Brown-Forman has announced an agreement to sell Finlandia vodka to Coca-Cola Hellenic Bottling Company (HBC) for $220 million.
Subject to regulatory approvals, the acquisition is anticipated to close in the second half of 2023. The Switzerland-based bottler of Coca-Cola products made the proposed deal through its subsidiary CC Beverages Holdings II.
Finlandia was established in 1970 and has remained a leading vodka brand in Central and Eastern Europe with annual volumes of 2.7 million 9-liter cases globally, of which more than 60% is generated within Coca-Cola HBC’s geographic footprint. The brand comes in its original SKU and several flavored versions.
Since debuting as Brown-Forman’s sole vodka in 2000, Finlandia has significantly contributed to the corporation’s global expansion, said Lawson Whiting, president and CEO of Brown-Forman Corporation. Brown-Forman acquired Finlandia from Altia Corp., attaining full ownership in 2004.
Coca-Cola HBC has distributed Finlandia for more than 17 years, and the deal “enhances its journey towards becoming the leading 24/7 beverage partner,” according to a press release. The acquisition will serve as a boost to “its strategy of incorporating mixability with its core non-alcoholic ready-to-drink (NARTD) offerings” and enhance its “premium spirits credentials.” The deal is also expected to enhance partnerships within strategic channels such as hotels, restaurants, and catering services.
“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,” said Zoran Bogdanovic, CEO of Coca-Cola HBC.
Russia’s invasion of Ukraine, which began in February 2022, had a negative effect on Brown-Forman’s fiscal 2022 operating results, particularly impacting Finlandia. A decline in the long-term outlook for Finlandia was reported in the company’s 2022 earnings report, following Brown-Forman’s suspension of operations in Russia, a key market for the brand. The Kentucky-based spirits company recognized a non-cash impairment charge of $96 million for Finlandia in its financial results for the nine months ending January 2023, following a $52 million non-cash impairment charge recorded in the company’s fiscal 2022 results. The war has halted major spirit companies’ exports of other vodka brands to Russia as well.
Coca-Cola and Brown-Forman have partnered before on the creation of a Jack Daniel’s and Cola RTD, which recently debuted in Great Britain. The canned cocktail was one of the sales-drivers for the spirits group, which reported 8% organic growth in its fiscal 2023 year, also fueled by its major whiskey brands Jack Daniel’s Tennessee Whiskey and Woodford Reserve. The company also recently announced an investment in an ascending category by pouring $200 million into expanding its historic Casa Herradura tequila distillery in Jalisco, Mexico to meet soaring global demand.