Analysis

just On Call - Brown-Forman head sees "upstarts" hamper vodka pricing in US

Most popular

The just-drinks analyst returns

Heineken must cut costs to aid recovery - analysis

How COVID has accelerated the sobriety trend

Interview - Treasury CEO Mike Clarke - Part II

The just-drinks analyst returns

MORE

The CEO of Brown-Forman has flagged the growth of rival vodka “upstarts” such as Tito's Handmade Vodka as driving a “brutally competitive” vodka category in the US.

Titos has enjoyed good growth in the US

Tito's has enjoyed good growth in the US

Paul Varga, whose company owns the Finlandia brand, said it is harder than ever to take pricing in vodka because of incoming brands that are “innovating at lower price points”. Varga highlighted two rival brands, Fifth Generation's Tito's and E&J Gallo's New Amsterdam, claiming they have “captured the imagination of consumers”.

“In the US, it is harder to get pricing these days,” Varga said today in a call with analysts. “The flavoured aspect of the US vodka market has gone soft here in the past couple of years and the winning brands are coming from upstarts.”

Varga said Tito's is the leading growth vodka brand in the US and is benefiting from its organic and local brand identity, as well as from staying out of the flavoured category.

“In vodka, once you think you have an established brand - because there are very few barriers to market - you see new brands come in," Varga added.

The CEO was speaking after the release of Brown-Forman's first-half results that saw it report a single-digit rise in first-half net profits and sales despite a "tough trading environment".

Finlandia struggled in the six-month period, with the vodka portfolio's sales falling by 6%. An excise rise in Poland at the beginning of this year was blamed for the poor performance.

In contrast, Brown-Forman's Jack Daniel's stable saw sales rise by 7% in underlying terms in H1, with the Tennessee Honey expression up by 32% year-on-year.

In the call, Varga said the Jack Daniel's performance was down to improved relative pricing for the brand, more disposable income for US consumers as fuel prices decrease and his sales team's focus on the core Jack Daniel's line.

Varga is not the first CEO to highlight the success of Tito's. In August, Pernod Ricard head Pierre Pringuet blamed the vodka for causing a drop-off in sales for the Absolut brand in the US.


Related Content

How did Brown-Forman perform in its fiscal-2019 Q1? - results data

How did Brown-Forman perform in its fiscal-2019 Q1? - results data...

How did Brown-Forman perform in Q3 & YTD fiscal-2020? - results data

How did Brown-Forman perform in Q3 & YTD fiscal-2020? - results data...

How did global tariffs affect Brown-Forman's H1? - results data

How did global tariffs affect Brown-Forman's H1? - results data...

Sales lift for Brown-Forman in Q1 as US stays strong - results data

Sales lift for Brown-Forman in Q1 as US stays strong - results data...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?