Woodford Reserve Brown-FormanBusiness

Brown-Forman reveals its plans for Australia

Brown-Forman has announced it will bring a new sales and marketing strategy to Australia, which is aimed at raising the profile of its super-premium brands.

Details of the strategy were revealed during an analysts’ call, following the release of Brown-Forman’s financial results for the fourth quarter and fiscal year ended April 30, 2021. The period saw double-digit underlying net sales growth driven by strong performances in Australia, Germany, France and the United Kingdom.

For the fourth quarter, the company’s reported net sales of $812 million increased 14% (+19% on an underlying basis) compared to the same prior-year period.

Australian earnings were up 35% (reported), making it the fastest-growing region for the company in the world.

CEO Lawson Whiting said its emerging brands division had been very successful in the US, delivering “really stellar high growth rates for some of our smaller brands” at super and ultra-premium price points.

“We’re taking that model and exporting it to Germany and Australia and hope to see pretty strong benefits in terms of portfolio growth from that group,” he said.

He admitted the plans for expanding the company’s super-premium marketing strategy in Australia are so new they’re “not even really formed yet”.

“It will be over the next few months,” he said. “Our business outside of the United States in most markets really is a Jack Daniel’s company. And we have a big effort to continue to expand our portfolio in those markets led by like a Woodford Reserve would be a great example. But our single malt Scotches are very important to us. Fords Gin, even Slane Irish Whiskey, those are much smaller brands, but brands that we see a bright future for.

“And that’s the purpose of putting dedicated people in place in these markets that have been so Jack Daniel’s-oriented. It’s very difficult to build a Slane Irish Whiskey next to Jack Daniel’s Tennessee Whiskey. Salespeople’s incentives need to be aligned behind the right initiatives. And so, that’s the reason we’re doing it. We feel pretty good that we’ll be in the right place at the right time and hopefully make that into a significant piece of business.”

CFO Jane Morreau added: “And each of those markets are going to have one common priority across all, which is our great Woodfood Reserve brand that we’re so excited about. But, what they do within the other rest of our emerging brands will be unique, depending on the category in those markets and what’s important in those markets.”

Fiscal 2021 highlights for Brown-Forman

“In a year unlike any other, we delivered top line growth of plus 6%, which is consistent with our long-term performance,” Whiting said.

“Yet, this year was anything but consistent and conditions were anything but normal. The pandemic created unprecedented market conditions, and perhaps surprisingly in many of our largest markets really strong performance. At the same time, these results would not have been possible without the resilience, creativity, agility, and determination of our employees around the world.

“So before moving on, I do want to thank each and every one of our employees for their continued focus over these past 12 months, and for all they have done and continue to do to rise to the challenge, re-imagine the future, take care of each other, and move the business forward. I’m immensely proud of what we were able to accomplish, and I hope you are too.”

Among the highlights revealed were:

  • Underlying net sales grew 6% (+3% reported)
  • Growth across each of the three major International Monetary Fund (IMF) geographic clusters
  • Jack Daniel’s family of brands underlying net sales grew 4% (+1% reported)
  • Premium bourbons maintained double-digit underlying net sales growth
  • The tequila portfolio grew underlying net sales 14% (+9% reported)
  • Sustained investment behind the brand portfolio with underlying advertising increasing 2% (+4% reported)
  • Continued to reshape the portfolio through the sale of Early Times, Canadian Mist, and Collingwood brands and the acquisition of New Zealand’s Part Time Rangers RTDs
  • Strong free cash flow generation of $755 million
  • Industry-leading return on invested capital of nearly 20%

The rise and rise of RTDs

Australia has always been an RTD heartland for Brown-Forman, but RTDs are becoming an increasingly important part of the business globally.

Jack Daniel's

“Globally, Jack Daniel’s RTD exceeded 12 million cases and New Mix crossed 8 million cases,” Whiting said. “Remarkably for the year, we sold approximately 5 million incremental cases of RTDs. Jack Daniel’s Tennessee Honey was approximated 2.1 million cases, and our flavour whiskey portfolio grew to 3.3 million cases, an incremental 500,000-plus cases were added for the year.”

Morreau added: “Our developed international markets collectively delivered strong underlying net sales growth, up double digits for the fiscal year. This growth was driven by higher volumes of Jack Daniel’s RTDs in Australia and Germany, broad-based volumetric growth from Jack Daniel’s Tennessee Honey as well as the launch of Jack Daniel’s Tennessee Apple, which in year one is already the size of Jack Daniel’s Tennessee Honey was in year four in Europe.”

Brown-Forman has also partnered with Pabst take its RTD business to “an even higher level’ in the US. Whiting explained that Pabst is “really going to beef up our Jack Daniel’s Country Cocktails” range.

“We’re going to sell them the glass,” he said. “They’re going to then distribute it throughout all their channels that we don’t traditionally access to.

“And so, they’re going to make it. They’ve got better capabilities as it relates to packaging, configurations, things like that, so we can have some mixability, pack sizes and shapes and so forth like that … in effect, we’ll get a royalty, an agreed-upon royalty and it will scale up as they grow. That’s the simplest way to talk about it.”

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