Price increases on Jack Daniels have helped boost Brown-Forman profits

Price increases on Jack Daniel's have helped boost Brown-Forman profits

Brown-Forman price increases that have helped the company post a big jump in H1 profits are unlikely to be rolled back in the near future, an analyst has said.

In first-half results released yesterday (6 December), the Jack Daniel's brand owner posted a double-digit increase in net profits as volumes gains were matched by price rises. According to analysts Nomura, the company put through 3-5% price increases on Jack Daniel's and as much as 10% on “super-premium” Sonoma-Cutrer wine.

“We believe that in the US the company is following the industry trend rather than being the price leader, which gives us confidence that these price increases will not be discounted back due to consumer resistance,” Nomura said in a note today.

The key drivers of the price increases are less promotional activity and fewer value-added packs, Nomura added. 

Global sales of Jack Daniel's Tennessee Honey rose by 50%, Brown-Forman said. However, in a conference call with investors CFO Don Berg said Brown-Forman will likely go slow on further extensions for Jack Daniel's.