Brown-Forman Picks Amsterdam as Europe HQ - Analyst Blog


In an effort to consolidate its European management, Brown-Forman Corp. ( BF.B ) will be opening its regional headquarter at Amsterdam, The Netherlands. The newly created head office, expected to be fully operational from Jan 1, 2014, will gradually accommodate approximately 40 employees over the next few years.

The company's activities across the European region have risen significantly in the past few years, with the region accounting for approximately 30% of Brown-Forman's fiscal-2013 net sales. Therefore, with the aim to sustain healthy growth in the region, Brown-Forman resolved to move its European leadership team and key functional leaders to Amsterdam. Moreover, the Dutch capital gets preference due to its central location and easy access to the rest of Europe and other international markets.

The company revealed that including Thomas Hinrichs, senior vice president and managing director of the European operations, other key members of the company's European leadership team will be relocated to Amsterdam from across Hamburg, London, Paris, Prague, and Louisville by the end of Jan 2014.

Apart from this, Brown-Forman decided to move its Finlandia Global Brand Team to the Dutch capital from Louisville, Ky. The company's motive is to bring Finlandia's key members closer to their largest customer base as Finlandia sources nearly 80% of its businesses from Europe. Therefore, Carmen d'Ascendis, senior vice president and managing director of the vodka business and other key members of the Finlandia Global Brand Team will be moved to Amsterdam from the company's headquarter in Louisville.

Brown-Forman, which competes with Diageo plc ( DEO ) is one of the leading producers and distributors of premium alcoholic beverages in the world and commands a strong portfolio of globally-recognized brands. The company's portfolio consists of more than 25 premium brands, including Jack Daniel's -the flagship spirits brand - followed by Southern Comfort liqueur, Canadian Mist whiskey, Finlandia vodka as well as Fetzer and Korbel wine brands.

We remain impressed with the company's pricing strategy, product innovation, and penetration into the emerging markets to boost its operational performance and bolster its well-established position in the market. We believe Brown-Forman's consistent focus on developing its premium Jack Daniel's brand through innovation and packaging changes has paid off, making it a thriving company.

Apart from expanding the market share of its flagship Jack Daniel's in developed and emerging markets, the company seeks to expand the sphere of its other brands, such as Gentleman Jack, Jack Daniel's Single Barrel and Jack Daniel's ready-to-drink within the Jack Daniel's brand.

However, disappointing fiscal first-quarter 2014 earnings results on the back of higher input costs and increase in operating expenses have hurt investor sentiment. Therefore, Brown-Forman currently holds a Zacks Rank #4 (Sell).

On a positive note, however, the company reaffirmed its fiscal-2014 outlook, still projecting earnings in the range of $2.80-$3.00 per share, a 9%-11% increase in operating income and a high-single-digit rise in sales.

Other stocks worth considering in the alcoholic beverage industry are Boston Beer Co. Inc. ( SAM ) and Constellation Brands Inc. ( STZ ). Boston Beer holds a Zacks Rank #1 (Strong Buy) while Constellation Brands has a Zacks Rank #2 (Buy).

BROWN FORMAN B (BF.B): Free Stock Analysis Report

DIAGEO PLC-ADR (DEO): Free Stock Analysis Report

BOSTON BEER INC (SAM): Free Stock Analysis Report

CONSTELLATN BRD (STZ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DEO , SAM , STZ

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