Andy Morton

just On Call - Brown-Forman price hikes protect Jack Daniel's status - CFO

By | 6 March 2013

Brown-Forman released its YTD results today

Brown-Forman released its YTD results today

An “explosion” in the premium spirits sector forced Brown-Forman to up the price of Jack Daniel's before consumers considered it run-of-the-mill, the company's CFO has said.

In a conference call with investors today (6 March), Don Berg said recent price hikes will protect the Bourbon brand's premium status, thereby ensuring its long-term growth. “The last thing we want to happen is for the market place to render Jack Daniel's as standard,” Berg said.

Brown-Forman said in year-to-date results, released today, it has implemented a global price increase on its Jack Daniel's brand in the past year with no damage to sales. In the nine months to January, the brand posted a 10% net sales growth, while the Tennessee Honey extension doubled its global sales.

“You have to continually reinforce your price, particularly when there has been an explosion of interest at price points above Jack Daniel's,” Berg said.

Meanwhile, Brown-Forman CEO Paul Varga told investors that Southern Comforts sales outside of the US were “lumpy, but weak across the board”.

Berg added that the brand suffered from tax increases in core markets the UK and Australia.

Southern Comfort's year-to-date net sales declined by 4% despite a 1% rise in the US compared to the year before. 

A marketing campaign launched in the US and UK and credited with arresting sales declines will be rolled out to other markets soon, Varga said.

Expert analysis

Brown-Forman Corporation (BF.B) - Financial and Strategic SWOT Analysis Review

Brown-Forman Corporation (Brown-Forman) is one of the largest American-owned spirits and wine companies in the world. The company is engaged in the manufacture, bottling, import, export, and marketing of a wide variety of alcoholic beverage brands. It offers a wide range of whiskies, vodka, gin, liqueur, tequila, and champagne through a portfolio of more than 30 brands, including Jack Daniel's, Southern Comfort, Canadian Mist, Fetzer, and Korbel. The company offers its products in more than 135 countries across the world. It's largest operations are in the United States, Poland, Australia, the United Kingdom, Mexico, and Germany. The company is headquartered in Kentucky, the US.

Sectors: Company results, Spirits

Companies: Brown-Forman, Jack Daniel’s, Southern Comfort

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