US: Castle Brands income hit by marketing costs
Boosted by the performance of its vodka and whiskey brands, Castle Brands has reported first quarter net sales of US$5.6m, a 3% increase over the prior year quarter.
However, as a result of increased marketing costs, the company yesterday (13 August) reported a net loss of $4.4m for the period compared to $4.1m in the first quarter a year ago.
Led by a 28% increase in US case sales of Boru Vodka and a 98% increase in US case sales of whiskey, which includes growth resulting from the addition of the McLain & Kyne Bourbon brands, US case sales increased 5% year-over-year to 44,723 nine-litre cases.
Offsetting factors included a 6% decrease in rum sales following heavier distributor purchases at the end of the company's 2007 fiscal year in anticipation of price increases and a 19% decrease in US case sales of liqueurs due in part to the discontinuation of certain low-margin cream products, the company said.
International case sales were up 5% in the quarter to 29,447 cases. The slower growth versus historical quarters was primarily due to lower distributor orders of the old Boru package in anticipation of restocking for the international launch of the new Boru bottle in September, Castle said.
Mark Andrews, the company's chairman and CEO said: "The first quarter of our 2008 fiscal year saw a continuation of the momentum for our flagship brand - Boru Vodka, with US volume growth of 28% following 120% growth in the prior quarter. Despite an inventory build by distributors in our fourth fiscal quarter, we were glad to see that demand in the first quarter remained solid. Record levels of depletions (sales from our distributors to retailers) make us confident that sales for our current fiscal year should be strong."
Andrews continued: "Internationally, our distributor changes and the anticipated launch of the new Boru bottle caused a reduction of inventory of the old package at the distributor level in the first quarter. While these factors obviously depressed our sales during the first quarter, we look forward to increasing sales in the second and third quarters as the new distributors establish inventory for expanding markets and the new Boru packaging is introduced to the international market."
The company said that its selling expense increased 20% to $4.2m in the quarter ended June 30, 2007 from $3.5m in the prior year quarter. This support included increases in costs associated with the Boru relaunch, sales support costs and additions to the sales and marketing teams.
The top ten most visited stories on just-drinks this week:...
Soyuz Victan has announced plans to outsource sales and distribution for its Silk vodka brand in the US....
The head of Vin & Sprit's spirits division has said that the current global economic uncertainty should not affect the unit in 2008....
The Swedish government is considering keeping a stake in soon-to-be-privatised spirits producer V&S, local reports have suggested, while speculation is also growing that the sale price could fall due ...
Vin & Sprit is toasting a record year for its Absolut Spirits division in 2007....
The Pink Spirits Co. has announced plans to launch its Pink vodka brand into the Israeli market....
Vin & Sprit has declined to comment on claims that it would prefer Swedish investment company Investor as its future owner....
Vodka continued its surge in the US market in 2007, and distilled spirit sales overall in the country grew for the eighth straight year, up 5.6% in value and 2.4% in volume, according to figures relea...
- Comment - The Appeal and Perils of Craft
- Cuba-US Normalisation: Bacardi, Pernod Winners?
- Review of the Year 2014 - Part IV: Spirits
- Sustainability in Wine - Part I
- Time is Right for Refresco Gerber Exit
- Belvédère to sell assets, streamline portfolio
- Belvedere vodka tie-up over new James Bond film
- Diageo ups focus on China with Mortlach roll-out
- Diageo rolls out Beckham's Haig Club to US
- Brown-Forman eyeing Scotch, Irish whisk(e)y entry?
- Global vodka insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- The IWSR Forecast Report - 2014-2019 Global Review
- Global Tequila Market 2014-2018
- just-drinks on-trend: Craft beer - fortunes and future