B-F Plans to “Turn Up the Innovation Dial”

Dear Client:

Brown-Forman continued its growth momentum in the US, with underlying net sales up 5% in the third quarter ended January 31, and 4% underlying net sales growth for the first nine months driven by its premium bourbons and tequilas.  

BRAND PERFORMANCE. B-F has been focused on portfolio diversification in the US, according to ceo Lawson Whiting. “We’re seeing an increasing share of growth coming from other brands in our portfolio beyond just Jack Daniel’s Tennessee Whiskey,” he said on this morning’s earnings call.  

The company’s premium whiskies, Woodford Reserve and Old Forester, were standout performers for the nine-month period, both delivering double-digit underlying net sales growth in the US. The two brands together are approaching the one-million-case mark. Woodford in particular is “on track to be the single largest contributor to growth” in the US this fiscal year, said Lawson.  

Herradura and El Jimador were also up double-digits, and Lawson referred to the tequila brands as the “most material drivers of our US growth.”

The Jack Daniel family of brands is also performing well. Gentleman Jack, Single Barrel and Tennessee Rye continue to grow. Honey is now about 750,000 cases in the US and Fire is about 400,000 cases.

“If you’re thinking we’re only a one-trick pony with Jack Daniel’s, we’re not anymore,” said cfo Jane Morreau.

FUTURE GROWTH DRIVERS. You may recall, B-F recently set up an emerging brands division in the US to refocus its resources behind super premium and heavy on-premise brands, such as Herradura, Old Forester, Woodford Reserve, Sonoma Cutrer, Slane Irish Whiskey and Glendronach and the BenRiach Scotch brands.

“And I’m pleased to say that we’ve accelerated the growth rate on every one of these brands over the past year,” said Lawson, adding, “we believe we’ve positioned these burgeoning brands to really become the future growth drivers” in the US.

Now that the emerging brands portfolio is accelerating, we can expect to see more innovation around those brands.

“We may have hit the pause button on [innovation for] some of our smaller brands, so that we didn’t get too much clutter in the innovation pipeline, but now those brands are growing really very nicely. And so you’ll gradually see Brown-Forman turn up the innovation dial again and continue to make that an important part going forward,” said Lawson.

ON TARIFFS. B-F’s strategy for the current retaliatory tariffs placed on US whiskey has been to absorb the costs of the tariffs, and for the first nine months of the fiscal year that’s led to a 1% reduction in sales growth. Jane estimates the annual cost of the tariffs is about $125 million.

“We continue to work with our government affairs partners and industry associations such as DISCUS to resolve the tariff situation,” she said, adding, “we’re in the process of our planning for the next fiscal year assuming tariffs remain.”

“We remain on track to deliver another strong year of results as cost discipline helped offset some of the large burden we are absorbing due to the retaliatory tariffs on American whiskey,” says Lawson.

The company reaffirmed its fiscal 2019 outlook at underlying net sales growth of 6-7% globally.


Vintage Wine Estates has acquired canned wine brand Alloy Wine Works, who was one of the first movers in the canned wine space, per a release. The purchase price was not disclosed.

Alloy Wine Works was founded by Field Recording wines creator Andrew Jones. The core varietals in the portfolio include Everyday Rose, Chardonnay, Pinot Noir and Everyday Red with small production of a few other limited brands, all of which are exclusively packaged in cans. Moving forward, Josh Phelps will join the winemaking team.

“Simply put, we were so impressed by Andrew’s vision of providing high quality wines in alternative packaging that we felt the brand aligned perfectly with our commitment to vertical integration and innovation, of always being focused on wine quality and the consumer experience,” says VWE chief Pat Roney.

VWE has launched a major innovation initiative for 2019, per a release, and alternative packaging will “play a strategic role” in reaching new markets.


1000 STORIES LAUNCHES PROSPECTORS’ PROOF CABERNET. Fetzer Vineyards’ 1000 Stories has launched a bourbon barrel-aged wine, called Prospectors’ Proof Cabernet Sauvignon, joining its flagship zinfandel and red blend Gold Rush Red. Prospectors’ Proof is available for purchase through the brand’s website and retailers nationwide for about $19 a 750 ml.

OLD ELK DISTILLERY’S RAPID GROWTH BRINGS IT TO THE BIG APPLE. Starting this month, CO-based Old Elk Distillery, will be available in New York through Southern Glazer’s Wine & Spirits. SGWS will bring three products to the new market including, Old Elk Blended Straight Bourbon Whiskey, Dry Town Gin, and Nooku Bourbon Cream.

GRAND MARNIER LAUNCHES CUVEE LOUIS ALEXANDRE. Campari’s Grand Marnier has launched the Cuvee Louis Alexandre, named after the legendary disruptor Louis-Alexandre Marnier Lapostolle, per a release. He was the first to blend a fine cognac with a rare, bitter orange liqueur. The Cuvee Louis Alexandre is created by master blender Patrick Raguenaud and made using a blend of refined VSOP Cognac and Liqueur D’Orange and bottled at 80 proof. It is available with a suggested retail price of $70.

Until tomorrow,

“Genius is more often found in a cracked pot than in a whole one.” – E.B. White     

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