Brown-Forman adjusts annual forecasts as consumer spending slows in the whiskey market 

US – Brown-Forman, the maker Jack Daniel whiskey and Herradura Tequila, has revised its annual forecasts for underlying sales and operating profit amid challenging trade conditions in the US home market.  

The company reported net income of $242 million for the three months ending October, a modest increase from $227 million in the same period last year, falling slightly below market expectations. Sales rose by 1% to $1.107 billion. 

The Louisville-based company attributed the adjustment in forecasts for the second half of the year to trade conditions in the US. Brown-Forman now expects full-year organic sales growth of 3% to 5%, down from the initial guidance of 5% to 7% growth provided in September.  

This shift in expectations comes despite the anticipated growth from recently acquired brands like Gin Mare and Diplomatico rum, which have experienced a 2% increase in net sales since April. 

Notably, the New Mix Ready-to-Drink (RTD) category has seen impressive organic net sales growth of 22%, while the original Jack Daniel’s Tennessee Whiskey witnessed a 2% decline in organic sales. The latter had enjoyed a 9% rise in the first six months of 2022, aligning with the post-pandemic “revenge spending” trend. 

Brown-Forman’s overall net sales for whiskey products declined by 2% in the first half of the year. The Jack Daniel’s brands saw a 1% net sales decline, primarily driven by lower volumes for Jack Daniel’s Tennessee Whiskey, Jack Daniel’s Tennessee Honey, and Gentleman Jack.  

This decline was partially offset by the growth of Jack Daniel’s Tennessee Apple and premium expressions such as Jack Daniel’s Sinatra, Jack Daniel’s Bonded Rye, and Jack Daniel’s Single Barrel. 

The trend suggests that American consumers are becoming more cost-conscious, seeking affordable alternatives to premium-priced brands amid inflation, which erodes spending power.  

Despite this, Brown-Forman has taken a conservative approach to raising prices compared to its competitors. However, higher costs of agave, wood, and glass have exerted sustained pressure on the company’s margins. 

Lawson Whiting, the CEO of Brown-Forman, acknowledged the recent slowdown in consumer spending, aligning with broader trends in the distilled spirits and consumer packaged goods sectors. 

“Fundamentally, our brands remain in very strong shape,” he said. 

While expressing optimism about growth prospects in fiscal 2024, the company recognized the challenging global macroeconomic conditions and continues to work with governments to advocate for a solution that brings long-term stability to the US and EU trade relationship. 

The announcement follows earlier plans by the company to sell its California subsidiary, Sonoma-Cutrer Vineyards to the American wine company, Duckhorn Portfolio Inc., for approximately US$400 million. 

The transaction is anticipated to be completed in the third quarter of the Company’s fiscal year 2024, subject to regulatory approvals and customary closing conditions. 

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