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Cruzan Rum Being Sold for $100 Million

Aug. 29, 2008 — Pernod Ricard is separating Cruzan Rum from its parent company and selling it to Fortune Brands for $100 million, the company announced Friday.
In March, Pernod Ricard won the public auction of Cruzan Rum's parent company, Sweden's Vin & Sprit, for a reported $8.8 billion, moving Pernod Ricard from being a major player to a global leader in the wine and spirits industry. Vin & Sprit's largest moneymaker was top selling Absolut Vodka.
Future Brands was created in 2001 as a sales and distribution joint venture of Beam Global Spirits, the makers of top selling Jim Beam bourbon and Absolut Vodka. Fortune Brands distribution contract was scheduled to end in 2012, but the partners agreed to end the contract Oct. 1, with Pernod Ricard paying Fortune Brands $230 million. Vin & Sprit will also stop being a shareholder in Future Brands.
On the same day, Absolut and most of the Vin & Sprit brands will join Pernod Ricard USA's portfolio, and Fortune Brands will get Cruzan Rum for $100 million.
Vin & Sprit bought Cruzan in 2005 and has been growing fast since then, reaching more than 6.7 million liters in 2007.
"The immediate takeover of Absolut distribution in the U.S. by Pernod Ricard USA is excellent news for the group," said Patrick Ricard, CEO of Pernod Ricard. "I also wish all the best and a continued success in the future for the Cruzan rum brand and the Cruzan teams within Fortune Brands."
Speaking from Denver, where he attended this week's Democratic National Convention, Gov. John deJongh Jr. welcomed Fortune Brands to the U.S. Virgin Islands. He was in touch with senior management of both companies during their negotiations, and conveyed the support of the administration, according to a statement from Government House.
"(I) knew when Pernod acquired V&S their objective was Absolut Vodka," deJongh said. "They assumed a lot of debt to win Absolut, and we fully anticipated that they might choose to sell Cruzan as part of their effort to pay down that debt."
Pernod has a strong presence in the flavored-rum market with Malibu and through the joint-venture agreement with the government of Cuba, a signature premium rum brand in the international market with Havana Club, deJongh said.
"Our concern from the beginning was that because of competition from a strong internal brand, Pernod might not have been the preferred home for Cruzan Rum," he said.
The governor believes the sale of Cruzan Rum to Fortune Brands will lead to a more stable environment for Cruzan Rum, in part because Fortune Brands has distributed Cruzan Rum products for many years.
"They know the brand, they like the brand and they want the brand," deJongh said. "Cruzan Rum will be Fortune's only rum product, giving the brand the opportunity to enjoy access to the resources needed to achieve its growth."
DeJongh intends to meet with the new owners of Cruzan Rum, just as he did with the principals of Pernod-Ricard.
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