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Brown-Forman Bullish On Further Whiskey Growth As Sales Rise 12% In First Half

December 8, 2011

Brown-Forman saw net sales surge 12% to $1.85 billion in the six months through October, its fiscal first half, and said momentum has picked up in the U.S. spirits market, particularly in its core whiskey category. Reported operating income rose 6% to $432 million during the period. The company acknowledged that several factors including “advanced buying ahead of anticipated price increases in several markets, the timing of promotional activities, and pipeline fill associated with product innovations” helped boost results, but said underlying net sales growth should continue to run in the high single-digits for the full fiscal year.

Flagship brand Jack Daniel’s led the sales gains for Brown-Forman both in the U.S. and abroad, with the brand family’s net sales rising 16% at constant currency in the first half. Brown-Forman CFO Don Berg said promotional pricing in the U.S. spirits market seemed to be easing somewhat. Berg added that with the recent robust volume growth of Jack Daniel’s, Brown-Forman may look to take up pricing on the brand over the next six to 12 months. Other key brands like El Jimador Tequila (constant currency sales up 4%) and Finlandia vodka (up 9%) were also on the rise, while Southern Comfort, still under pressure particularly in the U.S. on-premise from new flavored whiskey brands, fell 7%.

Brown-Forman chairman and CEO Paul Varga noted that Nielsen data in the 12 months through November 12 showed U.S. spirits growth by dollar sales accelerating at 3.4% from 1.8% a year ago. More importantly for Brown-Forman, the whiskey category rose 5.4% over the past 12 months, outpacing the spirits market by two full percentage points. “This is a real shift versus what we’ve seen over the past 10 or 20 years,” Varga said, referring to the rise of vodka at brown spirits’ expense over that time period. “This favorable trend has contributed to Brown-Forman growing share in the U.S. for the first time in several years over the last three months.”

Brown-Forman – Leading Brands
(millions of nine-liter case depletions worldwide)
Fiscal Year Percent Change3
Brand1 2009 2010 2011 2009-
2010
2010-
2011
FY20124
Year-to-Date
Jack Daniel’s
Tennessee Whiskey
9.48 9.62 10.00 2% 4% 14%
Jack Daniel’s RTDs 3.41 4.75 5.54 39% 17% 15%
el Jimador Tequila 1.05 1.10 1.19 4% 8% 4%
New Mix RTDs 4.64 4.49 4.65 -3% 4% 13%
Finlandia vodka 3.03 3.00 2.92 -1% -2% 3%
Southern Comfort2 2.34 2.21 2.17 -6% -3% -4%
Canadian Mist 1.85 1.82 1.70 -1% -7% -6%
Korbel 1.29 1.30 1.32 * 2% -4%
* less than 0.5% increase

1 excludes brands sold to Vina Concha y Toro in April 2011

2 includes RTDs

3 based on unrounded data

4 six months ending October 2011 vs six months ending October 2010 

Source: IMPACT DATABANK

 

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