Deerfield, Illinois-based Fortune Brands, Inc. (FO) is a conglomerate with three major businesses - home hardware, distilled spirits, and sports equipment. Fortune's portfolio includes several widely recognized brands, including Moen faucets, Jim Beam bourbon, and Titleist golf equipment. The company flirted with acquisition of another major brand in early 2008, but ultimately elected not to bid for Vin & Spirit, the maker of Absolut Vodka, which was instead acquired by the French firm Pernod Richard. Passing on the deal means Fortune can keep its balance sheet relatively clear of debt - but the lost opportunity could cause long-term cash flow problems for Fortune, as it has a deal with V & S to distribute Absolut vodka in the USA through 2012 that is unlikely to be renewed by the brand's new owners.^[1]

Fortune has had steady revenue growth over the past five years, though the 2007 economic slowdown took its toll on that year's results, leaving revenues virtually flat year on year. The Home and Hardware business, the firm's largest, is particularly vulnerable to housing slowdowns, and has been hit significantly by last year's subprime crisis. The Spirits sector faces rising commodities costs, but global demand has trended towards the premium and super-premium drinks that Fortune produces (and away from cheaper spirits and beer), improving that sector's short term outlook. Golf, the firm's smallest segment, has benefited from the growing popularity of the game abroad; the segment performed well in 2007 despite heavy regulations by governing bodies (the USGA) which limited product innovation.

All three of Fortune Brands' units compete with large consumer products firms (for instance, Black & Decker (BDK) in Home and Hardware, Brown-Forman (BF) in Spirits, and Nike (NKE) in Golf. Fortune's brands are often #1 or #2 in their markets, and the company regularly supplements its portfolio with strategic acquisitions. The diversity of its holdings also protects it, to a degree, against downturns in any particular market - but all three of its core businesses depend on consumers' discretionary income to build revenues.

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