Focus - Brown-Forman in distribution rethink
Brown-Forman looks at distribution needs
Brown-Forman is reassessing distribution arrangements for its wine and spirits brands in key markets.
The owner of the Jack Daniel's whiskey brand is "in discussions" regarding its distribution in several European countries, including France, Spain, Italy and Greece, according to group chief financial officer and executive vice president Don Berg.
The US-based drinks group is also in talks over distribution in Russia, Brazil and Canada.
"We plan to communicate more information about these markets once agreements are completed," Berg told analysts during Brown-Forman's third quarter results conference call today (10 March).
He stressed, however, that this did not necessarily mean that the group would change distributors in those markets. Rather, he said that the firm was reassessing its needs.
"This is meant to be an evolutionary path, rather than some kind of a lightning bolt and making a major change," said Berg.
Last month, Brown-Forman and Bacardi announced an end to their distribution partnership in Germany.
Brown-Forman today reported a 6% rise in nine-month profits, to $376.5m, although sales dipped by 1% to $2.5bn.
The group, which also owns Finlandia vodka and Southern Comfort whiskey, said it remains cautious on consumer spending.
"We remain concerned about the impact on consumption trends from a soft on-premise channel, consumer trading-down, and heightened competitive activity," it said.
The firm reported a strong nine months for Jack Daniel's, although volume growth of 12% outpaced a 7% reported net sales rise for the brand. Ready-to-drink beverages also reported strong double-digit net sales rises.
However, reported net sales for Southern Comfort, Finlandia and el Jimador Tequila fell by 1%, 16% and 1% respectively, with the latter seeing high single-digit gains reversed by unfavourable currency rates.
Brown-Forman reiterated that full-year earnings per share are expected to meet guidance, although it narrowed the range to $2.98 to $3.08, compared to a previous range of $2.95 to $3.15.
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