There are many reasons that Beam Inc., the maker of Jim Beam bourbon, finds itself ripe for a takeover bid, as reported exclusively by Bloomberg News's Devin Banerjee and Duane D. Stanford today.
Among them: Beam is a stand-alone survivor of the Oct. 4 breakup of its former owner, Fortune Brands; bourbon is outpacing vodka right now; sales of Jim Beam increased by 8 percent in the last year, as opposed to a 4 percent average among whiskeys; and, unlike rival Jack Daniel's, Beam isn't family-controlled.
And there's another, perhaps somewhat unsettling, trend pushing up Beam's bottom line: In the wake of the Great Recession, Americans are increasingly drinking at home. According to Commerce Department data compiled by Bloomberg, U.S. spending on alcoholic beverages for off-premises consumption, adjusted for inflation, has gained nearly 13 percent since June 2009, and hit a record in August 2011.
Now, that's not necessarily bad news for anybody but bar and restaurant owners. But drinking at home is likely to be less of a social activity than raising a glass in public. And it does invoke the disturbing image of men and women across America passed out over piles of unpaid bills at their dinner tables.
According to analysts at our sister company Bloomberg Industries, at-home alcohol consumption tends to move inversely to consumer confidence, which had a huge decline in August. They also explain that "craft beers and flavored spirit-based beverages are likely to benefit from higher at-home consumption as cash-strapped consumers search out products that they view as affordable luxuries."
Which brings up another aspect of Beam's product line that may have suitors, possibly including Diageo and Pernod, seeing dollar signs: Red Stag, a black cherry-flavored Jim Beam that's been a smash hit. I should, perhaps, have tried a taste or two of the stuff before writing about it, but there are some risks I'm not willing to take even in the service of good journalism. Of all the misfortunes in life we can blame on the economic crisis, fruit-flavored bourbon has to be near the top of the list.
(Tobin Harshaw is a member of the Bloomberg View editorial board.)