Jim Beam Gets Out Of The Faucets And Golf Balls Business.

[cowdery]

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]

Profit is a great motivator, I suspect they will bottle what sells.

[DeanSheen]

Profit is a great motivator, I suspect they will bottle what sells.

[Josh]

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]

Dean, I eschew grammatical correctness but generally get my point across. The producers will provide whatever sells.

[DeanSheen]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.

[cowdery]

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]

Didn't Beam Global just buy Cooley?

[T Comp]

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]

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]

Could this buy stop a hostile take over by Diageo or Pernod Ricard due to anti trust laws?

[cowdery]

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]

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]

Seems the talk of Diageo's interest 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]

Seems the talk of Diageo's interest 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]

Suntory Weighs Takeover of Whiskey-Maker Beam, Official Says (Bloomberg)

Interesting scenario.