon business.

Let me see, Jim Beam White or Pro V1, which is more highly regarded?

smokinjoe
12-13-2010, 05:31
If you ask me, Jim Beam needs to get out of the bourbon business.

I'm curious. Why would you say that?

rocky480
12-13-2010, 11:52
If you ask me, Jim Beam needs to get out of the bourbon business.

Regardless of one's opinion about the core products from Beam Global, the spirits business is the crown jewel of that company accounting for most of the profitability of the entire corporation. For 2009, the entire spirits business generated an operating profit of approximately $485,000,000 vs. $25,000,000 from golf and $87,000,000 from home and security. I may not drink a lot of JBW, but there are plenty of people who do.

bvscfanatic
12-13-2010, 16:44
I'm curious. Why would you say that?

Oh, it was tongue in cheek for the most part. I don't want to ruffle anybody's feathers. I just don't like their bourbon. That's all. I've tried the white and tried the black. Don't like 'em. That's all. I do like OGD, which is under their umbrella. But that's about as far as it goes. Hell, McDonalds is popular, but I don't eat there. I've eaten in a McDonalds once in my whole life, and had chicken McNuggets at that. Just not my kind of food. OR bourbon.

White Dog
12-14-2010, 12:54
Is anyone from Beam/Fortune on this site and reading this? Please consider the following proposal.

Basil Hayden's is an 8yr OGD mashbill at 80 proof.

Most people on this board swear by OGDBiB and 114, regardless of how we may feel about other Beam products. Obviously you have some 8yr stocks, and possibly older.

PLEASE release a Basil Hayden, or OGD, at 8 years, and BARREL STRENGTH. You sell Basil Hayden for around $35ish across the country. I would gladly pay $50 dollars for an OGD 8y at full proof. Make it a 10yr and I'll really get giddy.

You have the customer base. Make a small run. You know you'll sell out. What are you afraid of? Please do this!

OscarV
12-14-2010, 13:01
I have a leaky kitchen faucet, should I replace it with the cheap Beam faucet or go with the delux over-priced Buffalo Trace faucet?

CorvallisCracker
12-14-2010, 13:32
I have a leaky kitchen faucet, should I replace it with the cheap Beam faucet or go with the delux over-priced Buffalo Trace faucet?

Depends on how much longer you plan to live there.

Josh
12-14-2010, 13:58
Is anyone from Beam/Fortune on this site and reading this? Please consider the following proposal.
PLEASE release a Basil Hayden, or OGD, at 8 years, and BARREL STRENGTH. You sell Basil Hayden for around $35ish across the country. I would gladly pay $50 dollars for an OGD 8y at full proof. Make it a 10yr and I'll really get giddy.

You have the customer base. Make a small run. You know you'll sell out. What are you afraid of? Please do this!

I mentioned this on another thread a while back, but according to Jacko's 1987 World Guide to Whisky, OGD 114 was, at the time of the Beam acquisition of ND, 10 y/o and barrel proof.

ThomasH
12-14-2010, 14:21
I certainly don't want to see Beam out of the bourbon business. Beam black is one of my favorites and OGD is no slouch either.Knob Creek isn't one of my faves but I still plan on getting a bottle of the barrel strength when it comes next year. Life is good!

Thomas

White Dog
12-14-2010, 15:51
I have a leaky kitchen faucet, should I replace it with the cheap Beam faucet or go with the delux over-priced Buffalo Trace faucet?

Weller SR, Antique, and 12yr are some of the best values in Bourbon IMHO.

White Dog
12-14-2010, 16:02
I have a leaky kitchen faucet, should I replace it with the cheap Beam faucet or go with the delux over-priced Buffalo Trace faucet?

You want over-priced? How about Ri1 and Basil Hayden.

White Dog
12-14-2010, 16:04
I mentioned this on another thread a while back, but according to Jacko's 1987 World Guide to Whisky, OGD 114 was, at the time of the Beam acquisition of ND, 10 y/o and barrel proof.

It sure ain't a 10yr anymore. :hot:

cowdery
12-14-2010, 22:03
I hate to contradict the Revered One, but I was working on the Old Grand-Dad business at the time of the Beam acquisition of ND, and OGD 114 was not 10 y/o and barrel proof. There may have been a period, during the glut, when it was briefly or occasionally a 10 just because they were trying to reduce inventory and everything was aging faster than they could sell it, so Jackson may have been right, but that was a temporary aberration, not the brand profile.

But I love the idea of a 10-year-old, barrel proof OGD/BH, although I don't think that will likely be a top corporate priority of the new all-booze Fortune.

One irony of this is that Fortune started life as a tobacco company and is now a pure play spirits company. So much for diversifying out of the vice business.

squire
12-14-2010, 23:18
Profit is a great motivator, I suspect they will bottle what sells.

DeanSheen
12-15-2010, 06:46
Profit is a great motivator, I suspect they will bottle what sells.

Are you trying to say they will bottle what will sell?

How about "They may bottle what may sell once they identify demand". That is what I think we are shooting for here with the requests for new expressions.

Josh
12-15-2010, 08:27
I hate to contradict the Revered One, but I was working on the Old Grand-Dad business at the time of the Beam acquisition of ND, and OGD 114 was not 10 y/o and barrel proof. There may have been a period, during the glut, when it was briefly or occasionally a 10 just because they were trying to reduce inventory and everything was aging faster than they could sell it, so Jackson may have been right, but that was a temporary aberration, not the brand profile.

I will admit that I was pretty skeptical when I read that paragraph.

But to give the man his due, this is from page 158, in the Kentucky- Frankfort section:

Though Old Grand-Dad also avoids age statements, its regular whiskey is usually about six years old and is sold at 86 proof. There are further versions at 8 years at 100; and 10 years at 114, which is how it comes out of the barrel. The company [National Distillers] is very proud of its "barrel proof" whiskey, which comes from selected batches. It is a very smooth and flavourful after-dinner whiskey.


But I love the idea of a 10-year-old, barrel proof OGD/BH, although I don't think that will likely be a top corporate priority of the new all-booze Fortune.

Me three! It would be a nice companion to the new barrel proof KC.

squire
12-16-2010, 00:01
Dean, I eschew grammatical correctness but generally get my point across. The producers will provide whatever sells.

DeanSheen
12-16-2010, 07:14
Dean, I eschew grammatical correctness but generally get my point across. The producers will provide whatever sells.

Fair enough if you believe supply side economics is always efficient.

I don't.

squire
12-16-2010, 16:32
Robert, I have less interest in economics than I do in grammar, I just believe whisky providers, from distillers to retailers, are in the business of making money.

Halifax
12-17-2010, 10:17
Well now that they're going to focus on their bourbon business perhaps they'll finally spend some money for a website for Old Grand Dad. I am amazed that in this day and time companies have not embraced the internet to promote some of their best selling products. Seems rather asinine.

Josh
10-25-2011, 09:47
The new rumor being passed around is that Pernod-Ricard may be interested in buying Beam. Since they just got OUT of the American Whiskey business (at least the business of distilling it) when they sold Wild Turkey, that makes even less sense to me than Diageo.

Completely speculative Bloomberg article here: http://www.businessweek.com/news/2011-10-24/jim-beam-inviting-biggest-liquor-takeover-since-2005-real-m-a.html

sku
10-25-2011, 10:10
The new rumor being passed around is that Pernod-Ricard may be interested in buying Beam. Since they just got OUT of the American Whiskey business (at least the business of distilling it) when they sold Wild Turkey, that makes even less sense to me than Diageo.

Completely speculative Bloomberg article here: http://www.businessweek.com/news/2011-10-24/jim-beam-inviting-biggest-liquor-takeover-since-2005-real-m-a.html

My recollection is that Pernod's sale of WT was about financing their purchase of Absolut. If they now have stabalized and paid that off, they may well be in the position to go back into bourbon, and Beam is a whole different animal than the measley WT distillery. Whether they have the capital to do it, I have no idea.

p_elliott
10-25-2011, 10:15
I don't know if they are getting completely out of the faucet business Joe (fishnbowljoe) claims they turn his back faucet on high every time he drinks JBW.

Josh
10-25-2011, 10:28
The article does raise a possibility that makes more sense to me, Beam looking to make aquisitions of its own.

Whatever is or isn't going on, all these rumors seem to be benefitting Beam's stock price.

p_elliott
10-26-2011, 07:52
My recollection is that Pernod's sale of WT was about financing their purchase of Absolut. If they now have stabalized and paid that off, they may well be in the position to go back into bourbon, and Beam is a whole different animal than the measley WT distillery. Whether they have the capital to do it, I have no idea.

If they had to sell off WT to buy Absolut I doubt they could swing buying Beam inc. much bigger cash out lay.

cowdery
10-28-2011, 16:35
Both Diageo and Pernod, the only two viable candidates for a Beam takeover, say officially that it's not in their plans, not because they wouldn't like to have it, but because that's not what they're doing with their money right now. Pernod, as others have noted, is still trying to reduce its debt from the Absolut acquisition, which precludes another big acquisition, and Beam would be a big acquisition. Diageo says it's more interested in developing the Chinese and Indian markets.

Most analysts finger Diageo as having a big hole in its portfolio where the Beam bourbons could go, and Jim Beam fits Diageo's definition of a 'strategic brand.' But the rest of Beam would have to be sold off to 3rd parties because Diageo is already dominant in categories such as Scotch, Canadian whiskey and Tequila.

I think the game right now is Beam's to lose. If they do well they won't have to look over their shoulders. This is what Fortune's stockholders wanted, a pure-play spirits company.

T Comp
12-16-2011, 05:51
I think the game right now is Beam's to lose. If they do well they won't have to look over their shoulders. This is what Fortune's stockholders wanted, a pure-play spirits company.


Right on Chuck. The Chicago Tribune reports today at 7.05 A.M via the BBC that Beam has bought the Irish distiller County Louth for $95 million. They are the makers of Kilbeggan, Conemara, Tyrconnell and Greenore.

cowdery
12-16-2011, 10:57
And also of Michael Collins, although Sidney Frank Imports owns that brand.

This is evidence of my prediction that Beam isn't going to lay down and be acquired, as most other commentators have predicted.

G.H.Adams
12-16-2011, 20:31
Didn't Beam Global just buy Cooley?

T Comp
12-17-2011, 06:11
Didn't Beam Global just buy Cooley?

Yes Greg you are correct it is the Cooley Distillery in County Lough. I was posting fast yesterday morning before work (and coffee) after seeing the news feed and parroting the BBC headline which referred to it as "the County Louth distillery" without referencing Cooley.

cowdery
12-17-2011, 11:40
And it's no longer "Beam Global," just "Beam Inc."

I think it was a smart move for Beam and a nice payday for the investors who launched Cooley back in 1987.

p_elliott
12-19-2011, 09:46
Could this buy stop a hostile take over by Diageo or Pernod Ricard due to anti trust laws?

cowdery
12-20-2011, 07:00
Not this alone, but it adds another complication. Pernod really isn't a candidate because they're still over-leveraged from buying Absolut. Diageo could use Jim Beam itself, but would have to unload just about everything else and it's hard to see who the buyers for those other pieces would be.

p_elliott
01-10-2012, 09:39
Ralfy at Ralfy.com slaps Jim Beam face for their management of a Scotch distillery they owned in the past. Said he hoped they do better with Cooley fingers crossed. I can't quote him so check out his video # 241 about 13 min in. Ralfy's got some kahunas on him.

tanstaafl2
12-09-2012, 10:06
Seems the talk of Diageo's interest (http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9732457/Diageo-plots-move-on-US-rival-Beam.html) in Beam is far from over (maybe it is just rehashing old ground?). Can't help but think this would be a lose-lose for the consumer if it were to happen. Especially for Irish whiskey unless Diageo were to spin Cooley off.

T Comp
12-09-2012, 14:39
Seems the talk of Diageo's interest (http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9732457/Diageo-plots-move-on-US-rival-Beam.html) in Beam is far from over (maybe it is just rehashing old ground?). Can't help but think this would be a lose-lose for the consumer if it were to happen. Especially for Irish whiskey unless Diageo were to spin Cooley off.

Nice pickup on this. Who knows what the future holds but Diageo finally expanding labels at Dickel has to be an indication they are interested in American whiskey again, even in companies that spell it with an e :grin:.

dementedavenger
12-10-2012, 12:06
Suntory Weighs Takeover of Whiskey-Maker Beam, Official Says (http://www.bloomberg.com/news/2012-12-10/suntory-considers-offer-for-whiskey-maker-beam-official-says.html) (Bloomberg)

Interesting scenario.

cowdery
12-10-2012, 12:34
The only news here is that there has been some actual tire-kicking, and the presence of Bacardi and Suntory in the mix is interesting. I guess there is no limit to how many times you can shuffle the deck. Nobody has a perfectly-balanced worldwide portfolio, which I guess is now the industry's holy grail.

Unlike Allied-Domecq and Seagram's in the past, I don't believe Beam is looking for a buyer. Beam also has shown a deftness for the business which Diageo and Pernod seem to lack. If Beam wants to keep going it alone, I believe they can out-maneuver the would-be buyers.

If there is a deal, the current state of consolidation makes a multi-party deal inevitable. Diageo wants Jim Beam but probably can't absorb any other major Beam brands. All things considered, I don't see it happening in the near term.

squire
12-10-2012, 13:47
Well . . . they make good cars.

cowdery
12-11-2012, 15:20
The idea that Beam Inc. might be acquired got one step closer to reality today, as it was announced that talks have broken down between Diageo and the Beckmann family over Diageo's acquisition of the Jose Cuervo Tequila brand. That means there's about $3 billion burning a hole in Diageo's pocket (about what they would have spent for Cuervo) plus Beam gives them the #2 tequila, Sauza (though it's a distant #2), which they can now keep since Cuervo is going away.

The cost to acquire Beam Inc. has been estimated at about $10 billion.

At least one analyst has opined that Diageo will opt to invest in its other Tequila, Don Julio. As it is, Cuervo is so dominant in the tequila space its hard to take any competitor seriously, and I don't think Diageo has demonstrated much of an ability to grow brands. It's much better at buying them.

Where will Cuervo go? The Beckmanns have said they will distribute it themselves, perhaps through Proximo, which they own, although maybe not.

In other news only peripherally related to bourbon, Wild Turkey owner Campari has acquired the Jamacian parent company of Appleton Estate Rum.

jburlowski
12-11-2012, 15:27
$10 billion would be a modest premium over Beam's current market cap of $9.5B. And a big gulp for Diageo to do alone. Even with Suntory, it would be a tough deal to pull off.

Then again, money is plentiful and very cheap right now.....

cowdery
12-11-2012, 16:04
Agreed. And then there's this: Here's what Shaken News Daily reported earlier today. "Diageo is parting ways with Jose Cuervo, but Diageo North America president Larry Schwartz says his company will look to regain leadership of the Tequila category—either by creating its own brand or acquiring another one.

“'We’re number-one in 10 categories in North America, and our goal is to regain the number-one spot (in Tequila),' Schwartz said to analysts earlier today. 'We have an innovation machine, which will be focused on figuring out how we can compete with a 100%-agave product in the premium Tequila segment.'”

Which is mostly bullshit.

Even Sauza, at #2, is a poor substitute for Cuervo, because it's a very distant #2. He's not even speaking straight within his own statement, since 'regain leadership in the Tequila category' and 'compete with a 100%-agave product in the premium Tequila segment' are two very different things.

But you have to wonder if the Beckmanns can maintain Curevo's dominance without Diageo. If they stumble and Cuervo starts to hemorrhage share, the tequila category could burst wide open. No doubt Diageo would like to scare the Beckmanns back to the bargaining table with that kind of scenario.

Another thing is that, right now, 100%-agave tequila is pretty cheap. Most of what Cuervo sells is mixto, which is cheaper, but right at this moment not a lot cheaper. If stocks of 100%-agave start to tighten, the price difference will grow, which will send some consumers back to mixtos. I think everything at this point depends on what the Beckmann's do after June of next year. If they can keep Cuervo going without missing a beat, there isn't a whole lot anyone else can do about it. Cuervo will remain #1 by a wide margain and everyone else will be left chasing their tails.

The goal, if you want to sit at the top of the spirits business, is to have worldwide category leaders in every category. Diageo is still the unchallenged leader by that standard. But losing Cuervo means they're no longer a strategic worldwide player in tequila--Don Julio notwithstanding--and that's a blow.