Brown-Forman has reported sales growth of 8% in Australia in Q1 FY20, however it said underlying net sales growth was “modest” at 1%.
Underlying growth was driving by higher pricing of Jack Daniel’s RTDs, taken last August.
Overall, the company reports its underlying net sales were flat in Q1. For the first quarter, the company reported net sales of $US766 million. In the quarter, reported operating income declined 6% to $248 million (-8% on an underlying basis).
Lawson Whiting, President and Chief Executive Officer, said:
“Our first quarter results came in largely as anticipated considering the
year-over-year drag from tariffs and timing of customer orders. Our takeaway
trends remain healthy in most of our major markets globally.
“We believe we remain on track to deliver another year of solid underlying net sales and underlying operating income growth driven by the Jack Daniel’s family of brands. This includes the benefit we expect from the launch of Jack Daniel’s Tennessee Apple beginning in October, as well as the continued strength of our portfolio of premium bourbons and tequilas.”
“We continue to invest behind the momentum of our business, by not only absorbing much of the tariff costs, but thoughtfully re-allocating and reinvesting back into our brands and our people, including the recent announcement of establishing our own distribution platform in the United Kingdom. We believe that investing in momentum will position us well for the next generation of growth and continue to deliver superior returns for our shareholders.”
Decline for Jack Daniel’s, but RTDs strong
Jack Daniel’s family of brands underlying net sales declined 1% (-1% reported) globally, with growth was impacted by approximately three percentage points due to tariff-related buy-ins and related net pricing reductions.
Jack Daniel’s Tennessee Whiskey experienced a 4% decline (-3% reported) in underlying net sales as tariff-related buy-ins and related net pricing reductions significantly affected its developed international markets.
However, Jack Daniel’s RTD business delivered broad-based underlying net sales growth of 7% (+6% reported), Jack Daniel’s Tennessee Honey grew underlying net sales 5% (-3% reported), and Jack Daniel’s Tennessee Fire increased underlying net sales 2% (-2% reported) fueled primarily by markets outside of the United States.
France, for example, saw its growth was fueled by the launch of Jack Daniel’s RTDs and sustained strong momentum behind Jack Daniel’s Tennessee Honey.
Whiting said RTDs were expected to fuel growth for the company over the next 10 years.
“We’ve got about a 16 million case RTD business around the world, seven new mix and 9 million cases of Jack Daniel’s,” he added. “The vast majority are outside of the United States.”
Jack Daniel’s won Fan Favourite Dark Spirit at the Australian Drinks Awards last week.
Emerging brands a winner
In order to accelerate portfolio development Brown-Forman established an emerging brands group about a year ago, featuring about 40 staff who focus on building its smaller, premium brands, including Old Forester, Chambord, GlenDronach, Slane Irish Whiskey and Fords Gin.
Whiting noted that the group was performing well and called out Fords Gin as having huge potential for Brown-Forman.
“While this brand is small today, it’s a little over 30,000 cases, we believe it has the potential to be a powerhouse in the upcoming years,” he said. “It’s just a beautiful liquid paired with an intriguing package and rich brand stories. The combination of all that is a formula that works well for Brown-Forman and something we think we can build upon.
“Simon Ford, the founder and his team will help us up our game, I think in the on-premise. They’ve done a beautiful job in some of the most prestigious bars and restaurants around the world, and seeding the brand in a way that very few entrepreneurs actually can achieve, and with a very large percentage of the business in the on-premise right now, we think we can take the Brown-Forman system, the Brown-Forman emerging brands team, and use the size and scale of our system to really find new and exceptional ways to grow.
“So I’m really looking forward to many success stories on Fords Gin as we talk about that in the coming years.”