During and after the recent recession, sales of Jack Daniel shifted from distributors who supply bars and restaurants to retailers because American consumers were going out less. BF resisted price increases since “consumers tend to be more sensitive to price when shopping at stores.”
As a result, the growth Jack Daniel experienced in the current fiscal year was based on volume and not a price increase. As the cost of certain expenses continues to rise, this could put BF in a pinch when it comes to profits.
BF executives said now that the economy seems to rebounding, they see an opportunity to raise prices and boost margins. Brown Forman executives have stated that they plan to increase price across their family of brands and not just with Jack Daniel.
Brown-Forman said its flagship Jack Daniel’s whiskey brand led sales gains with a 12 percent overall gain. The newest member of the family, Jack Daniel’s Tennessee Honey, which debuted last year, is key to rising sales for the Jack Daniel’s brand in the U.S, said company CEO Paul Varga.
The company said it plans to expand the honey-flavored whiskey to several overseas markets in the next year, including the United Kingdom, South Africa and Australia, building on international sales momentum for the Jack Daniel’s brand.
Analysts pondered whether distributors stockpiling inventories in advance of an anticipated price increase could affect Brown Forman’s next quarter earnings.