Brown-Forman reveals its focus for future growth

Brown-Forman is celebrating exceptional growth in 2022, driven by its focus on American whiskey and tequila, with the company also predicting an exciting global future for its spirit-based RTDs.

The company has reported its financial results for its fourth quarter and fiscal year ended April 30, 2022, with net sales of $996 million, an increase of 23% (+27% on an organic basis).

For the full year, the company’s reported net sales increased 14% to $3,933 million (+17% on an organic basis).

Jack Daniel’s Tennessee Whiskey fuelled overall company performance, with 20% reported net sales growth (+23% organic), while premium bourbons, led by Woodford Reserve and Old Forester, grew reported net sales 17% (+17% organic).

The tequila portfolio, driven by Herradura and el Jimador, grew reported net sales 22% (+20% organic).

Jack Daniels RTDs delivered another year of double digit organic net sales growth for the fiscal year lapping very strong prior year comparisons, largely driven by Australia and Germany. 

The FY22 results are particularly impressive in light of the fact that last US summer, Brown-Forman decided to reallocate the finite amount of glass that it had – due to the global glass shortage – to focus on Jack Daniel’s Tennessee Whiskey.

“That was largely because we saw the on-premise opening around the world and we certainly didn’t want to miss that,” Brown-Forman CEO Lawson Whiting said.

“And Jack Daniel’s by our own estimates is either the largest or certainly one of the largest on-premise brands in the world. So that worked and you obviously see the numbers that Jack Daniel’s was able to deliver this year. It was a spectacular year for Black Label. But it came at the cost for pretty much every other brand in the portfolio.” 

Whiting said he expected glass to still be somewhat of an inhibitor to growth moving forward.

“We won’t have everything we want till probably the second half of next year, but it is the situation is certainly getting better,” he said.

However, Whiting said the Brown-Forman portfolio was well aligned with consumer trends, particularly “American whiskey, tequila and RTD categories, which we believe are high growth categories with strong consumer demand”.

He noted that he had been “staring at some of the Nielsen data” and “boy you want to be in the American whiskey and tequila categories”.

“I mean, they are by far and away, the strongest and so many of the white spirits are pretty weak. So I think the company Brown-Forman in general is well positioned, not only where we are, but in the right categories at the right time.”

Innovations for Jack Daniel’s

In fiscal 2022, the Jack Daniel’s brand added approximately 1.5 million nine-litre cases and has now grown to more than 14 million cases.

“We believe these results demonstrate the health and strength of the largest global premium spirits brand by volume in the world,” Whiting said.

Collectively Jack Daniel’s Tennessee Honey, Jack Daniel’s Tennessee Fire, and Jack Daniel’s Tennessee Apple achieved double-digit organic net sales growth. The continued international launch of Jack Daniel’s Tennessee Apple along with solid volume growth in the United States drove a strong double-digit organic net sales increase for the brand in fiscal 2022.

Jack Daniel’s Tennessee Apple was introduced in October of 2019 and is approaching 700,000 nine-liter cases, which Whiting described as “impressive” considering that brand has largely been built during the pandemic lockdowns and restrictions.

Jack Daniel’s Tennessee Honey and Tennessee Fire grew organic net sales for the fiscal year while both were adversely impacted by supply chain disruptions largely related to glass supply.

The brand is entering the super-premium whiskey space with Jack Daniel’s Bonded Tennessee Whiskey and Triple Mash Whiskey, a blend of straight whiskeys from the Jack Daniel’s category. They are the brand’s first super-premium line extension in more than 25 years.

“In FY23 innovation is going to be led by our US national launches of Jack Daniel’s Bonded and Triple Mash, which will help us accelerate the premiumisation of the Jack Daniel’s family of brands,” Whiting said. “They’re going to be launching in the US in May, and the international launch will follow later in the fiscal year.”

Big future for RTDs

In fiscal 2022, Jack Daniel’s RTDs grew organic net sales high-single digits on top of very strong double-digit growth in the prior year,

“While the majority of our RTD business is international driven by Australia and Germany, we believe the combined consumer trends of flavour, convenience and premiumization are driving demand for spirit based RTDs in the US and creating additional opportunities for growth,” Whiting said.

“With the strong consumer popularity of our spirit-based Jack Daniel’s RTD in the US, we’re going to expand the US launch of our Jack Daniel’s spirit-based RTD, which has been incredibly well received by the consumer.”

Unlike Australia, malt-based RTDs currently dominate the US RTD market, with a 91% share by volume. However, spirit-based RTDs are increasingly entering the landscape – in fact, spirit-based RTDs in the US grew by 53% in 2021, around double the growth of the wine- and malt-based categories.

“By 2025, spirit-based RTDs are expected to grow at a CAGR of 33% in volume in the US, and many producers and distributors are leveraging the opportunity,” said Brandy Rand, COO Americas at IWSR. “Some are exploring the spirit-based RTD space for the first time, and others are expanding their existing portfolios.”

The growth of spirit-based RTDs in the US has been partly linked to flavour options. Flavour is the primary purchase driver for RTD selection by consumers, and spirit-based RTDs enjoy the advantage of being available in a spectrum of familiar cocktails flavours and taste profiles.

Global launch for Jack & Coke RTD

Brown-Forman and The Coca-Cola Company have announced a global partnership to debut the iconic Jack & Coke cocktail as a branded RTD.

Jack Daniel’s & Coca-Cola RTD will be made with Jack Daniel’s Tennessee Whiskey and Coca-Cola. It will be available in markets around the world, with initial launch planned for Mexico in late 2022.

“This relationship brings together two classic American icons to deliver consumers a taste experience they love in a way that is consistent, convenient, and portable,” said Brown-Forman CEO Lawson Whiting.

“Brown-Forman has been a leader in the ready-to-drink category since we launched our first Jack Daniel’s RTD more than 30 years ago. Coca-Cola perfectly complements Jack Daniel’s and our existing RTD offerings, enabling us to accelerate expansion and continue to grow our business around the world.”

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Tequila premiumisation trend continues

Tequilas delivered double-digit reported net sales growth of 22% (+21% organic) for Brown-Forman, driven by the broad-based growth of Herradura and el Jimador, led by the United States.

Whiting said that with demand for tequila so high, Brown-Forman was preparing to launch of Herradura Legend, which will be placed in the plus $US100 price point.

“The tequila category is obviously flying and we really need to work on building awareness and distribution for Herradura,” Whiting said. “So that is going to be a big effort over the next year.” 

Brown-Forman growth in the tequila category will also be driven by innovation in terms of barrel ageing the spirit.

“There are lots of things you can do with barrel finishing on tequila that I think makes innovation better,” he said.

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