USA: Jack Daniel's drives Brown-Forman's record results
Owsley Brown II, Brown-Forman's chairman and chief executive officer, cited a strong performance by Jack Daniel's when commenting on the company's successful year. He said: ``Our core brands made excellent progress in fiscal 2001; Jack Daniel's accelerated its worldwide growth rate, and Lenox achieved a fourth consecutive year of double-digit earnings increases.''
Beverage operating income grew 8% for the year, driven by strong results for the Jack Daniel's family of brands. The company said: "Jack Daniel's Black Label experienced excellent consumer demand around the world, with worldwide annual depletions up 6%. Depletions improved 3% in the US, the brand's biggest market.
Volumes grew at a double-digit rate in Western Europe and other important overseas markets, though weak foreign currencies continue to constrain dollar earnings outside the US."
Annual depletions for Southern Comfort increased 2% in the US, the brand's largest market, while gross profit improved by a double-digit rate, primarily the result of price increases and cost efficiencies. Volume trends for the brand also improved in other markets around the world. Profits for Fetzer and Bolla increased despite modest volume declines, reflecting higher pricing for both brands.
However Brown-Forman cited two industry-wide events that reduced 2001 results for the beverage group. In a statement the company said: "While Korbel gained market share during the year, a sharp decline in the US sparkling wine category following the millennium boom resulted in a 32% drop in depletions for the brand.
"A slowdown in Scotch production led to a significant decline in sales of used barrels to Scotch whisky distillers, which depressed the company's operating earnings by $8m versus last year. Excluding Korbel and the used barrel business, segment revenues increased 6%, gross profit rose 7% and operating income improved 13%."
The company said the ad spend had increased 4% while increased capital investments expanded capacity at Jack Daniel's and at the company's premium wineries. Brown-Forman continued to grow its portfolio of premium brands during the year by acquiring equity stakes in Finlandia, Glenmorangie, and Tuaca.
In a closing statement the company concluded: "Brown-Forman continues to have a positive outlook for its long-term growth. Fiscal year 2002 earnings per share are forecast to grow at a rate comparable to fiscal 2001. First quarter earnings are expected to grow at a low single-digit rate, however, as significant currency hedging gains in last year's first quarter will not be replicated this year."
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