Brown-Forman Corp. announced it has agreed to sell the Southern Comfort and Tuaca brands to Sazerac Co. for $543.5 million.

 

Brown-Forman has controlled the Southern Comfort brand since its acquisition in 1979, but the brand has faced a challenging market in recent years as rivals have been increasing competition in the space with products featuring new added flavors. One such product is Sazerac’s Fireball Cinnamon Whisky, which has become a consumer favorite, seeing sales soar from 100,000 nine-liter cases in 2010 to 4.6 million cases last year, according to Impact Databank.

 

In the year ending April 30, Southern Comfort sales fell by 4% to 2.2 million nine-liter cases, and for the six months ending October 31, sales fell by a further 7%, compared to Jack Daniels sales, which increased 7% to 21.3 million nine-liter cases, according to the Wall Street Journal.

 

In a company statement, Paul Varga, chief executive officer of Brown-Forman, states that the decision to sell the brands is a reflection of the company’s shifting portfolio strategy and the re-focusing of the company onto its priority, core business which includes its jack Daniels and Woodford Reserve brands – both of which have seen notable U.S. growth.

 

The sale to New Orleans-based Sazerac is expected to close in the first quarter of 2016 pending all regulatory approvals, and is expected to generate an approximate one-time operating income gain of $475 million in fiscal 2016.

 

“We’re proud of the work undertaken over the years by our employees and partners on behalf of Southern Comfort and Tuaca,” stated Mr. Varga in a company release. “Both brands played important roles in the Brown-Forman success story, and we will have fond memories of the enjoyment they brought to consumers, our partners, and to Brown-Forman.”