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

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  • First-quarter organic sales up 9%
  • Jack Daniel's family organic sales +10%; Finlandia -10%
  • US sales +2%; Germany +38%
  • Reported sales increase 6% in the three months to end of July to US$766m
     

Brown-Forman has got off to a strong start in its current fiscal year, with Q1 organic sales up 9% despite declines for Finlandia vodka and a raft of international challenges.

Announcing the results today, the Jack Daniel's owner warned that "uncertainty remains" over higher global tariffs on US spirits but said the resilience of its business was "encouraging". In reported terms, Brown-Forman saw its sales in the three months to the end of July rise by 6% to US$766m. Net profits were up by 12% to $200m.

Brown-Forman Fiscal-2019 - Sales versus 2018

Source: Company results

A number of regions including China and the EU have increased tariffs on US goods including alcohol in retaliation to US president Donald Trump's levy hikes on steel, aluminium and other imports. US distillers groups have warned that the tariffs could damage strong growth for North American brown spirits.

Today's Q1 results, however, show that the tariff hikes have yet to have an effect on Brown-Forman's whiskey portfolio. In fact, the company estimated that an increase in European wholesale and retail inventory levels ahead of the tariffs added up to three percentage points to organic sales growth. Organic sales for the Jack Daniel's family were up 10% in the three months, while the company's super-premium American whiskey brands performed even better, with sales growing by 25%.

Weakness instead came from the Finlandia vodka brand, which was down 10% organically. Brown-Forman blamed disruption related to packaging changes for the brand in Poland, as well as a competitive environment for premium vodka.

Finlandia is not the only mainstream vodka brand to lose sales. Smirnoff was down in Diageo's full-year, while Campari Group's Skyy vodka sales fell 11% in the first half. Speaking to just-drinks at the time, Camapri CEO Bob Kunze-Concewitz blamed heavy discounting in the US in response to the success of brands such as Fifth Generation's Tito's Handmade Vodka and E&J Gallo's New Amsterdam.

Brown-Forman Q1 fiscal-2019 - Brand Performance vs 2018

BrandVolumesReported SalesOrganic Sales
Jack Daniel's Family+7%+8%+11%
Jack Daniel's Tennessee Whiskey+9%+5%+8%
Jack Daniel's Tennessee Honey+10%+21%+12%
Jack Daniel's Tennessee Fire+11%+10%+13%
Jack Daniel's RTD/RTP+5%+6%+10%
Gentleman Jack+6%+4%+7%
Woodford Reserve+26%+30%+29%
Vodka (Finlandia)-6%-18%-10%
El Jimador+4%+10%+11%
Herradura+6%+11%+10%
All other brands-3%-11%-4%
Other non-branded---+19%+18%
Total Portfolio+4%+9%+9%

Source: Company results

Looking at regional performance, some of Brown-Forman's most developed markets were its biggest growth drivers in Q1. The UK was up 33% in organic sales, while Germany jumped 38%. Growth in Brown-Forman's biggest market, the US, was only +2%. Elsewhere, Brazil's organic sales increased by 30%

CEO Paul Varga

"Brown-Forman's business momentum continued during the first quarter of fiscal 2019, with strong net sales growth as consumer demand for our premium American whiskey brands remained robust. After considering the estimated impact of order phasing related to tariffs, our first quarter growth was in-line with last year's underlying net sales growth and keeps us on track to deliver another strong year of top-line growth in the 6%-to-7% range."

To read Brown-Forman's officials results release, click here.

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