Old Forester Bourbon owner Brown-Forman reported flat net sales for its third quarter, however the Jack Daniel’s ready-to-drink portfolio rose 34%.
The firm’s net sales for the third quarter ending 31 January 2021 hit US$911 million, with operating profit falling by 8% to US$281m.
For the first nine months of fiscal 2021, reported net sales grew 2% to US$2.65 billion. Operating income for the year to date grew 10% to US$988m.
Brown-Forman president and CEO Lawson Whiting said: “We remain pleased with our year-to-date underlying net sales growth, particularly when considering the unprecedented and challenging operating environment.
“Importantly, we remain focused on executing our long-term strategic priorities and our commitment to be better and do better as individuals and as a company. Our strategic priorities have enabled us to build strong business momentum during the Covid-19 crisis and we believe they remain the right strategies to deliver broad-based growth and value creation over the long term.”
Sales in the US grew 7%, led by premium Bourbons, the Jack Daniel’s ready-to-drink (RTD) portfolio, Jack Daniel’s Tennessee Honey, Gentleman Jack, and Tequila brands Herradura and El Jimador. Brown-Forman said the gains were partially offset by declines for the core Jack Daniel’s expression due to a ‘channel mix shift’ and lower volumes in the on-trade.
Brown-Forman also reported ‘high-single-digit’ net sales growth in developed international markets, driven by Jack Daniel’s RTDs, Jack Daniel’s Tennessee Apple and Honey expressions, and super-premium American whiskey and Scotch.
Emerging markets returned to growth (up 1%) during the year to date, driven by Brazil, Poland and China. The increases mainly offset declines in Southeast Asia, India and a number of Latin American markets. Travel bans and Covid-19 restrictions ‘significantly’ affected travel retail sales, down 54%.
The Jack Daniel’s portfolio saw net sales increase 2%, with growth from its RTDs (34%), Apple (107%) and Honey (10%) line extensions, and Gentleman Jack (12%). The flagship Jack Daniel’s expression declined 7% due to lower travel retail sales, travel bans in certain emerging markets and Covid-19 restrictions.
Premium Bourbons rose by 18%, with ‘strong’ double-digit growth from both Woodford Reserve (up 18%) and Old Forester. The Tequila portfolio grew by 6%, boosted by New Mix in Mexico. El Jimador (up 1%) and Herradura (flat) both reported double-digit gains in the US. Brown-Forman reported a 19% decline for vodka, which included the Finlandia brand.
During the quarter, Brown-Forman’s board of directors approved a US$125m investment to expand Bourbon production in Kentucky. As such, the firm moved forward with its multi-million-dollar distillery expansion in Louisville to meet increasing demand for American whiskey.
Looking ahead, the firm expects to face continued uncertainty due to the pandemic. As a result, Brown-Forman has not provided guidance for the fiscal year.
Jane Morreau, executive vice president and chief financial officer, said: “While near-term uncertainty remains, we believe we are operating from a position of strength, and will emerge even stronger from this crisis, continuing to grow market share and drive long-term sustainable growth for all stakeholders.
“The company’s financial and business fundamentals have remained strong throughout the entire pandemic allowing us to deliver solid growth in this challenging environment.”
Via The Spirits Business