Corby – Not a Liquor Tollbooth

Corby Spirit and Wine is a leading Canadian marketer and distributor of spirits and wines. The company owns many of the 25 top-selling brands in the country. Corby’s portfolio of owned brands accounts for approximately 80% of its total annual revenue. It ranks amongst the top three of the ten largest brands in Canada (by volume).

Corby has a large footprint across Canada and also exports to the U.S., Europe, and other international markets. The company has a significant market share in the Canadian whisky and gin market.

It sources more than 90% of its spirits production requirements from HWSL and the remaining from third-party vendors. About 90% of the volumes are shipped in Canada and 10% are exported.

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Revenue Growth & Market Exposure

Corby’s portfolio is heavily weighted in the Canadian whisky, rum, and vodka categories and together they make up about 86% of the company’s total retail volumes. Its portfolio includes some of the most renowned brands in Canada, including J.P. Wiser’s, Pike Creek, and Gooderham & Worts Canadian whiskies, as well as Lamb’s rum, Polar Ice vodka, and McGuinness liqueurs.

Corby is an affiliate of Pernod Ricard, a global leader in the spirits and wine industry. The company benefits from its many partnerships that have supported the expansion of its portfolio, strengthening its operations, and leveraging best international practices. 

Other than deriving revenues from the sale of its owned brands, Corby earns commission income from the representation of selected non-owned brands in Canada. The company represents leading international brands such as Absolut Vodka, Chivas Regal, Glenlivet, Jameson, Malibu, Havana Club, Jacob’s Creek, etc.

Corby renewed its representation agreement with Pernod Ricard in the last year and will continue to represent iconic premium spirits brands such as Absolut vodka, Jameson Irish whiskey, and The Glenlivet single malt scotch in Canada, as well as popular wines like Jacob’s Creek, Stoneleigh, and Campo Viejo.

It also earns revenue from other ancillary activities, such as logistics fees and from bulk whisky sales to rebalance its maturation inventories from time to time. In addition, Corby benefits from its access to PR North America’s leading production technologies, through HWSL’s Windsor, Ontario facility, where most of its products are manufactured.

The COVID-induced lockdowns led to disruption throughout the hospitality industry as restaurants and bars remained closed and major social and sporting events were canceled. However, as a manufacturer and distributor of alcoholic beverages, Corby was deemed to be an essential business in Canada. Corby’s annual financial results have not been negatively impacted by the COVID-19 pandemic.

Its owned portfolio saw shipments of 2.1 million 9L cases in FY20, with volume growth of 2.7% YoY. Corby generated $31.5 million in commission income through its representation rights in FY20. The company reported overall revenue growth of 4% and revenue for Corby-owned brands increased by 4% for the first six months.

Dividends

The company has a history of paying regular dividend payments. A diverse brand portfolio drives profitable organic growth with strong and consistent cash flows. It sports an attractive dividend yield of 4.8% but has a high payout ratio of 77%. The company’s last dividend declined by 4.5%. Corby’s three-year-dividend payout has grown at a rate of 5%+ CAGR.

Corby is targeting to capture market share by focusing on brand prioritization in a few segments and markets. Its portfolio of owned and represented brands provides an excellent platform for future expansion while its innovative streak should assist in capturing incremental growth opportunities.

The liquor company is also focusing on growing outside Canada by delivering relevant consumer offerings. The combination of Corby-owned brands and commission income consistently generates strong annual cash flows, supporting a generous dividend policy.

Corby operates in the consumer defensive sector and even the pandemic could not put a dent in its performance. There is growing recognition for wines and liquor amongst the younger generation.

Unlike other consumer-driven commodities, people tend to drink more at times of crisis. In fact, alcohol sales have surged during the COVID-19 crisis in North America. As such, Corby’s dividend stands a good chance from the improved performance of Corby-backed brands and better commissions from represented brands.

Competition

The global beverage alcohol industry has been witnessing industry consolidation in recent years. The Canadian and international beverage alcohol industry is very competitive.

The company competes with the likes of Andrew Peller Ltd., a leading producer, and marketer of quality wines in Canada, Waterloo Brewing that engages in the production, distribution, and sale of alcohol-based products. Corby’s operations are subject to seasonal fluctuations.

Retail sales are also affected by the timing of key holidays and reporting calendars.The global beverage alcohol industry has been witnessing industry consolidation in recent years. The Canadian and international beverage alcohol industry is very competitive.

TickerKeyTickerCompanySectorIndustryScoreQuoteMarket CapP/EFPEEPSYield RawYieldPayoutRatioPaymentsDividendChowderGrowthRatingIncomeRatingTollboothAmbassadorAchieverAristocratKingCountryGraph
TSE:ADW.AADW.AAndrew Peller Ltd.Consumer DefensiveBeverages - Wineries & Distilleries0.4411.340.526.416.411.770.01901.900.121540.220.090734Consumable - DiscretionaryNONONONOCanada1
TSE:CSW.ACSW.ACorby Spirit and Wine LtdConsumer DefensiveBeverages - Wineries & Distilleries0.3518.120.5116.6416.641.090.04644.640.770640.840.062424Consumable - DiscretionaryNONONONOCanada1

Bottom Line

Corby’s key brands continue to outpace the industry, not only in the Canadian whisky and super-premium gin categories but also within a super-competitive vodka category.

Given its large international footprint, Corby is well-positioned to leverage the growth potential of its key strategic brands and continue to exploit new routes-to-market and channel opportunities for long-term growth. In addition, acquisitions can provide access to further growth opportunities.

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