BF.B to Expand Kentucky Distillery - Analyst Blog

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To capture the growing demand for its super premium Woodford Reserve Kentucky Bourbon whiskey globally, Brown-Forman Corporation ( BF.B ) has decided to expand its Woodford Reserve Distillery.

Centrally located in Kentucky's Bluegrass Region, off McCracken Pike in Versailles, this is America's oldest working distillery. The expansion of this distillery is slated to attract investments in excess of $35 million, including the construction of three new warehouses, new pot stills, spreading out of the present bottling line, and upgrade of the facility's general efficiency and output.

With the addition of three bourbon maturation warehouses, the distillery will be capable of holding over 165,000 barrels of bourbon. Further, the company highlighted that the 3 new pot stills made of copper will be installed within the existing distillery premises. Additionally, the project is expected to bring in 15 new jobs through its completion.

Recently, the premium North American whiskey brands gained interest among consumers, which resulted in increased exports of these spirits. Brown-Forman's Woodford Reserve, which was introduced in 1996, recorded a volume of about 250,000 nine liter cases and contributed 28% to the company's global net sales growth in fiscal 2013. The brand has a track record of registering double-digit growth rates every year since its introduction.

Further, the company has received preliminary approval from the Kentucky Economic Development Finance Authority (KEDFA) for tax benefit up to $2.5 million through the Kentucky Business Investment program. As part of this performance-based incentive plan, the company is entitled to retain a part of its investment over the tenure of the agreement through corporate income tax credits and wage evaluation by satisfying job and investment targets.

Additionally, Brown-Forman is entitled to receive tax benefits up to $500,000 from KEDFA under the Kentucky Enterprise Initiative Act. Under this initiative, KEDFA allows permitted companies to recover Kentucky sales and utilize the tax on construction expenses, electronic processing apparatus, building fixtures and equipment used for research and development purposes.

Other Stocks to Consider

Other stocks worth considering in the consumer staples industry are Avon Products Inc. ( AVP ), Beam Inc. ( BEAM ) and Constellation Brands Inc. ( STZ ). Of these, Avon has a Zacks Rank #1 (Buy), while Beam and Constellation Brands carry a Zacks Rank #2 (Buy).

AVON PRODS INC (AVP): Free Stock Analysis Report

BEAM INC (BEAM): Free Stock Analysis Report

BROWN FORMAN B (BF.B): 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 Nasdaq, Inc.

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

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