Brown-Forman Corporation has reached an agreement to sell its Southern Comfort and Tuaca trademarks to New Orleans-based company Sazerac for $543.5 million (£379m).
Paul Varga, Brown-Forman Chief Executive Officer, said the decision to sell these brands reflects the company’s evolving portfolio strategy and a continuation of its efforts to focus resources on its highest strategic priorities.
Brown-Forman has marketed Southern Comfort since acquiring the brand in 1979. The company acquired Tuaca in two transactions, completing the purchase in 2002. However, over the last decade, Brown-Forman has been actively managing its portfolio by developing, acquiring and selling specific brands and categories with the aim of improving the growth and value creation prospects for its business.
The sale of these brands is expected to close by March 1, 2016, resulting in a one-time operating income gain for Brown-Forman of approximately $475 million (£331m). The transaction, which is subject to regulatory clearance in the U.S. and customary closing conditions, will be discussed in further detail during Brown-Forman’s March conference call following the issuance of its third quarter earnings release.
Paul Varga comments, “We’re proud of the work undertaken over the years by our employees and partners on behalf of Southern Comfort and Tuaca. Both brands played important roles in the Brown-Forman success story, and we will have fond memories of the enjoyment they brought to consumers, our partners, and to Brown-Forman.”
While Mark Brown, President / CEO of the Sazerac Company said, “We are very excited about the opportunity to acquire such iconic brands. Brown-Forman has done an excellent job of building both brands over the years and we are looking forward to many more years of successful brand building.”
Brown-Forman Corporation’s portfolio includes Jack Daniel’s Tennessee Whiskey, Jack Daniel’s Tennessee Honey, Gentleman Jack, Jack Daniel’s Single Barrel, Finlandia, Woodford Reserve, Canadian Mist, Herradura, and Chambord.
The Sazerac Company is one of New Orleans’ oldest family owned, privately held companies. It has a broad portfolio which includes brands such as Buffalo Trace, Old Rip van Winkle Bourbon, Monte Alban and Montezuma tequila. Peychaud’s, AnCnoc, Balblair and Glenfarclas and Fireball in the U.S.
According to industry estimates, Southern Comfort sales have dropped from 1.5 million cases a decade ago to just over a million cases while Tuaca sales also are also down, from 135,000 cases in 2008 to around 85,000.