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Jack Daniel's sales booming for Brown-Forman Australia

Jack Daniel's sales booming for Brown-Forman Australia

Brown Forman Australia has reported a 7% increase in profits for the first half of fiscal 2018, driven by the Jack Daniel's family of brands. 

Australia’s first half results also benefited from the first quarter buy-ins in advance of excise tax-driven price increases.

Globally, the company’s reported net sales increased 10% to $914 million compared to the same prior-year period. 

CEO Paul Varga said: “Brown-Forman’s second quarter and first half results were excellent on both a reported and underlying basis. Against a backdrop of improving economies in the emerging markets, and continued momentum in our categories of focus, our underlying net sales have accelerated nicely due to strong performances from our Jack Daniel’s, Woodford Reserve, Old Forester and Herradura brand families, as well as timing-driven improvements in our used barrel sales.

"We believe that an ever-improving combination of investment, resource allocation, revenue management, innovation, and geographic expansion are important contributors to our acceleration in fiscal 2018.”

The company’s premium American whiskey brands grew underlying net sales by 15%, including 21% growth from Woodford Reserve.

Herradura grew underlying net sales 19% and el Jimador grew underlying net sales 10%. 

Sales in the company’s developed markets outside of the United States rebounded in the second quarter, and delivered year-to-date underlying net sales growth of 5% (+5% reported). The United Kingdom and Germany delivered strong, double-digit underlying net sales growth in the second quarter after a sluggish start to the year.

Japan’s underlying net sales declined due to comparisons with the prior year’s buy-ins in advance of price increases. France’s underlying net sales grew mid-single digits, Canada’s underlying results were flat, and Spain delivered improved results following this summer’s transition to owned distribution.

Underlying net sales in the emerging markets jumped 15%. The company’s two largest emerging markets, Mexico and Poland, grew aggregate underlying and reported net sales by double-digits, with both countries experiencing solid demand for the Jack Daniel’s family of brands. Underlying net sales in the emerging markets excluding Mexico and Poland grew at an even faster rate, as economies and currencies have stabilized in most markets. Russia, Turkey, Brazil, Thailand, China and Ukraine grew underlying net sales double-digits, helped by comparisons to a soft first half of fiscal 2017.

Travel Retail continued to deliver solid rates of growth, with underlying net sales up 11%.

The outlook for the second half

Regarding the second half of fiscal 2018, Varga said: “We now expect 6-7% growth in underlying net sales for the full year. We also are planning for a second half reversal of the very positive operating leverage we experienced during the first half due to moderately higher cost of sales expectations and a higher operating investment posture associated with the favorable environment for our brands.

"Even after incorporating these expectations for higher costs in the back half, we are increasing our full year range for underlying operating income growth to 8-9%, and our EPS expectations to $1.90 to $1.98.”

The company noted that the global economy has "improved modestly" over the last year, but emerging markets remain volatile.

Assuming current trends continue, the company anticipates:

>> Underlying net sales growth of 6% to 7%.

>> A slight increase in underlying SG&A, and underlying A&P growth roughly in-line with sales growth.
>> Underlying operating income growth of 8% to 9%.
>> Diluted earnings per share of $1.90 to $1.98.