As others have stated here: they're raising the price because of demand and they feel they can without impacting sales volumes.
"Drinking when we are not thirsty and making love at all seasons… that is all there is to distinguish us from other animals."
The one factor that hasn't been mentioned is that Beam Inc. is a brand new company, since the shedding of the non-spirits businesses. This is a signal to Wall Street too, perhaps most of all. What Wall Street values above all else is predictability.
Beam Global had a good quarter, but Wall Street is a "What are you doing now to keep income growing" sort and you are only as good as your next quarter's earning.
Hey Chuck......Wall Street also likes pricing power. Analysts are always looking for companies who can either/or/or both pass along increases in costs quickly and increase prices due to supply/demand issues. We know the supply/demand picture is working in the industry's favor.
I think there's a balance point though. At some point, consumers, even ones overseas, may feel bourbon is priced too high, and stocks may start to languish on the shelves. I'm not sure people will ever view bourbon as completely on a par with malt whisky, I don't mean specialist circles like here, but the market at large. I think the companies need to be careful not to go overboard with price hikes.
I've been closely following another stock for a purpose unrelated to whiskey, and have been struck by how relentlessly short term most analysts and commentators are. Gary's point is completely valid but too long term to be pertinent.
Pricing power is a very good point and in flexing it, Beam is making a 180° shift in corporate style. Beam historically was cautious on pricing and quick with a deal. The recent explosion of new products is another 180° change. Beam's leadership is signaling that this isn't the old Fortune Brands-version of Beam.
Here's a Bloomberg businessweek article from 7/1/91 (was that really more than 20 years ago ) on how the industry was betting on global sales back then. Chuck has previously writtten about Japan and it being the first success and cause of Bourbon's renaissance. Interesting that Japanese sales were already starting to decline in 1990 and that United Distillers $20 million expansion...how'd that work out for them.
I could care less if Basil Hayden goes to $50, or Knob Creek is increased to $40... Let Beam raise the price on shit that sucks. What do I care...