Jack Daniel’s Tennessee Honey halo: ‘US bourbon is hot', Brown-Forman


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Brown-Forman sats Jack Daniel's Tennessee Honey sales have nearly doubled in its fiscal year to date
Brown-Forman sats Jack Daniel's Tennessee Honey sales have nearly doubled in its fiscal year to date
Brown-Forman’s US flavored whiskey revolution continues, with Jack Daniel’s Tennessee Honey sales nearly doubling in the firm’s fiscal year to date, as the firm hails a ‘hot’ US bourbon category.

On Wednesday Brown-Forman reported its Q3 2013 results with net sales up 7% on Q3 2012 at $1.027bn, while operating income rose 15% in the quarter to $237m; Jack Daniel’s brand portfolio net sales increased by 10%.

CFO Donald Berg attributed Brown-Forman’s success, in part, to the fact that: “In the US, bourbon’s a hot category, growing almost twice as fast as total distilled spirits and vodka according to a twelve month Nielsen data.”

There was renewed interest in aged spirits and flavor innovation, Berg added, with 60% of Brown-Forman’s case sales weighted towards its whiskey portfolio, and with value growth a key metric for brands such as Jack Daniel’s, the firm has been able to pass through price rises over the past year.

Bourbon outperforming broader spirits category

Across all spirits categories, Nielsen data showed that bourbon had posted the largest year-on-year improvement in price/mix, Berg added, gaining 2.2% points and outperforming total distilled spirits, which only posted 0.6% point growth.

Noting a clear correlation between higher prices and higher growth rates, Berg said that the premium spirits categories were outgrowing value, while super-premium had seen the strongest growth at 8.9%.

“With over 90% of our sales derived in the premium and above categories, we believe our brands are well positioned to benefit from consumers’ willingness to pay a premium from brands with heritage and authenticity, not to mention great taste profiles,” ​he said.

Noting the continued success of 2011 launch Jack Daniel’s Tennessee Honey, which was rolled-out this financial year into a limited number of markets beyond the US, notably the UK, CEO Paul Varga said: the drink “has continued to be well received in a handful of countries where it available”.

“We consider it a wonderful accomplishment for it to be as successful as it has been with little to no cannibalization effect observed thus far,”​ he said.

“If anything, we think it has provided a positive halo impact on the trademark and reinforced the brand’s mixability,” ​Varga claimed, adding that Tennessee Honey had also reinforced impressions of Jack Daniel’s as a premium spirit.

Sinatra Select, Gentleman Jack

Modest price hikes and fewer discounts had also helped strengthen the core brand, he added, alongside improved primary packaging, further development of products such as the single barrel Gentleman Jack and ultra-premium Sinatra Select limited edition (pictured).

During the equivalent Q3 2012 earnings call a year ago, Varga told analysts that interest in distilled spirits, in the US, but increasingly globally, was evidence of clear consumer interest in flavored varieties, whether with vodka or more recently, with Tennessee Honey.

“People like them for their very interesting flavors, but also the convenience oftentimes that comes in preparation of their drinks. So we think there’s a lot of growth here,” ​Varga said.

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