Jack Daniel needs a drink: Whiskey sales are falling
By Jordan Valinsky, CNN
New York (CNN) — Jack Daniel would probably pour himself a stiff one after seeing his parent company’s earnings.
Brown-Forman, the maker of several spirits, said sales of its Jack Daniel’s whiskey fell 1% in the first half of its current fiscal year — a sharp contrast when compared to the same time period a year ago when they rose 9%.
Overall sales of its whiskeys fell 2% year over year, with Woodford Reserve sales falling 3% and Old Forester down 5% — a steep drop from last year’s earnings report when sales of those premium brands jumped 39%.
However, there was a bright spot for Brown-Forman’s whiskey business: Sales of its Jack Daniel’s Tennessee Apple shot up a whopping 50%.
Shares of Brown-Forman (BF.A) sank as much as 10% in midday trading, making it one of the worst performing stocks of the S&P 500 on Wednesday. The stock is down about 16% for the year.
In an earnings call, Brown-Forman CEO Lawson Whiting said demand for its drinks “continues to reflect a normalization back to our more historical trends” following the height of the Covid-19 pandemic.
The company also cut its 2024 net sales forecast, stating in an earnings release that “evolving global macroeconomic conditions continue to create a challenging operating environment tempering our expectations.”
One of those factors includes customers seeking out cheaper alternatives as the lingering effects of high inflation continue and the cost of living rises. Drinkers might have hit their limit for price hikes that were implemented across Brown-Forman’s brands because of the higher prices for raw materials.
Whiting said on the call that the company has recently noticed a “slowdown in consumer spending similar to the trends we’re seeing across total distilled spirits and other consumer packaged goods.”
Another factor likely worrying Brown-Forman are tariffs being added on to American whiskey being imported by the European Union. The EU is set to impose a 50% tariff on imports of the liquor in 2024.
The move is all part of a retaliatory package of tariffs being imposed on US goods by the EU in relation to an ongoing dispute over steel and aluminum.
Whiting discussed the tariffs on the call, saying that the company “continues to work with governments on both sides of the Atlantic, advocating for a solution that brings long-term stability to the US and EU trade relationship.”
Last year, American-made whiskey was the third-best selling spirit in the US with sales totaling $5 billion, a nearly 11% increase from 2021, according to the Distilled Spirits Council.
The-CNN-Wire
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