Brown-Forman sales in Australia have surged 27% in the first half of FY21 in what the company has described as “exploding growth”.
Brown-Forman announced its financial results for the first half of fiscal 2021 (ending October 31) overnight, noting that its overall reported net sales decreased 1% to $US1,738 million (+4% on an underlying basis) compared to the same prior-year period.
President and Chief Executive Officer Lawson Whiting said: “We continue to be pleased with our underlying top-line growth in the first half. Notably, our business accelerated in the second quarter amidst an unprecedented environment. These results are a testament to the resilience of our people, the strength of our brands, and the agility that so many before us today have demonstrated over the company’s last 150 years. As the pandemic continues, our focus remains on prioritizing the safety of our employees, meeting the needs of our consumers and business partners, and pursuing our long-term strategy.”
The United States grew underlying net sales 9% (+3% reported) while developed international markets grew underlying net sales 10% (+10% reported).
“Since the start of the COVID pandemic, spirits performance, particularly in the United States has accelerated,” Whiting said. “Overall consumption is up, even with many restaurants and bars closed. And we continue to take share from both, wine and beer. Although that’s a trend that has existed in the US for a long time, the gap has gotten wider in spirits’ favour.”
The world catches up on RTDs
Brown-Forman said that the Jack Daniel’s family of brands underlying net sales growth in HY21 was driven by Jack Daniel’s RTDs, the ongoing launch of Jack Daniel’s Tennessee Apple, and broad-based volume growth from Jack Daniel’s Tennessee Honey and Gentleman Jack.
Australia is the birthplace of RTDs, which were were introduced here in the mid-1990s, then later into Europe, Great Britain and the US. However, they’ve only been hitting their stride overseas in recent years, fuelled partly by the popularity of hard seltzer and the move to convenience in at-home consumption during COVID-19.
IRI Lead Consultant – Liquor, Jarna McLean, noted in September that bourbon RTDs were “hit hard” in Australia during the early months of 2020, but were back to having more than 50% category share in the latest quarter.
“Jack Daniel’s was flat, but it’s now the third largest contributor to liquor growth with RTDs accounting for nearly 60% of the master brand’s growth,” McLean said.
Whiting said the “exceptional growth” Brown-Forman had experienced in its RTD business had been a “surprise”.
“We have believed in the ready-to-drink category ever since we launched our first Jack Daniel’s RTD over 25 years ago,” he explained.
“But, I’ll admit that this year’s performance has exceeded our expectations about the format and the category. And this really is not a single brand or single market phenomenon. We’ve seen strong growth from our Jack Daniel’s RTDs and markets like Australia, Germany and the UK. Our recent launch of the Jack Daniel’s spirit-based RTDs in the US is off to a terrific start. We’ve also seen excellent performance from our malt-based Jack Daniel’s country cocktails in the US. Our tequila-based RTDs called New Mix in Mexico, which is now near a record 8 million cases in the last 12 months.
“Although, the shutdown of the on-premise certainly gave a boost to the RTD category, the mega trends of convenience and flavours give us confidence that this category will continue to be a growth driver into the future.”
Whiting said the acquisition of New Zealand RTD brand Part Time Rangers, which produces spirit-based RTDs with all-natural fruit flavouring, was “a target investment that we believe will help us grow in this key category”.
“We believe it’s well-positioned to take advantage of recent consumer trends such as lower calorie, lighter and brighter tasting,” he said. “While focused on New Zealand and Australia, over the next 12 months, we believe this brand has the potential to move into more markets in upcoming years.
The outlook for the second half
Brown-Forman said the company continues to face “substantial uncertainty in the rapidly evolving environment due to COVID-19 and its effect on the global economy”.
As a result of this ongoing uncertainty and expected volatility, it is not providing quantitative guidance for fiscal year 2021.
Jane Morreau, Executive Vice President and Chief Financial Officer, noted: “We believe our financial and business fundamentals remain strong, allowing us to navigate this highly dynamic environment while remaining focused on our long-term strategic priorities.
“In our 150 year history, we have experienced many unforeseen turbulent events and have emerged stronger. We believe this time will be no different.”
However, Whiting said ecommerce was a growing focus for Brown-Forman moving forward.
“UK, Germany, France, Australia, Brazil, Mexico … all those markets are seeing exploding ecommerce growth, and we’re making sure that we’re going to be a part of it,” he said.