Brown-Forman reports ‘strong’ Q1 sales

Brown–Forman has hailed a “strong start” to fiscal 2019, driven by the double-digit growth of the Jack Daniel’s family of brands.

The Jack Daniel’s family of brands led the growth of Brown-Forman’s 2018 first quarter

In the three months ending 31 July 2018, the US firm reported a net sales increase of 6% to US$766 million. Reported operating income grew by 5% to US$264m.

Brown-Forman experienced “solid, broad-based” gains from around the world with markets outside of the US delivering the “strongest” growth.

Developed international markets saw an increase of 16% (+12% reported), while emerging markets grew by 11% (+7% reported). Underlying net sales in the US increased by 2% (0% reported).

Brazil grew by 30% (+20% reported) due to “strong demand” for Jack Daniel’s. Russia experienced a 12% decline (+57% reported) as a result of “challenging comparisons related to the changes in distributor and related buying patterns”.

Germany and the UK grew by 38% (+28% reported) and 33% (+19% reported) respectively, while France’s underlying net sales increased 3% (-1% reported).

Australia’s net sales increased 6% (+2% reported) and Canada’s net sales were flat (-2% reported).

Travel retail witnessed “solid growth” during the period, up 22% (+24 reported).

Brand outlook

The Jack Daniel’s family of brands led the firm’s underlying net sales, up 10% (+7% reported), with “strong volume gains” outside of the US.

The group’s super-premium American whiskey brands – including Woodford Reserve, Jack Daniel’s Single Barrel and Gentleman Jack – delivered 25% underlying net sales growth (+24% reported).

Woodford Reserve grew by 29% (+30% reported).

Old Forester grew at “an even faster rate”, fuelled by the “combination of volumetric gains and favourable mix”.

Finlandia vodka declined by 10% (-18% reported), due to “disruption related to packing changes” in Poland and the “competitive environment for premium vodka”.

Tequila brand El Jimador grew by 11% (+10% reported) boosted by “strong takeaway trends” in the US. Herradura increased by 10% (+11% reported) with double-digit gains in the US.

CEO Paul Varga said the company’s “momentum continued” during the period, with “strong net sales growth as consumer demand for our premium American whiskey brands remained robust”.

He said: “After considering the estimated impact of order phasing related to tariffs, our first quarter growth was in-line with last year’s underlying net sales growth and keeps us on track to deliver another strong year of top-line growth in the 6-7% range.”

Lawson Whiting, chief operating officer and incoming CEO, added: “There remains significant uncertainty around the duration of recently enacted tariffs, but we have been encouraged by the resilience of our business model as we are working to minimise short-term disruption and maintain our top-line momentum.

“We believe that our consistent reinvestment back into our brands and people positions us well over the long-term to continue generating leading returns for our shareholders.”

In June this year, Brown-Forman announced it will raise the price of Jack Daniel’s by around 10% in the European Union after the bloc implemented a 25% tariff on American whiskey.