Brown-Forman forecasts flat FY sales

Jack Daniel’s owner Brown-Forman saw organic revenue decline by 2% in the third quarter of fiscal 2024 and now expects full-year sales to be stagnant.

For the three months to 31 January 2024, US firm Brown-Forman reported sales of US$1.1 billion. Organic operating income rose by 5% to US$373 million.

It followed a sales decline of 1% for the first half of the group’s 2024 fiscal year, dragged down by whiskey and Tequila declines.

For the nine months to the end of January, sales were flat at US$3.2bn.

The company’s whisky sales fell by 1% for the nine-month period with single-digit declines for the entire Jack Daniel’s portfolio, except for the Tennessee Apple line extension, which soared by 45%. Brown-Forman noted that the decline in whisky sales was due to lower volumes for the core Jack Daniel’s (down 5%) and Honey variant (down 6%).

Premium Bourbons fared slightly better with Woodford Reserve growing by 2% and Old Forester by 5%. The company’s other whisky brands – which includes Scotch whisky Glenglassaugh ­– saw sales soar by 19%.

The group’s ready-to-drink (RTD) portfolio was up by 4%, led by a double-digit increase for Tequila-based New Mix (up 17%), which was bolstered by higher prices. The Jack Daniel’s RTD range increased by 1%.

Tequila sales fell by 3%, with Herradura reporting a 10% drop due to lower volumes in the US. El Jimador rose by 4%, driven by price hikes, mostly in the US.

Vodka sales increased by 3%. The group recently exited the category after completing the US$220m sale of Finlandia vodka to Coca-Cola HBC in November, which resulted in a pre-tax gain of US$90m.

Brown-Forman’s recently acquired brands, Gin Mare and Diplomático rum, boosted the ‘rest of portfolio’ division (up 11%).

By region, US sales fell by 2%, partly due to a decrease in distributor inventories.

The company’s ‘developed international markets’ reported a sales decrease of 6%, attributed to a triple-digit drop in Japan (down 105%) following a major inventory build-up.

Within this geographical division, three markets experienced declines: the UK (down 13%), France (down 6%) and Australia (down 5%). Meanwhile, Germany rose by 8% and Canada by 5%.

The group’s emerging markets posted an 11% gain, led by Poland (up 16%), Brazil (up 9%) and Mexico (up 7%).

Travel retail sales rose slightly by 1%.

‘Significant uncertainty’  

Due to global macroeconomic conditions and a normalisation in industry trends, Brown-Forman has downgraded its forecast for fiscal 2024.

Brown-Forman now expects organic sales to be flat for its 2023/2024 full year. Operating income is predicted to rise between 0% and 2%.

The prediction is lower than the group’s original estimate in December of 3%-5% for fiscal 2024 sales, and a 4%-6% growth for operating income.

Lawson Whiting, Brown-Forman president and CEO, said: “In a year with significant uncertainty and complexity in the spirits industry, Brown-Forman has demonstrated continued resilience and agility following two years of double-digit organic net sales growth.

“As industry trends have normalised, we have expanded our gross margin, executed our strategic priorities, and invested behind the business. As we look to the end of the fiscal year, we remain confident in the strength of our portfolio and our ability to deliver long-term growth.”