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Brown-Forman looks to bounce back from Bacardi UK disruption

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Brown-Forman management has blamed declines in the UK on its withdrawal from a distribution and sales partnership with Bacardi, but believes the disruption is only short-term.

UK sales for Brown-Formans Jack Daniels brand have declined over the past fiscal year

UK sales for Brown-Forman's Jack Daniel's brand have declined over the past fiscal year

Bacardi and Brown-Forman are to formally end their UK arrangement on 1 May after 18 years together. In nine-month results released yesterday, Brown-Forman said the change, which will see the Jack Daniel's owner set up its own UK route-to-market, was partly responsible for a 7% sales decline in the country.

Speaking to analysts after yesterday's results announcement, group CFO Jane Morreau warned the company is navigating "multiple challenges" in the UK this year. As well as the distribution change, Morreau highlighted a switch in Brown-Forman's promotional strategy and a soft cash-and-carry channel.

Pointing out that the UK is Brown-Forman's biggest market outside of the US, Morreau said she expects the market to rebound within the next 12 months. "All combined, we experienced what we believe is some short-term disruption," the CFO said. "We expect the negative trends in this market to ease as we move into the next fiscal year."

Commenting on the end of the Bacardi partnership, Brown-Forman CEO Lawson Whiting said the agreement had run its course. "I think both companies would admit, it's just time," Whiting said. "Our portfolios got bigger, the conflicts got bigger, and we've moved on."

The CEO added: "If we're totally honest, the amount of promotion in the UK market got too big. We're trying to reduce that a little bit and get some pricing up... We do think in the long run, it's the smart thing to do. And, we're taking our medicine now for what we think can be a great outlook going forward."

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Sectors: Spirits

Companies: Bacardi Ltd, Brown-Forman

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