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Brown-Forman on track for ‘solid’ year of growth

Woodford Reserve owner Brown-Forman Corporation has reported strong financial results for the first half (H1) of fiscal 2023, boosted by sales of Jack Daniel’s whiskey.

Brown-Forman UK Hq
Brown-Forman reported a ‘strong’ first half of fiscal 2023

For the first six months of the fiscal year (May-October 2022) the firm has reported a net sales increase of 11% to US$2.1 billion compared to the same period last year.

Lawson Whiting, Brown-Forman’s president and CEO, stated: “Brown-Forman has once again displayed tremendous resolve, delivering double-digit revenue growth for the first half of fiscal 2023.

“Consumer demand for our brands remains strong, and we have set the organisation on a path for continued growth with our sustained brand investments, recently announced acquisitions, product innovation, and strategic relationships.

“Despite foreign exchange and inflationary headwinds, Brown-Forman is on track to deliver another solid year of growth in fiscal 2023. The board’s recent approval of a 9% increase in the regular quarterly cash dividend reinforces our shared confidence in the long-term health of our business.”

Portfolio growth was led by Jack Daniel’s Tennessee Whiskey, which saw a reported net sales boost of 9%, with broad-based growth seen across all geographic clusters and the travel retail channel.

Foreign currency exchange has negatively impacted the company’s net sales growth by six percentage points, however the firm reported operating income increased by 8% to US$656 million in H1, and diluted earnings per share increased by 11% to US$0.99.

Higher pricing and an estimated net increase in distributor inventories positively impacted reported net sales of the brand, partially offset by the negative effect of foreign exchange.

Continued consumer desire for convenience and flavour drove gains in Jack Daniel’s ready-to-drinks (RTDs), Jack Daniel’s Tennessee Honey, and Jack Daniel’s Tennessee Fire. Innovation is also said to have contributed to net sales growth with the launch of the Jack Daniel’s Bonded series.

The company attributed its full-year sales growth for 2022 to the whiskey brand, which climbed by 23% as consumers returned to the on-trade.

Woodford Reserve sustained double-digit growth with reported net sales of 39%, while the firm’s RTD brands saw net sales growth of 14%, propelled by Jack Daniel’s RTDs in Australia and Germany.

Reported net sales for the firm’s Tequila portfolio increased by 10%, led by El Jimador, which grew reported net sales by 16%, and Herradura, which increased reported net sales by 9%, driven by volumetric growth in the US.

The travel retail channel continued to deliver strong growth with a reported net sales increase of 60%, driven by higher volumes across much of the portfolio as travel continued to rebound.

Full-year fiscal 2023

Looking forward to fiscal 2023, Brown-Forman anticipates stronger growth despite global macroeconomic and geopolitical uncertainties.

The company has said that, reflecting the strength of Brown-Forman’s portfolio of brands, stronger consumer demand, and the easing of supply chain constraints, it expects organic net sales growth to land in the high-single digit range.

The firm’s reported gross margin for H1 fell by -1.3%, driven by inflation, supply chain disruption costs, and foreign exchange.

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