In 2005, when Jim Beam Brands Company partnered with Pernod Ricard to acquire and divide between them the assets of Allied Domecq, Beam became a major international player in spirits, but also in wine. A new corporate name followed in 2006 that reflected the change: Beam Global Spirits & Wine, Inc. Now, new facts have made the new name obsolete, as Beam has divested itself of its wine portfolio.
I blogged about this in November, when an $885 million sale of wine business to Constellation Brands was announced. I just received a press release announcing that sale closed today, but it noted an earlier sale I had missed, to E. & J. Gallo Winery. At any event, Beam is now out of the wine business and has close to a billion dollars to spend on other things.
Constellation got Clos du Bois, Geyser Peak, Wild Horse, Buena Vista Carneros and Gary Farrell. Gallo got William Hill and Canyon Road. Constellation is the parent company of Barton, a full-line spirits company with a whiskey distillery in Bardstown, Kentucky.
This exit from the wine business is a little surprising, mainly because such a big deal was made of the new corporate name barely a year ago. If at the time they had intended to get out of the wine business, they could have come up with a less specific name. This suggests that the decision was opportunistic rather than part of a long-term plan. Press releases from Beam parent company Fortune Brands invariably point out how profitable the premium spirits business is, without saying what everybody knows, which is that the wine business isn't.
As a rule, investors hate surprises, so publicly-traded companies usually try to avoid them, but investors like profits even more than they hate surprises, so this surprise sale doesn't seem to be a problem for Fortune. It does, however, suggest that if Beam is thinking about using the proceeds of these sales to make a major acquisition in the spirits business, such as Absolut Vodka, it may not publicize its intentions in advance.
Still, what are they going to do about that name and their new web site?
On a slightly different subject, corporate press releases like the one I got today from Fortune invariably end with a paragraph that describes the corporation's business. It was a big deal a few years ago when the phrase, "Major spirits brands include Jim Beam bourbon.." was changed to read, "Major spirits brands include Jim Beam and Knob Creek bourbons..." It was a way of saying that Knob Creek had arrived as a successful brand. Sadly, Knob Creek has been bumped and replaced by Maker's Mark, one of the key brands in the Allied deal.