Jack Daniel’s drives Brown-Forman H1 gains

Brown-Forman has hailed a “strong start” to fiscal 2018, driven by “broad-based” gains for its Jack Daniel’s family of brands.

The Jack Daniel’s family of brands delivered “broad-based growth” in H1

In the three months to 31 July 3017, Brown-Forman’s underlying net sales hit US$723 million, up by 6% year-on-year (+9% reported).

Results were driven by the emerging markets, which were up by 19% on an underlying basis (+27% reported). Developed markets grew underlying net sales by 3% (+7% reported), led by 5% growth in the United States (+10% reported).

Year-to-date underlying net sales grew 5% (+10% reported) in the US, fuelled by “continued gains” for the Jack Daniel’s family and “sustained growth” from its Bourbon brands.

Aside from Australia, which enjoyed underlying net sales growth of 17% (+12% reported) thanks to buy-ins in advance of excise tax driven price increasesm the developed markets fell flat.

Japan witnessed declines due to “comparisons with the prior year’s buy-ins related to last year’s large price increase”, and the UK and Germany were also negatively impacted by timing. Brown-Forman expects these markets to normalise in the second quarter as the comparisons ease “considerably”.

Mexico and Poland – the firm’s two largest emerging markets – grew both underlying and reported net sales double-digits, driven by “solid growth” for the Jack Daniel’s stable.

Underlying and reported net sales grew by strong double-digits in Russia, Turkey, Brazil, China, and Ukraine, thanks to “improving consumer demand in a more stable exchange rate environment”.

In Travel Retail underlying net sales were up by 12% (+4% reported), propelled by an increased focus on key global accounts.

Brand outlook

The Jack Daniel’s family of brands delivered “broad-based growth”, with underlying net sales up 6% (+10% reported), with strong results from Jack Daniel’s Tennessee Fire as the brand continues to benefit from its global rollout and solid US growth.

Jack Daniel’s Tennessee Whiskey grew by 4% on an underlying basis (+9% reported), as an acceleration in the emerging markets offset a “soft start” in the developed markets outside of the US.

The company’s super- and ultra-premium American whiskey brands, including Woodford Reserve, Jack Daniel’s Single Barrel, and Gentleman Jack, experienced “strong” underlying net sales growth. Woodford Reserve grew underlying net sales by 16% (+10% reported), and Old Forester “grew even faster”.

Vodka brand Finlandia grew underlying net sales by 6% (+17% reported) thanks to “improved results in Poland against a very competitive environment, strong growth in Russia, and gains in Travel Retail”.

Tequila Herradura increased by 18% (+11% reported), driven by double-digit gains in both the United States and Mexico, while el Jimador Tequila delivered 13% growth (+19% reported), thanks to “strong and accelerating” takeaway trends in the US, and “better results” in Mexico after repositioning the brand at a premium level.

The company has reaffirmed its full year expectations for 4-5% underlying net sales growth and 6-8% underlying operating income growth.

Chief executive officer, Paul Varga, said: “Fiscal 2018 is off to a strong start with 6% growth in underlying net sales and 12% growth in underlying operating income, both metrics representing a nice acceleration versus the company’s solid fiscal 2017 underlying results.

“We continue to foresee growth potential for our brands, most notably in American Whiskey, and accordingly, we intend to invest against this opportunity with ever-improving prioritization, competitiveness, effectiveness, and efficiency.”