Brown-Forman Toasts Successful New Jack Daniel's Label, Booming International Markets in Fiscal Third-Quarter 2012

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Researched by Industrial Info Resources (Sugar Land, Texas)--Brown-Forman Corporation (NYSE:BF.B) (Louisville, Kentucky), a leading manufacturer of alcoholic beverages, including Jack Daniel's and Southern Comfort, held steady during the third quarter of the company's fiscal year 2012, as broad-based gains in international sales and a successful product addition to the resurgent U.S. whiskey market offset most of the negative effects from a major wine label sale and adjustments in distributor inventories. Net income for the quarter was reported to be $133.1 million, a 5.4% decrease from the fiscal third quarter of 2011.

Net sales were almost unchanged from the same period in 2011, at $959 million. While sales in the U.S. were buoyed by the very well-received introduction of Jack Daniel's Tennessee Honey, which already is ranked as a leading flavored whiskey, the international market remained strong, with double-digit sales growth in Brazil, Canada, France, Germany, Mexico and Russia. In particular, Jack Daniel's brands saw strong volume gains in Germany, Mexico and the U.K., while the Finlandia vodka brand's growth in Eastern Europe offset its declines in the U.S.

However, a downward rebalancing of distributor inventories impeded profit growth, as did a stronger U.S. dollar. The company's sale of its wine products based in Hopland, California, also eroded profits.

Industrial Info's North American Food & Beverage Project Database is covering 6,649 operational plants and 574 active projects. Among the operational plants are five Brown-Forman distilled and blended liquors facilities, including two Jack Daniels facilities in Lynchburg, Tennessee. Industrial Info also is covering a Brown-Forman whiskey barrel-manufacturing plant in Louisville, Kentucky, as part of its North American Industrial Manufacturing Project Database.

"Today, the global economy, while a bit firmer, continues to experience a very fragmented recovery and, in some economies, continues to struggle," said Donald Berg, the executive vice president and chief financial officer for Brown-Forman, in a conference call. "However, in some markets, the competitive pricing environment seems to have abated somewhat, and we have seen some return to 'trading up' to premium and super-premium brands."

Of all the company's products, Jack Daniel's saw the strongest gain in net sales when compared to the first nine months of fiscal year 2011, reporting a 14% increase. Finlandia products also fared well, with a 10% increase. However, whiskey and whiskey-related products with the Canadian Mist and Southern Comfort labels saw 6% and 5% declines in net sales, respectively, while Korbel Champagne dipped 4%. Southern Comfort is facing increased competition from similar whiskey- and vodka-related products.

"Flavored whiskeys continue to explode in the U.S., fuelled by Jack Daniel's Tennessee Honey," Berg said in the conference call. "We are firming up our plans to expand Tennessee Honey into several international markets in fiscal 2013, including the U.K., South Africa and Australia."

Brown-Forman executives say that the company is on par with overall growth rates in the alcoholic beverage industry and expect to see high single-digit percentage growth for full-year 2012 in underlying operating income and net sales. They also plan to take price increases in most markets during the coming fiscal year and across most of the company's brands, although they don't anticipate a lot of pricing improvement in the near future.

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