Analysis - Brown-Forman moves on pricing as brown spirits grow
Brown-Forman released its Q1 results yesterday
Analysts have praised Brown-Forman's pricing strategy across its portfolio despite some slowdown in US sales.
The company indicated a "robust" price/mix rise of 4% in yesterday's first-quarter results compared to 3% for full-year 2013, Nomura's Ian Shackleton said today (29 August). Pricing was stronger for Brown-Forman's brown spirits - including its Jack Daniel's range, which grew Q1 sales by 7% globally - than in white spirits, Shackleton said.
Stifel analysts Mark Swartzberg called Brown-Forman's pricing strategy “positive” and said it is in line with price rises elsewhere. "Price/mix across the industry is accelerating, including a 3.2% increase in the 12 months ending July 2013, versus 1.7% in the comparable period ending July 2012," Swartzberg said.
Brown-Forman yesterday posted a slight drop in Q1 profits as it came up against a tough comparison. Management said it expects Q2 to be much stronger, with full-year operating profits increasing by 9-11%.
However, Nomura's Shackleton raised a note of caution over the group's price increases, warning of “some slowdown in the overall US market dynamic” because of a “more mixed” on-trade that could hamper overall industry price/mix.
He also said the company has found “strong momentum” in Jack Daniel's extension Tennessee Honey, which increased Q1 sales by 26%. On a conference call with analysts yesterday, Brown-Forman CFO Don Berg said a global rollout of the flavoured whiskey has been successful in all markets except Australia, where demand has been diluted by competing RTDs.
The third part of this month's management briefing, in which Euromonitor considers the year ahead for the global drinks industry, sees Jeremy Cunnington and Spiros Malandrakis look at the spirits cate...
If Scotch sales receive an end-of-year bump this month, there's a good chance it is from whisky executives toasting a banner year for the brown stuff....
Eyebrows rose earlier this week at the US$16bn that Suntory is set to pay for Beam Inc. At 20 times the company's EBITDA, the transaction is at the more expensive end of the scale. Here, courtesy of a...
- What's so special about Islay anyway? - Comment
- Six key trends for alcoholic drinks in 2016
- Aus wine industry pays price for past failures
- Ten things to know about spirits in the US
- What do Bourbon and craft beer have in common?
- Alcohol industry warning over Kroger plan
- SABMiller hits back in UK corporation tax row
- Diageo's Orphan Barrel The Gifted Horse - NPD
- Suntory bids for Lucozade, Ribena Nigerian network
- American rye whiskey sales leap 600% in five years
- What Next for Beer and Brewers Following the MegaBrew Deal?
- Global travel retail insights - market forecasts, product innovation and consumer trends
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global Whiskey Market 2016-2020
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research