Brown-Forman, the maker of Jack Daniel’s and Woodford reserve whiskeys, has agreed to sell the struggling liqueur brand Southern Comfort in a deal that amounts to $543.5 million.
The Kentucky-based company is selling Southern Comfort and the Italian liqueur Tuaca to Sazerac so that Brown-Forman can better focus on higher performing brands, like Jack Daniel’s. Brown-Forman (BFB) had owned the Southern Comfort brand since 1979. With the deal, which is expected to close by March 1, Brown-Forman will record a one-time gain of about $475 million in fiscal 2016.
The move to sell off Southern Comfort isn’t a big surprise, as industry observers had long speculated that Brown-Forman would unload the underperforming spirit. While Brown-Forman has angled to keep Southern Comfort relevant by launching lime and caramel variations in recent years, those spirits have not resonated as strongly as Fireball and Jack Daniel’s Tennessee Honey. Flavored whiskeys are driving growth in the category in the U.S., but it is a highly competitive market.
Southern Comfort’s net sales slipped 7% for the first six months of the most recent year, badly lagging Brown-Forman’s Jack Daniel’s 7% jump over the same period (with Tennessee Honey’s sales climbing an impressive 14%).