Brown-Forman sales slow down in H1

Jack Daniel’s owner Brown-Forman reported “slower than anticipated” sales for the first half of its 2024 fiscal year, dragged down by whiskey and Tequila declines.

The US firm reported a sales increase of 1% to US$2.1 billion for the six months to 31 October 2023, with operating income rising by 1% to US$666 million.

Second-quarter organic sales fell by 1% to US$1.1bn, following 2% growth in the previous three months.

Brown‑Forman president and CEO Lawson Whiting said: “Our first-half fiscal 2024 results illustrate Brown‑Forman’s ability to deliver continued growth, even amid dynamic market conditions and very strong comparisons from the prior-year period.

“While we grew at a slower pace than anticipated, we delivered strong gross margin expansion and continued to invest strongly behind our brands. We continue to believe our premium portfolio and broad geographic footprint will position us for accelerated growth in the second half of the fiscal year.”

After strong sales in the same period last year, Brown-Forman’s whiskey division reported a 1% decline in the first half of its 2024 fiscal year.

Sales of the Jack Daniel’s family of brands was stagnant, due to lower volumes of its core Jack Daniel’s, Tennessee Honey (down by 3%) and Gentleman Jack, which were offset by the growth of the Apple variant (up by 52% organically) and super-premium expressions.

Premium Bourbon brands Woodford Reserve and Old Forester also declined, down by 3% and 5% respectively.

The group’s Tequila portfolio also fell by 1%, with Herradura falling by 9% organically due to lower volumes in the US.

El Jimador grew by 7% as a result of higher prices, mainly in the US, and higher volumes in Colombia that partially offset lower volumes in the States and Mexico.

The company’s ready-to-drink (RTD) portfolio fared better, with Tequila-based New Mix soaring by 22%. The Jack Daniel’s RTD range rose by 1%, boosted by the co-branded Coca-Cola product.

Brown-Forman’s latest acquisitions, Gin Mare and Diplomático rum, drove the ‘rest of portfolio’s’ division (up by 17%).

In terms of markets, the group’s biggest market, the US, fell by 5% after ‘significant’ inventory rebuild as a result of supply chain disruption.

The group’s emerging markets rose by 19% and developed international markets declined by 2%.

The travel retail market was flat (up by 3% on a reported basis), led by the group’s super-premium American whiskeys, with growth offset by lower volumes of the core Jack Daniel’s whiskey and Tennessee Honey.

Brown-Forman increased advertising expense by 12% to support investment behind Jack Daniel’s Tennessee Whiskey, Gin Mare, Diplomático and Jack Daniels & Coca Cola RTD.

Outlook for fiscal 2024

Brown-Forman expects organic net sales for fiscal 2024 to increase by 3%-5% and operating income to grow between 4% and 6% due to ‘continued input cost pressures’.

Capital expenditures are predicted to be in the range of US$250m to US$270m.