Jack Daniels boosts Brown-Forman

Jack Daniel's boosts Brown-Forman

Brown-Forman has said it sees more strong growth for Jack Daniel's outside of the US, after a strong showing from the whiskey brand in the group's year so far.

A 9% rise in net sales for the Jack Daniel's range lifted Brown-Forman to a 5% rise in net sales for the first nine months of its fiscal year, to the end of January. Demand for the Tennessee whiskey brand was particularly strong outside of its core US market and Brown-Forman sees the trend continuing.

International Jack Daniel's growth is "significantly outpacing the US", according to the company. "We're very enthused by the response we're getting to Jack Daniel's," said Brown-Forman's CFO, Don Berg. "We don't think we're even close to where we would declare that we've maxed out in some of these countries," he told analysts during the company's results conference call yesterday (8 March).

Last year, Brown-Forman said that it would invest heavily to improve its overseas sales, particularly in emerging markets. Non-US sales already make up around 50% of the distiller's annual turnover.

In addition to investing in existing brands, Brown-Forman could also use acquisitions to improve its international presence. Group CEO Paul Varga told analysts that the firm's position on acquisitions has not changed, but that it is "constantly on the lookout for those kinds of things that we think would do very well in our hands".

On acquisitions in emerging markets, Berg added: "There are some very attractive local businesses, particularly if they have premium development around the world, that a lot of people are starting to pay more attention to."

Back home in the US, the spirits market remains mixed. Brown-Forman said that the US spirits market is up by between 2% and 3% in volume and by between 3% and 4% in value year-on-year, although the on-trade remains flat and most of the growth has come from vodka, rum and Tequila.
   
Southern Comfort remains a blackspot in Brown-Forman's portfolio. Global net sales for Southern Comfort fell by 2% for the first nine months of Brown-Forman's year, hampered by tough times in the US. Varga said that the firm "remains disappointed" with Southern Comfort and that a turnaround on the brand is "critical" to achieving the company's growth targets.

In the meantime, the group has plans to reinvigorate Jack Daniel's on the brand's home turf. The firm is in the process of launching an RTD range of Jack Daniel's in the US and also plans to launch Jack Daniel's Tennessee Honey in April.

Although the US market remains mixed, Brown-Forman's strong international showing and strong profits performance have got investors onside for the time being. Its share price rose by 5% yesterday and has held onto the gains in morning trading today on the New York Stock Exchange. Third quarter profits rose by 30% to $140.7m.

The group still expects the sale of Fetzer Vineyards to Vina Concha y Toro to close in April.