Brown-Forman (NYSE:BF.A)(NYSE:BF.B) continues to whittle down its spirits portfolio to concentrate on just the top brands. Today, it announced it is selling its Canadian Mist, Collingwood, and Early Times whiskeys.

Privately held Sazerac will acquire the brands for an undisclosed sum. The distiller is slowly amassing a broad portfolio of spirits through acquisitions, making it a formidable competitor to larger, more established rivals.

Bottles of Canadian Mist whisky

Image source: Brown-Forman.

Placing a premium on growth

Brown-Forman generates most of its revenue from the sale of Jack Daniel's whiskey, the largest U.S. whiskey brand and the fourth biggest spirit, but it has been benefiting from the trend toward premiumization that's occurred across the alcohol sector. The distiller's high-end whiskey and tequila enjoyed double-digit growth in underlying net sales prior to the coronavirus pandemic.

Analysts, however, have downgraded the prospects of distillers due to COVID-19's impact on the on-premise channel, or venues such as restaurants, bars, nightclubs, and hotels. With the travel and tourism industry not likely to bounce back quickly, the outlook for growth is muted.

But Brown-Forman sees premium spirits as the long-term sweet spot with consumer preferences, so it has agreed to sell off brands not in line with that strategy. 

Brown-Forman acquired the Canadian Mist brand in 1971, marking the first time the distiller produced a spirit outside of the U.S. The 160-year old Early Times Kentucky whiskey was its first acquisition in 1923.

Sazerac may be best known for kicking off the cinnamon-flavored whiskey trend with its Fireball brand, which led to Brown-Forman creating its own version, Jack Daniel's Tennessee Fire, and then branching off with other derivatives, including its top-selling honey-flavored version, Tennessee Honey.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.