USA – Brown-Forman, the maker of the iconic Jack Daniel’s whiskey, reported an 8 percent decline in revenue on a reported basis for the first quarter of fiscal 2025, ending July 31, 2024.
The company’s revenue dropped to US$1 billion, while its operating income fell 13 percent organically to US$281 million.
Gross profit also decreased by 13 percent, leading to a reduction in gross margin by 330 basis points to 59.4 percent.
The revenue decline was primarily driven by a 6 percent decrease in organic sales of Jack Daniel’s Tennessee Whiskey, which remains Brown-Forman’s flagship brand.
The disposal of Finlandia Vodka, sold to Coca-Cola in November 2023, also contributed to the revenue drop, despite resulting in a pre-tax gain of US$92 million for the company.
Brown-Forman’s Tequila portfolio faced significant challenges, with overall sales dropping by 23 percent.
El Jimador, a key brand within this segment, saw a 26 percent decline due to lower volumes in the United States, Colombia, and Mexico. Herradura, another prominent Tequila brand, recorded a 14 percent decrease, primarily due to economic difficulties in Mexico.
Total whisky sales for the company fell by 3 percent, with the core Jack Daniel’s expression being impacted by unfavorable foreign exchange rates and the timing of shipments compared to last year.
The company’s ‘rest of whiskey’ portfolio, which includes Scotch brands like Glenglassaugh and Benriach, saw an 18 percent decline.
However, Brown-Forman’s premium bourbon brands recorded positive results, with Old Forester growing by 16 percent and Woodford Reserve increasing by 3 percent, both outperforming the US whiskey category.
Ready-to-drink (RTD) sales experienced a 4 percent decline, with Tequila-based New Mix falling by 9 percent, and the Jack Daniel’s RTD portfolio dipping by 2 percent due to changes in the business model for Country Cocktails RTDs.
Geographically, the company saw organic sales growth only in Brazil, up by 29 percent, and in the ‘rest of developed international markets,’ including Japan, which grew by 3 percent.
The US market, however, recorded a 4 percent decline, driven by the flagship Jack Daniel’s variant, El Jimador, and the negative impact of Country Cocktails and Californian sparkling wine Korbel.
Brown-Forman President and CEO Lawson Whiting stated, “Our first quarter results were in line with our expectations, and as such, we are pleased to reaffirm our full-year fiscal 2025 guidance.”
The company remains optimistic about the future, anticipating a return to growth in fiscal 2025 driven by gains in international markets and normalizing inventory trends.
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