Brown-Forman posts 2% sales rise in Q1

US firm Brown-Forman saw organic sales grow by 2% in the first quarter of fiscal 2024, driven by El Jimador Tequila and ready-to-drink (RTD) brand New Mix.

For the three months to 31 July 2023, Brown-Forman’s sales reached US$1 billion.

Organic operating income fell by 6% to US$327 million.

The group previously posted a sales increase of 8% for its 2023 fiscal year.

Lawson Whiting, Brown-Forman’s president and CEO, said: “As anticipated, our first quarter growth was impacted by the difficult shipment comparison from fiscal 2023, when we rebuilt inventory impacted by prior glass supply challenges.”

The firm’s US sales dropped by 9% organically, as a result of lower volumes from a decrease in distributor inventories, which were partially offset by higher prices across the portfolio.

The decrease in distributor inventories was partially due to ‘cycling against a significant inventory build’ from the same period last year, the firm said, as it recovered from supply chain disruption.

Emerging markets grew by 32% organically, led by Mexico (up 24%), Poland (up 22%) and Brazil (up 18%).

Organic sales were flat in ‘developed international markets’, after lower volumes of Jack Daniel’s RTDs in the UK and Australia.

The company’s top developed international markets were Germany (up 4%), Australia (down 13%), the UK (up 15%), France (up 3%), Canada (down 1%), and Japan (down 88%).

The firm will end its distribution partnership with Asahi in Japan in March 2024 to enable it to bring distribution in house.

The travel retail channel rose by 9%, led by Woodford Reserve Bourbon and the Jack Daniel’s super-premium range.

Brand performance

The firm’s whisky division (which also includes whisky-based liqueurs) reported stagnant organic sales, due to a decrease in distributor inventories for Woodford Reserve (down 8%) and Gentleman Jack (down 13%).

The Jack Daniel’s family of brands reported 2% organic sales growth, with the core expression also registering a 2% increase.

Brown-Forman highlighted that its Jack Daniel’s Tennessee Apple climbed by 52% organically, led by South Korea. Jack Daniel’s Honey was flat and the Fire line extension slumped by 19%.

Old Forester Bourbon dropped by 9%.

Vodka, which includes Finlandia, increased by 15%. The firm announced its exit from the category with the sale of Finlandia to Coca-Cola’s bottling arm in June this year.

Organic net sales of Tequila rose by 12%, boosted by El Jimador (up by 26%), which benefitted from higher prices, particularly in the US, and higher volumes in Colombia.

Herradura Tequila, on the other hand, declined by 3% organically after lower volumes in the US.

Tequila-based RTD New Mix soared by 32%, while the Jack Daniel’s RTD portfolio reported a flat performance.

Brown-Forman’s ‘rest of the portfolio’ grew by 5%, led by Gin Mare and Diplomático in Italy. The division also includes Chambord liqueur, Korbel Brandy and Fords Gin.

The company’s advertising spend rose by 14%, driven by the launch of the Jack Daniel’s & Coca-Cola RTD, increased investment in Jack Daniel’s Tennessee Whiskey, and the acquisitions of Gin Mare and Diplomático.

Guidance for fiscal 2024

Brown-Forman expects its organic net sales to rise in the range of 5% and 7% for the 2024 fiscal year.

Operating income is predicted to grow between 6% and 8%.

The firm is planning its capital expenditures to be in the range of US$250 and US$270m.