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Brown-Forman offloads Finlandia Vodka for $220m
Jack Daniel’s owner Brown-Forman will exit the vodka category through the sale of its Finlandia brand to Coca-Cola’s bottling arm for US$220 million.
Coca-Cola Hellenic Bottling Company (HBC) made the proposed deal through its subsidiary CC Beverages Holdings II. Coca-Cola HBC is the bottling division of The Coca-Cola Company.
Founded in 1970, Finlandia is a leading vodka brand in Central and Eastern Europe.
According to the Brand Champions 2023 report, Finlandia’s volumes were stagnant at 2.6m nine-litre case sales in 2022. Coca-Cola HBC said more than 60% of the vodka’s sales are generated within its geographic footprint of 29 countries.
Brown-Forman has owned Finlandia Vodka for nearly 20 years. The brand has struggled to surpass its sales high of 3m cases in 2018, Brand Champions data showed.
In March, Brown-Forman recorded a non-cash impairment charge of US$96m for Finlandia in its financial results for the nine months to 31 January 2023.
It followed a US$52m non-cash impairment charge for Finlandia, recorded in Brown-Forman’s fiscal 2022 results. Brown-Forman said this reflected a decline in its long-term outlook for Finlandia as a result of the firm’s suspension of operations in Russia, a key market for the brand.
Lawson Whiting, CEO of Brown-Forman, called Coca-Cola HBC a “strong and reliable partner” for its brands.
“We believe Coca-Cola HBC is well-suited to support Finlandia’s future stages of development,” Whiting continued.
“I am confident that Coca-Cola HBC’s growth ambitions and capabilities in premium spirits, its critical mass and executional excellence, coupled with its leading sales and distribution credentials in the markets where it operates, will accelerate Finlandia’s growth trajectory.”
‘Mixability opportunities’
Coca-Cola HBC, which has distributed Finlandia for more than 17 years, said the deal ‘enhances its journey towards becoming the leading 24/7 beverage partner’.
The purchase also strengthens Coca-Cola HBC’s ‘premium spirits credentials’ and boosts ‘mixability opportunities’ within the non-alcoholic ready-to-drink (NARTD) category.
Zoran Bogdanovic, CEO of Coca-Cola HBC, said: “Having been associated with the distribution of Finlandia for 17 years in several markets, we are excited by this unique and regionally relevant opportunity that will support the acceleration of our on-premise business across more of our markets.
“The proven complementarity of our premium spirits business with our strong NARTD portfolio enables us to offer solutions for a broad range of 24/7 consumption occasions, particularly socialising moments.
“We view this as an attractive investment and a natural evolution of our role as one of Finlandia’s distribution partners, further attesting to the strength of our time-tested and wide-ranging partnership with Brown-Forman.”
Subject to regularly approvals, the acquisition is expected to close in the second half of 2023.
Brown-Forman previously partnered with Coca-Cola to create a ready-to-drink Jack Daniel’s and Cola in a can, which recently debuted in Great Britain.
Anora partnership
Finlandia is distilled and bottled by Nordic spirits group Anora under a long-term production services agreement that is due to run until 2035.
Finnish alcohol producer Altia sold Finlandia to Kentucky-headquartered Brown-Forman in 2004. Altia merged with Norwegian alcohol wholesaler Arcus in 2021 to form Anora Group.
The partnership with Brown-Forman began in 2000 when Altia sold a 45% stake in Finlandia Vodka to Brown-Forman, marking the firm’s entry into the category. Two years later Brown-Forman acquired an additional 35% stake in the brand. In 2004, Brown-Forman acquired the remaining 20% stake in Finlandia, taking full ownership of the vodka.
Anora is also the brand’s distributor in Finland, Sweden and Norway.
Pekka Tennilä, CEO of Anora Group, added: “Finlandia vodka, produced by Anora from the pure natural ingredients of Finnish barley and water, is an important part of Anora’s history and heritage, first as brand owner and later as the producer for global markets pursuant to a strategic partnership with Brown-Forman. We look forward to continuing and deepening the strategic partnership with Coca-Cola HBC.”