Beam Me Up

Diane is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Beam (NYSE: BEAM), the maker of the Jim Beam bourbon whiskey, one of the best-selling brands of whiskey in the world, just reported toast worthy fiscal year results for 2012. Sales were up 7% year-over-year and profits rose 9%.

Propelling sales was better than expected results from Beam’s Power Brands: Jim Beam up 10%; Maker’s Mark up 15%; and Pinnacle Vodka up 19%. The group’s “Rising Star” brands, those that provide promise in select markets, added 10% to the sales increase. Basil Hayden’s contributed 35%, followed by Knob Creek with 24%, Skinnygirls (the cocktail brand sold to Beam from TV personality and contributing diet writer Bethany Frankel in 2011 for a whopping $120 million) up 19%, and Laphroaig up 15%.

Adding to the strong results was the introduction of some innovative products within its Power Brands portfolio like the Jim Bean Devil’s Cut, Jim Bean Honey and Pinnacle Pumpkin Pie launch.

There is no question that Americans like their liquor-- strong, weak, on ice, or neat. According to a 2012 Gallup poll, the majority, two-thirds of U.S. adults, imbibe in alcohol, downing an average of four spiked beverages per week. That was a 17% increase from the year before. While beers remain the preferred choice, and wine a close second, liquor is quicker--er--quickly catching up.  

The U.S. looks almost like a nation of teetotalers when compared globally. In Europe and the Soviet Union, the average consumption is closer to some 210 ounces of the stuff per person annually.

A notable trend in the alcohol industry is a growing shift toward cocktails, and the growing selections offered, including carbonated cocktails, bottled cocktails, cocktails on tap, new ingredients in cocktails, cocktail ingredients added in barrels and totally new flavors. Beam is keeping up and also creating its own trends.

Spun-off from Fortune Brands (NYSE: FBHS) in 2011, Beam is headquartered in Deerfield, Ill, though its famed whiskey is distilled in Kentucky. Fortune Brands announced, in December of 2010, that it planned to focus on its liquor business and would shed other parts of the holding company. It got rid of Titleist, Footjoy and Fila. What remain are Fortune Brands Home & Security and Beam.

The separation has proved fruitful. Beam’s results in its first full year as a focused pure play spirits company were outstanding. Company guidance for 2013 looks equally promising. Beam expects to continue to outperform the global spirits markets, projecting growth of 3% year-over-year. The company will look to grow in emerging markets and sees continued support for its Bourbon portfolio.

So "raise your glass" to the impressive Q4 results and near future outlook. Also worthy of a long pull is the fact that Beam is not tangled up the Constellation Brands and Anheuser Busch InBev saga regarding Justice Department’s decision to block the deal for Grupo Modelo’s business, a move that would have served both companies well. The two have lost some of their froth in what is shaping up to be a long, costly, and iffy battle.  

Seven generations of the Beam family have been shaping whiskey production for the company since 1795, interrupted only by Prohibition. They never let a little rain spoil any proof batch or profit. As the old Scottish saying goes: today’s rain is tomorrow’s whiskey.

While consumers may chant “one whiskey is alright, two are too many, and three are too few,” it is investors who stand to get buzzed by the company’s performance.


DianeAlter has no position in any stocks mentioned. The Motley Fool recommends Beam. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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