Brown-Forman reports strong first-half results
Jack Daniel’s brand leads growth
Brown-Forman Corp., Louisville, Ky., reported financial results for the second quarter and first half of its fiscal-year 2014, which ended Oct. 31. In the second quarter, the company’s reported net sales grew by 6 percent to nearly $1.1 billion and reported operating income grew 19 percent to $311 million compared with the prior-year period. For the first six months of the year, reported net sales increased 4 percent and reported operating income increased 9 percent.
The company’s underlying net sales growth of 7 percent in the first half of the fiscal year was driven by geographically balanced revenue growth, it says. In the United States, underlying net sales grew 5 percent, driven by the combination of strong price/mix and volume growth.
“Fueled by the Jack Daniel’s trademark, the company’s second-quarter and first-half results were very strong,” said Paul Varga, the company’s chief executive officer, in a statement. “We continued to generate an excellent balance of geographic growth, including strong growth in the emerging markets.”
The company’s North American whiskey portfolio continued to grow globally, led by 10 percent underlying net sales growth for the Jack Daniel’s trademark across price points and brand extensions. For example, Jack Daniel’s Tennessee Honey grew underlying global net sales by 30 percent, driven by the brand’s introduction into several new markets outside of the United States, and experienced double-digit growth in the United States. Similarly, Gentleman Jack grew underlying net sales by 19 percent following its recently launched “Order of the Gentleman” TV campaign as well as a significant increase in total media spend. In addition, Jack Daniel’s Single Barrel grew underlying net sales 7 percent and Jack Daniel’s ready-to-drink options grew 4 percent.
Other brands within the company’s North American whiskeys portfolio also performed well. Woodford Reserve grew underlying net sales by 27 percent globally; Old Forester grew underlying net sales by 16 percent; the Early Times family of brands grew underlying sales by 5 percent; and Canadian Mist’s family grew underlying sales by 1 percent.
In the vodka category, Finlandia’s family of brands’ underlying global net sales increased by 1 percent, driven by double-digit gains in Russia.
In the tequila segment, Herradura grew underlying net sales by 7 percent as the brand enjoyed solid growth in the United States and Mexico. El Jimador’s underlying net sales grew 2 percent as the Mexican marketplace for mainstream tequilas remained competitive. New Mix ready-to-drink beverages’ underlying net sales decline of 16 percent in the first half of the year was negatively impacted by inventory adjustments following price increases taken at the end of fiscal 2013.
Among Brown-Forman’s other liqueurs, Southern Comfort’s family of brands’ underlying global net sales declined 4 percent. Its sales growth of 1 percent internationally was more than offset by declines in the United States, where the competitive environment for liqueurs remained challenging, particularly in the on-premise channel, the company says.
In the wine segment, Sonoma-Cutrer grew underlying net sales mid-single digits as the brand continued to experience strong brand loyalty and pricing power as the No. 1 selling super-premium Chardonnay. Korbel also grew underlying net sales by 8 percent.
“We are particularly pleased with Brown-Forman’s results in light of recent industry commentary around a slowdown in global spirits momentum, and we are reaffirming our expectations for excellent full-year growth in underlying operating income,” Varga concluded.