Why the Rising Popularity of Brown Spirits?

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March 18 (Bloomberg) -- Brown-Forman Chairman and CEO Paul Varga discusses the rising popularity of distilled alcoholic beverages on Bloomberg Television's “Market Makers.” (Source: Bloomberg)

I feel like i've been talking to a litany of liquor ceos about whiskey and berman -- bourbon.

Brown spirits are increasing in popularity.

What is behind it?

Thank you for having me.

They are doing very well is the reason you may be talking to them.

Articulately the american whiskeys of late.

For those of us who have been around this industry for some time, we have had has been -- headwinds for so long as bourbon producers and hit tennessee whiskers -- with bourbon producers and tennessee whiskey producers as we have been for so long, it has caught the interest of many both inside the industry and outside.

I think i read recently that the market share of whiskey, bourbon, these types of spirits has grown to 30% of the total liquor market.

35%. is that true?

I would have to see what you are referencing in terms of the industry data.

I know one statistic that is very telling, at least when i will refer to from the united states, and this comes from 2013, that the growth of -- some of the whiskeys generally outgrew vodka, which is the first time in this country and an amazing statistic.

That trend may have been underway for some three decades.

We just showed this chart.

Spirit sales are 35% about all sales.

It is not that bourbon and whiskey are 35% of spirits.

And we have seen in the industry a lot of consolidation, particularly leveling out overall in the industry.

What do you think about that?

I don't know that the industry is, in fact, consolidating in fewer owners.

It is very fragmented globally as an industry.

Did -- depending on which statistics you use, there is data that says that top 10 manufacturers and leading companies in the world may only attribute about 15% to 20% of the total volume.

Can there'd too many industries -- compared to any industries that are consolidated, ours remains quite fragmented.

A company like ours, for example, has less than one percent of the total volume worldwide.

Nevertheless, though, bacardi has actually put out there that it is looking for more brown spirits in its portfolio.

I wonder what kind of conditions would you consider selling yourself.

We are family controlled and have been since the company was founded in 1870. the company remains very committed to the future of brown-forman.

To be quite honest, with the results that we are posting in the future we see ahead of us, we don't see any change in that posture.

Have the guys from bacardi been down to louisville lately?

We have known them for a long time and have done work with them in the united states and the u.k. and have had partnership.

There is a lot of speculation out there that relates to consolidation, particularly the since the announced suntory being deal.

We do not comment on it specific acquisitions that we are undertaking or any that anyone else might be doing.

But we cooperate with them on industry affairs and do word -- work distribution in key countries.

That sounded like a maybe.

It sounded like they know each other.

They are family owned.

Let me ask you about the kind of bourbon that you are selling.

I'm a huge fan of jack daniels.

I like the different versions you occasionally come out with.

But in general across the country, it looks like people are looking for more expensive, older bourbons, older whiskeys, flavored.

This fireball liquor has become very popular.

Are you making a move toward unorthodox flavors and higher-priced product?

You have outlined the two dimensions were there has been significant growth.

We have been at the forefront, we think, of the ultra-premium business with both back -- jack daniel expressions, called gentleman jack, and single barrel, going back 20 years.

It is wonderful.

It is wonderful.

And also the woodford reserve that we reduced in the mid-1990's. we like to think of ourselves as one of the original craft the steelers.

We have enjoyed great success.

And the other -- one of the original craft distillers.

We have enjoyed great success.

And the other thing is that you don't see other forms of whiskey . american whiskey lends itself to flavoring.

Like southern comfort, right?

We have owned it since the 1970's and because of the impact of no competition, one of those competitors that we on is tennessee honey.

It is very highly competitive right now.

We intend to be at the forefront of it.

You brought up tennessee.

I want to get to the big debate is going on right there.

Last year, tennessee law laid out requirements for spirits to be labeled tennessee whiskey, which in essence, kind of made it.

Lead jack daniels and other distillers in the state actively trying to change the law.

They say you are trying to have a monopoly there.

What do you say to that?

They are wrong.

There is one major distiller who is making a lot of noise down there.

The craft distillers, the small guys, are also against the law.

It's not just the one big guy.

Who is the one big guy?

Most of the craft distillers are on our side.

This is the one thing i will say about it.

A year ago, the state legislature and the governor signed into law the standards of identity that exist today.

And the reality is that anybody who produce debates in any of the categories of distilled spirits around the world, it meets those standards of quality vigorously.

It is very true of scotch whiskey, cognac, tequila, bourbon.

The unique thing about this is that jack daniels from any size or scale, really, the only well-known tennessee whiskey.

It has caused a bit of a scrap down in tennessee.

It is getting more press than it would normally get.

Got it.

This text has been automatically generated. It may not be 100% accurate.


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