Southern Comfort sales hit by rising flavoured brown spirits trend – Brown-Forman
Reporting its full-year 2012 results for the year to April 30, spirits giant Brown-Forman posted net sales up 6% to $3.6bn (€2.86bn) while operating income fell 8% to $788m.
Ben Marmor, Brown-Forman director of investor relations, said that “primary growth driver” the Jack Daniel’s family underpinned net sales gains in Western Europe: the UK, Germany, France and Spain.
He said the company was “particularly proud” of taking market share and growing its business in a region where most countries are seeing declines in distilled spirits sale.
But US net sales fell in 2011, with Brown-Forman admitting lost market share in recent periods, emerging markets provided 40% of underlying net sales growth, led by Mexico and Turkey.
Tennessee Honey creates ‘positive halo effect’
Brown Forman has high hopes that line extensions such as Jack Daniel’s Tennessee Honey (a whisky blended with a honey liqueur, pictured below) which it claims is the first spirits brand to ever advertise on Twitter – could improve its US performance.
Already launched in the US, the firm considers the product as a further growth driver for its successful Jack Daniel’s brand globally, where it is currently posting double-digit net sales growth.
During a later analyst call, executive chairman and CEO, Paul Varga said that Brown-Forman would assess the success of Tennessee Honey within the context of growth in flavoured brown spirits.
But he added: “One of the problems we’ve got with Southern Comfort’s performance, actually, is that a lot of these new [market] entrants have created a competitive challenge to Southern Comfort, which has been for a long time…one of if not the leader in this flavoured brown spirits segment.
Jack Daniel’s Tennessee Honey – other Brown Forman 2011 innovations include Chambord Vodka, Southern Comfort Lime and Early Times 354 – had created a “positive halo effect” for Jack Daniel’s Tennessee Whisky, the firm said, with volume and value share up in the past quarter.
‘Fast growing’ RTD profit source
Said Marmor: “We plan to build on these innovations in fiscal 2012, particularly with Tennessee Honey. This only started shipping [in the US] at the very end of fiscal 2011 and will really be more of a fiscal 2012 launch,”
“It is early in the launch, but results so far have been very encouraging. Anecdotally, we have seen a lot of excitement from both the trade and consumers alike,” he added.
Ready-to-drink (RTD) Jack Daniel’s lines were also rolled-out into a number of new markets in 2011, Marmor said, with volumes growing nearly 17% in 2011 to over 5.5m nine-litre cases shipped.
“The success of Jack Daniel’s RTD products has significantly accelerated the growth of the Jack Daniel’s trademark…and were an important and fast-growing profit source,” Marmor said.
Aside from Jack Daniel’s and Southern Comfort, key Brown-Forman brands include Finlandia vodka, Canadian Mist whisky and Don Eduardo tequilas.