2011 was an extraordinary year for Beam. As we review our results and our outlook for the future, I'd like to emphasize 3 points which give us confidence in our ability to deliver our commitment to our shareholders. First, we launched Beam as a leading standalone spirits company with great success. We have an excellent team, a clear strategy and a strong capital structure, reflected in our recent synergy-driven acquisitions, all of which enable us to be a leader in the dynamic spirits industry.Second, even as we transitioned to a pure-play spirits company, the Beam team executed well against our growth strategy in 2011 and delivered a set of results that met or exceeded all of our 2011 targets. Our net sales increased 8% on a comparable basis, well ahead of our markets, and our adjusted pro forma diluted EPS increased 10%, and we achieved our target to convert at least 90% of our earnings into free cash flow. And third, we feel very positive about the current performance and outlook for our business. We finished 2011 with a very good fourth quarter that was slightly above our expectations, reflected in solid comparable sales growth and profit leverage. Q4 comparable sales increased 4%, despite the adverse impact of the timing of sales in Mexico and Australia, which effectively reduced sales growth by approximately 2 points. Market-beating performance for our global Power Brands, as well as new product launches, helped drive our gains in the quarter. Fourth quarter adjusted pro forma diluted EPS was up 9%. Moreover, we're encouraged by our continued momentum as we start the year and the exciting plans we have to keep outperforming in 2012. Our confidence in our prospects for 2012 is rooted in a couple of key dynamics. First, we expect to grow sales faster than our markets due to the strength of our Power Brands and Rising Stars, our pipeline of new product introductions in 2012, sustained premiumization and the continued consumer excitement around the bourbon category. And second, our earnings will benefit from our accelerated cost reductions, offsetting raw materials inflation; our competitive level of brand investment, which is now in line with sales growth; and the leverage of our fixed cost base. So we feel very good about our earnings target for 2012, which we'll discuss in greater detail later.
So let me now step back and build upon these themes by describing how we are putting our growth and return strategy into action. We continue to focus on disciplined execution of a simple and effective 3-point strategy: creating famous brands, building winning markets and fueling our growth. Our Creating Famous Brands strategy is reflected in our focused resource allocation. We boosted brand investment by approximately 30% over the past 2 years, which has taken our run rate to a very competitive level. And this investment has become even more effective through increased focus. In 2011, we devoted the substantial majority of our brand investment to our Power Brands and Rising Stars. By enhancing the equity of these brands through impactful brand communication and powerful innovation, we drove very strong growth at the premium end of our portfolio in the past year. We outperformed our competitors in the spirits markets in which we compete around the world, and we positioned these brands to thrive in 2012 and beyond.In 2011, comparable sales growth for our Power Brands was up 9%, and our Rising Stars grew 42%, including very strong growth for the Skinnygirl brand. Now I'd like to mention a few of the brand-building highlights from the past year. We continue to optimize our marketing mix, including devoting about 1/3 of our advertising investment to digital media. The critically-acclaimed Bold Choice advertising campaign helped reenergized the Jim Beam franchise, including solid growth for the core Jim Beam white label. We launched the first-ever TV advertising for Maker's Mark in the U.S. in 2011, which, combined with other tools like innovation and pricing, further enhanced this brand's already strong performance. We supported both Sauza and Red Stag with targeted TV advertising in the U.K. And backed by creative brand activation, our Canadian Club RTD products approached 1 million cases in Australia, as CC continues to tap into beer occasions and take market share. New products like Skinnygirl White Cranberry Cosmo, Courvoisier Rosé and Pucker Flavored vodka brought new female consumers to our categories in very meaningful numbers.
On the innovation front, 2 very successful innovations from Jim Beam, Red Stag and Devil's Cut, are also good examples of how we seek to borrow equity from the core brand and build back strength in the franchise. Jim Beam Devil's Cut is off to a tremendous start in the U.S., and we're now beginning to roll it out into more markets. Red Stag continues to grow very strongly in its third year in the U.S. and around the world. Red Stag is now sold in 22 global markets, including Germany, the world's third largest bourbon market, where it doubled our initial expectations after its 2011 launch. And our Borrow and Build mantra also works at an economic level, with both innovations benefiting from the halo of Jim Beam's overall advertising investment, while delivering higher gross margins to the core brand's P&L. Our ability to energize our markets with new products is also supported by our strong R&D capabilities, our speed to market and what we believe are the best innovation cycle times in the industry.Read the rest of this transcript for free on seekingalpha.com