Brand building is in Corby’s DNA, and our top stories in fiscal 2019 are a testament to our exceptional capabilities. We rejuvenated J.P. Wiser’s whisky, our 162-year-old brand, to the extent that it was among Canada’s top three value-gaining spirits brands. Our whole organization also rallied around our objectives of taking Ungava gin national and transforming it into a power brand. What’s more, we turned around Polar Ice vodka by making bold moves in a difficult category and launched a campaign for Absolut vodka that hit all the right notes for millennials.
I cannot say enough about how our people rose to each challenge and showed their passion, creativity and proficiency in delivering these results. To capture market share and grow in our competitive industry, we need to be strategic about how and where we invest our time and money and we need our employees to be at the top of their game. Without a doubt, they proved their mettle and poured their all into helping us win in fiscal 2019. Corby’s portfolio boasted three of the top 10 spirits growth brands in the year.
Bolstered by the momentum of key brands, overall net revenue grew 2.9% compared to the previous year, reaching close to $150 million despite the marked slowdown of the wine market and the continued pressure on the standard or economy brands in our portfolio. Growth from Corby’s domestic brands and commission income enabled us to fund strategic marketing investments and led to net earnings that were in line with the prior year at $25.7 million.
I cannot say enough about how our people rose to each challenge and showed their passion, creativity and proficiency in delivering these results.
Building tomorrow’s brands
Beyond our top stories, progress made on the Foreign Affair winery, export and technology fronts not only contributed to the year’s solid performance, but also set the stage for future growth.
We acquired Foreign Affair winery in fiscal 2018, with a view to capitalizing on Canadians’ growing appreciation for higher- quality wines and the opening up of grocery store channels. Having spent the first 12 months integrating the business into our processes, we’re starting to deploy a more tailored strategy for extracting profitable growth from this unique business. In fiscal 2019, this included expanding the Foreign Affair wine footprint outside Ontario with distribution gains in the key wine markets of British Columbia, Alberta and Québec.
As we add high-demand, super-premium products like Ungava gin to our portfolio, we want to ensure we’re capturing every opportunity, in both domestic and export markets. To do so, we restructured our sales organization and appointed Stéphane Côté, formerly Vice-President, Sales, to the newly created role of Vice-President, New Business Ventures. One of Stéphane’s first tasks – securing export agreements for strategic brands – led to new five-year distribution agreements in the US with 375 Park Avenue Spirits for J.P. Wiser’s Canadian whisky, and with Hotaling for our Northern Border Collection of Canadian whiskies and Ungava gin. Effective January 1, 2019, we also signed agreements with Pernod Ricard affiliates and third parties to represent Ungava gin in key Western European markets.
From a technology perspective, the launch of a total promotional management tool in March 2019 linked various internal systems together to measure the efficiency of our promotional spend and help us determine which promotions provide the best return on investment. With its advanced science, and as more data is collected, the system will be able to develop, forecast, manage and automate the optimal promotional activities to maximize benefits.
Innovation as growth lever
Innovation is a key growth lever in our industry – driving 76% of spirits growth and 100% of wine growth*. We must always think about current trends, what we can try and how we can deepen our connection with consumers.
That’s why new products such as J.P. Wiser’s Old Fashioned Whisky Cocktail and J.P. Wiser’s Alumni Whisky Series (a collaboration with the NHL Alumni Association) are so important to us. Both exceeded their year-one projections and will be followed up in fiscal 2020 with J.P. Wiser’s Manhattan Whisky Cocktail and another wave of the Alumni Series.
Through our affiliation with Pernod Ricard, we’re also able to bring some of its highly acclaimed innovations to the Canadian market. In fiscal 2019, this included Jameson Ginger & Lime ready-to-drink cans, Jacob’s Creek Double Barrel Chardonnay, and Martell Blue Swift, a unique spirit made of VSOP cognac that has been matured in French oak casks and finished in Kentucky bourbon casks. We also added on-trend flavour innovations such as Beefeater Pink, a strawberry gin that’s based on the classic Beefeater London Dry recipe, and Absolut Grapefruit.
New products such as J.P. Wiser’s Old Fashioned Whisky Cocktail and J.P. Wiser’s Alumni Whisky Series exceeded their year-one projections.
Good times from a good place
Sustainability and Responsibility (S&R) initiatives present additional opportunities to make meaningful, purpose-driven connections with customers, consumers, employees and communities. In 2019, we aligned our S&R activities with Pernod Ricard’s international Good Times from a Good Place platform, which itself is linked to the United Nations’ Sustainable Development Goals, the world’s to-do list to end poverty, reduce inequalities and tackle climate change.
Responsib’All Day was a highlight of the year. In eight cities across Canada, our employees spent the day working alongside bartenders to transform 21 bars and restaurants into sustainability pop-up venues where customers could enjoy cocktails made from Corby spirits mixed with ingredients diverted from waste channels and turned into delicious syrups, garnishes and infusions. The initiative was part of a strategic partnership with Trash Tiki, a passionate bartending duo who create cocktails from materials destined for landfill and tour the world to raise awareness about food waste.
Delivering shareholder value
Through all of our brand, operational and S&R activities, we aim to deliver consistent value growth and returns for our shareholders. Year after year, the Company has generated strong cash flows, maintained a healthy balance sheet to fund growth, and paid a consistent dividend. In fiscal 2019, we were very pleased to be able to declare a special dividend of 44 cents per share, which resulted in a cash distribution of approximately $12.5 million to shareholders and was sourced from our surplus cash position.
In conclusion, I’d like to thank our Board of Directors for their guidance and support as we seek to drive growth and create value. Thank you as well to our employees – we toast your passion and encourage you to keep living our purpose of creating win–win memorable experiences for customers, consumers, shareholders and one another.
President & Chief Executive Officer
*Association of Canadian Distillers retail data, June 2019