Jack Daniel’s and premium American whiskeys drive Brown-Forman Q318 growth
The spirits maker’s reported net sales were up 9% for the third quarter and first nine months of fiscal 2018 ended Jan. 31, 2018, hitting $878m and $2.5bn, respectively.
Jack Daniel’s Tennessee Fire grew by double digits (+22%) helped by increased sales in US on-premise channels and a global rollout of the American whiskey brand. Jack Daniel’s RTD business has also delivered strong net sales growth, up 17%, driven by innovation and new product launches such as recently-debuted Jack Daniel’s Cider, Jack Daniel’s American Serve (launched in 2016), Jack Daniel’s Lynchburg Lemonade and Southern Peach Country Cocktails (launched in 2017).
The company’s super premium whiskey brands Old Forester and Woodford Reserve have grown “well into the double digits” supported by increased branding and marketing initiatives, Brown-Forman CEO Paul Varga said during the company’s Q318 earnings call.
According to Varga, a combination of repackaging, managing price volume, and home place marketing has increased consumer acceptance and awareness Old Forester in particular.
“We are experiencing… some benefit from retro appeal and you see this across the few categories. We are seeing some of it in beer as well, so all of these are contributing to this recent resurgence in Old Forester,” Varga said.
“As the American whiskey category and bourbon continues to surge across the United States, I think Old Forester should be able to ride that momentum quite effectively.”
Developed and emerging markets performance
Brown-Forman’s aggregate business in markets outside the US accounts for 50% of its total revenue and have grown in the high single digits, the company reported.
Sales in the company’s developed markets outside of the US remained robust, delivering year-to-date reported net sales growth of 9%, fueled by the UK, Germany, France, and Australia. After launching its own distribution in Spain last summer, results have continued to accelerate, resulting in double-digit year-to-date underlying net sales growth, the company said.
The company’s two largest emerging markets, Mexico and Poland, both grew reported net sales by 13% and 25%, respectively, due to a strong demand for the Jack Daniel’s family of brands as well as growth of tequilas in Mexico, Brown-Forman said.
The travel retail channel continued to deliver solid sales performance (+17%) led by the growth of Jack Daniel's Tennessee, Gentleman Jack, and Woodford Reserve in new and emerging markets. Increasing passenger volumes, particularly Russian travels, and improved foreign exchange volatility have also contributed to sales performance in travel retail.
“I think the emerging markets have stabilized and are growing nicely and I am very optimistic about the growth overall as we look at even from the market in Russia,” Brown-Forman CFO Jane Morreau said.