Brown-Forman is to offload its Finlandia vodka brand to Coca-Cola HBC for US$220m.
The transaction, announced earlier today [19 June], will see the Central & East European Coca-Cola bottler relieve Brown-Forman of its only vodka brand. According to a client note from Bernstein, Finlandia accounts for just 2% of the Jack Daniel’s brand owner’s sales and will “improve Brown-Forman’s top-line growth outlook”.
In its most recent set of results, for the nine months to the end of January, Brown-Forman saw Finlandia’s value sales fall by 5% year-on-year on a 1% increase in volumes.
The sale, which should close in the second half of this year, will see Coca-Cola HBC take full control of the Brown-Forman Finland unit and builds on the bottler’s 17 years as a distributor for the US company’s brands, including Finlandia, in its markets. The soft drinks specialist said that around 60% of the vodka’s volumes hail from its geographic footprint, led by Poland with 23%.
“We believe Coca-Cola HBC is well-suited to support Finlandia’s future stages of development,” said Brown-Forman CEO Lawson Whiting. “I am confident that Coca-Cola HBC’s growth ambitions and capabilities in premium spirits …, coupled with its leading sales and distribution credentials in the markets where it operates, will accelerate Finlandia’s growth trajectory.”
Brown-Forman’s growth strategy is focussed on premium-plus brands, exemplified by the acquisitions last year of Mediterranean gin brand Gin Mare and Diplomático Rum from Venezuela. “Finlandia’s global average price per 75cl bottle is lower than Brown-Forman’s global average for whiskey and tequila,” said Bernstein analyst Nadine Sarwat in her note to clients. “Net, the divestment improves Brown-Forman’s topline growth outlook from both a volume and mix perspective.”
In March’s results announcement, the group took an impairment charge – the second in 12 months – on Finlandia of $96m.
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