Jack Daniel's maker Brown-Forman has cut its organic net sales forecast for fiscal 2024, a sign that higher prices are weighing on the demand for its whiskey and spirits.
Higher input costs of raw materials such as agave — a key input for tequila — wood and glass have forced most alcoholic beverage makers to raise product prices in the previous years to shield their margins.
Increased prices, however, prompted cost-conscious consumers to look for cheaper alternatives in the face of sticky inflation, hurting demand for Brown-Forman's spirits and premium whiskey brands.
The company said it saw lower volumes for its whiskey business, which includes Jack Daniel's Tennessee Whiskey and Jack Daniel's Tennessee Honey, so far in the fiscal year 2024.
Brown-Forman forecasts annual organic net sales to be flat, compared with its prior range of 3% to 5% growth.
Quarterly Performance
The company posted net sales of $1.07 billion (€980 million) for the quarter ended 31 January, compared with analysts' average estimate of $1.12 billion (€1 billion), according to LSEG data.
Lawson Whiting, president and chief executive officer of Brown-Forman stated, “In a year with significant uncertainty and complexity in the spirits industry, Brown-Forman has demonstrated continued resilience and agility following two years of double-digit organic net sales growth.
“As industry trends have normalised, we have expanded our gross margin, executed our strategic priorities, and invested behind the business. As we look to the end of the fiscal year, we remain confident in the strength of our portfolio and our ability to deliver long-term growth.”
News by Reuters, additional reporting by ESM.
