Some call it the “Mad Men effect.” Others say we’re suddenly more interested in drinking American spirits. Some combination of factors has been boosting whiskey consumption, and Brown-Forman (BF/B)—the maker of Jack Daniel’s, the country’s best-selling whiskey brand—hasn’t missed out on the boom.
The company reported a 6 percent increase in global net sales in the 12 months ended April 30, thanks mostly to Jack Daniels, whose sales improved 8 percent globally. Demand was strong overseas, particularly in France, Germany, Russia, Turkey, and Brazil. The brand’s star product: Tennessee Honey, which increased another 36 percent after doubling the previous year.
“The phenomena of flavor whiskeys in the U.S. appears to be in its infancy,” said Chief Financial Officer Jane Morreau during Wednesday’s earnings call. The company expects flavors to be the fastest-growing segment in the U.S. whiskey market for the foreseeable future and is testing an extension called Jack Daniel’s Tennessee Fire, which tastes like hot cinnamon.
According to research firm Euromonitor International, after the flavored vodka craze, “Flavor is moving toward a more premium positioning to break its image of young college party crowd and offer a more sophisticated aura.” That means brands can charge a premium for unorthodox-tasting whiskey.
Brown-Forman has also benefited as more whiskey drinkers opt for higher-end varieties. Sales of the company’s premium whiskeys—such as Woodford Reserve and Woodford Reserve Double Oaked, Jack Daniel’s Single Barrel, Gentleman Jack, Sinatra Select, No. 27 Gold, and Collingwood—collectively increased 19 percent.
Here’s a snapshot of the whiskey market from the Distilled Spirits Council (pdf).
Brown-Forman spokesman Phil Lynch says that while other distillers have had problems getting oak barrels due to the severe winter—which delayed harvesting and delivery of oak, causing concern about a shortage—Brown-Forman owns its cooperage and mills, so “we aren’t experiencing any delays. We make sure we’ve got enough wood on hand to handle any temporary supply-chain issues.” So there should be plenty more flavored whiskey to come.
4 June 2014 | 8:18 pm – Source: businessweek.com