Brown-Forman maps global push for Jack Daniel’s
Despite being the world’s leading American whiskey, Jack Daniel’s still commands only a small share of the global spirits market – a gap Brown-Forman believes represents a major growth runway across emerging and established regions.
During its Investor Day on 15 October, Brown-Forman’s executive leadership team focused on Jack Daniel’s and how the brand will play an important role in the future growth of the company.
Jeremy Shepherd, executive vice-president (EVP) and chief marketing officer, shared his insights on why the brand has a “long runway for growth”.
He described Jack Daniel’s as the biggest-selling American whiskey and the most valuable global spirits brand in the world.
However, he points out that despite its leadership position, there are still opportunities for growth.
“We only have a 3.7% [market] share of the global TDS [total distilled spirits] business,” he told investors. In his presentation slides, he noted countries such as North America and parts of Asia as areas where Jack Daniel’s still has less than 3.7% of the total distilled spirits business.
Regarding the US, he described it as the “world’s largest spirits market and a market that we’ve been very successful in historically”.
However, he noted opportunities in other markets: “If you look at India or Japan, these are countries that are well-known whisky-drinking consumers. In India’s case, fast growing. In Japan’s case, a very small part of our business. We believe that we have a great opportunity to win and succeed in those markets.”
He highlighted that the standard-priced whisky category globally is “roughly US$70 billion scale of business” with US whiskey representing 27%. “Within US whiskey, Jack Daniel’s represents roughly 35%,” he continued.
“In our established US whiskey businesses like the United States, there still is a US$24 billion standard-plus whiskey business that we need to win in.”
He believes there is a “huge opportunity” for Brown-Forman to grow its share of the standard whisky category worldwide in areas where the category is still “relatively small”.
“We are not sitting on our laurels,” he stressed. “We’re not sitting back and enjoying our status as the number one American whiskey. We actually believe, with the right strategy, we have an amazing runway for growth.”
US distribution shift
Michael Masick, EVP and president of Americas, delved deeper into several markets that are key to growing Jack Daniel’s.
He pointed to the US as the company’s biggest market, representing just under 40% of Brown-Forman’s retail sales value. “The Jack Daniel’s family of brands is roughly 60% of our retail sales value in the US. So it’s the majority of our business in the United States,” he explained.
Masick also noted the major route-to-market change for the company in the US, its first major shake-up of distribution in 60 years. Brown-Forman changed distributors in 14 markets from 1 August, including three of the company’s largest footprint markets: New York, Texas and California.
Explaining this change, he noted four objectives: “The first was to make sure we’re aligned with the right partners, the partners that have the right scale, the right capabilities and the ability to reach into the growth opportunities that are evolving in this dynamic environment.
“The second one was to increase focus and dedication to our brands. So over the last 10 or 15 years, quite honestly, these distribution houses have become quite cluttered.”
He added that this was an “opportunity to clear out the clutter and refocus our partners on our brands” and ensure that Brown-Forman’s brands sat within “complementary portfolios”.
“So it’s just an opportunity to also remove the portfolio conflicts that had developed over a number of years,” he continued.
The third factor was to “update partnership terms” by renewing investment expectations behind the business in regards to “how we invest behind our brands” and the company’s selling resources.
On the last point, he said: “Ultimately, obviously, the fourth objective was to drive better performance and always with a focus on value growth and always with a focus on gaining value market share.”
Focus on Mexico
Outside of the US, Masick also highlighted Mexico as “a market where the American whiskey category is developing as is our Jack Daniel’s brand”.
Explaining the market, he said: “Mexico is a unique emerging market. It’s one of the few multi-category premium-plus spirits markets in the emerging world. Tequila, it’s whisky and it’s RTDs. It’s climbing the ranks quickly in premium-plus spirits, now number eight. It’s a huge RTD business. It’s now the number seven RTD market globally.”
Mexico is also the group’s third-largest market, behind the US and the UK.
The country is also a “consistent growth driver” over the last five to 10 years, Masick said. “It has been growing retail sales value, [up] 10% consistently over the last five and 10 years.
“Whisky in Mexico has been growing. If you look at the total category, [it’s a] very consistent growth driver, [up] 4% over the last 10 years. But if you look within that, American whiskey has been the growth driver of the category. We’ve been growing 2.5 times faster. Within American whiskey, that is almost entirely driven by Jack Daniel’s, [which] is 80% of the American whiskey category in Mexico.”
But he adds that it’s “relatively early stage” with the brand being “only roughly 9% of the broader whisky category in Mexico”.
The company is also the leader in whisky-based RTDs in Mexico with its Jack Daniel’s RTD/RTS portfolio. “It’s two million cases today, growing double digits.” He also highlighted the company’s Tequila-based New Mix brand, which sells 12m cases.
Like Mexico, Brazil has also been a “consistent leading growth driver” for Brown-Forman over the last decade. It is now the company’s sixth-biggest market, growing from its 10th position just five years ago.
“Premium whisky is about two-thirds of the total category. So it’s predominantly a whisky business, rising in the ranks. It’s now [the] seventh-largest whiskey market globally. Like Mexico, it’s benefiting from an expanding middle class, 50% of the population, rising disposable income, unemployment is relatively low. Inflation is going in the right direction. Even despite some of the troubles you’re seeing in beer in Brazil, the whisky category has been very resilient, growing double digits.”
In Brazil, Jack Daniel’s represents more than 90% of the American whiskey category and is the brand’s third-largest market.
Emerging markets
Turning to emerging markets, Brown-Forman’s chief strategy officer and EVP, Christina Graven, discussed the potential in Eastern Europe, focusing on Poland as the “greatest example of how we’ve used own distribution to build a strong and healthy Jack Daniel’s Tennessee Whiskey brand”.
Graven also highlighted India as a “great opportunity for spirits and for Jack Daniel’s”.
“We can see about 80% of whiskey sales are coming from just 10 states [in India]. And then there’s a middle-class wealth growing. We expect addressable population to triple in the next 10 years.”
She pointed out that whisky is the largest spirits category in India, and is expected to continue to grow at 8% annually over the next five years.
“We are still very small in this part of the world,” she continued.”Less than 1% of our retail sales value contribution comes from India versus some of our competitors who are up to 11%. So we have very significant headroom for growth in India.”
In terms of the wider Asian region, Graven cited developed markets such as Japan, Korea and China and “vibrant emerging markets” such as Thailand, Indonesia and Vietnam.
“Whisky is more than US$7 billion in retail sales value in Asia, and it is the largest international spirits category. So just to clarify, in Asia, still 75% of the spirits market is national spirits, but 25% is international. And within that, whisky is the largest category, and it’s expected to grow over 4% per year for the next five years.”
The global travel retail channel was the final growth market highlighted by Graven, which she described as a “great brand-building opportunity”.
“Jack Daniel’s has a long runway for global growth,” she concluded. “We believe we can unlock that through excellent execution of the Jack Daniel’s strategic priorities. We’re solidifying our leadership position in developed markets. We’re unlocking growth in emerging markets, and we’re leveraging global travel retail as a platform for global brand building. All of this suggests an exciting future for the Jack Daniel’s family of brands and for Brown-Forman.”
In August, Brown-Forman reported that first-quarter whisky sales were flat due to lower volumes of Jack Daniel’s Tennessee whiskey (down 4%) in the US and Germany.
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