Brown-Forman net sales drop 4% in H1

Finlandia vodka producer Brown-Forman has reported a net sales decline of 4% in the first six months of its fiscal year, blaming the sale of Southern Comfort and adverse currency effects for the loss.

Brown-Forman-owned Finlandia vodka experienced a 4% decline in underlying net sales

“As anticipated, our reported earnings were impacted noticeably in the first half by the absence of the brands we sold in late fiscal year 2016, as well as by adverse foreign exchange,” said CEO Paul Varga. “Underlying growth in net sales and operating income was solid considering the strength of last year’s first half.”

The company’s underlying net sales growth was led by the Jack Daniel’s brand, which was up 2% (-1% reported). Jack Daniel’s Tennessee Honey’s underlying net sales grew 2% (0% reported), with “modest growth” in the US offset by “flat” results outside of the market.

Jack Daniel’s Tennessee Fire’s underlying net sales grew double-digits due to the brand’s launch outside of the US and solid growth in the on-premise within the US.

Jack Daniel’s RTD range delivered “solid” results, with underlying net sales growth of 5% (equivalent to 0% reported).

Brown-Forman’s portfolio of super and ultra-premium whiskey brands, including Woodford Reserve Double Oaked, Jack Daniel’s Single Barrel, and Gentleman Jack, continue to deliver “strong rates of growth” – Woodford Reserve in particular grew underlying net sales by 19% (12% reported).

Finlandia vodka experienced a 4% decline in underlying net sales (-17% reported). Though trends in Poland improved, Russia remained under “significant pressure” attributed to a “challenging economic backdrop” and the depreciation of the rouble.

Tequila brand El Jimador grew underlying net sales by 9% (3% reported) as the brand is “growing quickly” in both the on-and off-trade in the US. Meanwhile Tequila Herradura grew underlying net sales by 16% (12% reported), driven by double-digit gains in the US and Mexico.

Brown-Forman predicts another year of “continued growth” in underlying net sales and operating income, despite “significant uncertainty” on the global economic and geopolitical environment and foreign exchange volatility.

Varga added: “We anticipate additional improvement in underlying net sales growth in the second half of fiscal 2017 against more favourable comparisons, as well as continued investments to position the company for sustained long-term growth.”