Louisville-based Brown-Forman announced Thursday that it was selling the Southern Comfort label and Tuaca liqueur to New Orleans-based Sazerac, owner of Buffalo Trace, for a combined $543.5 million.
The sale reflects a decision to focus resources on Brown-Forman’s highest strategic priorities, which include Jack Daniel’s and premium whiskeys including Woodford Reserve, CEO Paul Varga said in a news release.
Rumors of the sale, possibly including the raspberry liqueur Chambord, were floated in the fall, but Brown-Forman declined to comment, although word leaked that Goldman Sachs had been hired to broker a deal.
Brown-Forman bought Southern Comfort in 1979 and Tuaca, a brandy-based vanilla-and-orange liqueur, in 2002. In the second-quarter earnings report released in December, Brown-Forman reported that sales of Southern Comfort brands dropped 7 percent in underlying net sales, with an 11 percent reported drop. According to Shanken Daily News, an industry publication, sales had fallen from more than 1.5 million cases a decade ago to slightly more than 1 million cases. Tuaca sales also are down, from 135,000 cases in 2008 to fewer than 85,000, Shanken reported.
“We’re proud of the work undertaken over the years by our employees and partners on behalf of Southern Comfort and Tuaca,” Varga said. “Both brands played important roles in the Brown-Forman success story.”
Although Brown-Forman’s Jack Daniel’s Tennessee Honey and Tennessee Fire have done well, the company struggled in recent years to stop Southern Comfort’s declining popularity, launching oddball advertising campaigns — some of which went viral — to try to carve a niche for the liqueur in an increasingly competitive category of flavored whiskeys, dominated by Sazerac’s cinnamon-flavored Fireball.
“We are very excited about the opportunity to acquire such iconic brands,” said Mark Brown, president and CEO of Sazerac.
According to Shanken, Sazerac chairman Bill Goldring said he expected to turn the brand around. “We think we can improve their performance, as we’ve done with just about every brand we’ve acquired over the years,” he said.
The sale is expected to close March 1, the companies said. The deal will add about $475 million to Brown-Forman’s coffers; shares were up 1.23, to $92.74, in Thursday trading.
The transaction, subject to regulatory clearance in the United States and customary closing conditions, will be discussed in further detail during Brown-Forman’s March conference call about third-quarter earnings.
Brown-Forman also is the parent of Finlandia vodka, Korbel champagne, el Jimador tequila, Canadian Mist Canadian whiskey, Herradura tequila, Sonoma-Cutrer wines and Early Times bourbon.
Sazerac brands include Sazerac Rye; Eagle Rare, W.L. Weller and Blanton’s bourbons; Ancient Age Canadian whiskey; and Dr. McGillicuddy’s liqueurs.