BEAM Inc (BEAM), Diageo plc (ADR) (DEO): Don’t Be Stingy With These Sin Stocks

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Garbo’s first movie quote is one liquor companies would love to hear more often, “Pour me a whiskey and don’t be stingy, baby.”  However it’s more likely to be a request for flavored vodka these days. To attract more women drinkers alcoholic beverage companies have been floating flavored vodkas and low calorie cocktail mixes as well as saucy YouTube videos.

Hellooo, ladies


Wooing women as a way to improve the bottom line isn’t lost on BEAM Inc (NYSE:BEAM) or Diageo plc (ADR) (NYSE:DEO). BEAM Inc (NYSE:BEAM) makes the saucy Sauza tequila videos, Make It with a Lifeguard, featuring a hot lifeguard and a puppy montage, and Make It With a Fireman, featuring one hot fireman speaking French and a beret wearing kitten. You’re welcome, ladies.

If you can’t win them over with kittens and shirtless lifeguards you haven’t got a shot. And getting women to try a shot is the name of the game. Beam, the maker of Jim Beam bourbon, Maker’s Mark, Canadian Club, Courvoisier cognac and other distilled spirits also bought the Bethenny Frankel Skinnygirl Cocktail line of low-calorie margarita mix for its Global Spirits line. That brand is listed as one of their high margin, high growth Rising Stars.  And its Pinnacle Vodka line features sweet flavors like Whipped, Rainbow Sherbet, and Strawberry Shortcake among 27 others.

Pinnacle has also been offering YouTube videos on how to make drinks with the flavored vodkas like this bartender’s nightmare, the Birthday Cake made with Pinnacle Cake vodka. (This is  perfect to drink once in a lifetime on a 21st birthday.) Pinnacle is considered one of BEAM Inc (NYSE:BEAM)’s top Power Brands

No slouch either, London-based Diageo plc (ADR) (NYSE:DEO), world’s largest spirits manufacturer, has expanded its line of flavored vodka Smirnoff Confectionaries since 2011 with flavors such as Whipped Cream, Fluffed Marshmallow, Iced Cake, and Kissed Caramel. Both Pinnacle and Smirnoff offer recipes of dessert flavored vodka concoctions for adventurous ladies.

And for women who want fewer calories Diageo plc (ADR) (NYSE:DEO) introduced 78 calorie Smirnoff Sorbet with flavors like Raspberry Pomegranate. It also introduced Snapp, an apple champagne-like drink developed and marketed mainly to women in Kenya and since expanded to Nigeria.

How much of a dent have all these initiatives made in sales? According to Technomics the flavored vodkas gained 23% in volume sales in 2011 soon after they had been introduced to take a quarter of all US vodka sales. And vodka overall is the leader in spirit category sales, outshining whiskey, even with the newly debuted moonshine whiskeys debuted after the popularity of the Discovery Channel Moonshiners show.

BEAM Inc (NYSE:BEAM), the former Fortune Brands, presented at the Goldman Sachs Consumer Products Symposium in May. Of interest, Beam reported then using 50% of ad spend on TV/ online video and another 35% on digital marketing to make it the number one industry social media marketer. Also of note, Beam reported premium brand sales were picking up .

BEAM Inc (NYSE:BEAM) is number four in premium spirits globally. It reported $2.5 billion in net sales for 2012 with 30% EBITDA margin. Beam is trading at a 25.98 trailing P/E with a 1.4% yield and a 2.10 PEG. BEAM Inc (NYSE:BEAM) has barely moved this last year up 4.34% with mixed analyst opinion of 4 Strong Buys, 4 Buys, 3 Holds, and 2 Underperforms.

Late to the cocktail party

Competitor Brown-Forman Corporation (NYSE:BF.A) has been notably late to this ladies’ cocktail party. Their Finlandia vodka brand hasn’t yet ventured into the dessert flavored arena although it does have flavored vodkas, grapefruit, raspberry, citrus, and so on. However, its Jack Daniel’s Tennessee Honey has been performing well with net sales doubling since its debut in 2011, presumably benefiting from a sweet attraction for the ladies.

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