No Downfall for Creator Jack Daniel

Sales rose 11% to $1 billion, beating estimates of $978 million. Earnings rose 30% to $249 million, or 52 cents a share. Analysts had forecast earnings of 47 cents per share.

What’s more, consumers seem willing to splurge on higher-priced bourbon, despite worries about inflation and the economic downturn. Sale Brown Foreman (obd) Premium brands including Old Forester and Woodford Reserve are up 35% year over year.

“While market uncertainty remains, I remain optimistic we can maintain this momentum and realize both short and long term growth ambitions,” Brown-Forman President and CEO Lawson Whiting said in an earnings call.

Shares of Brown-Forman rose slightly on Wednesday. The stock has risen slightly over the year and is up about 10% over the past three months, even though the market as a whole has fallen and stocks of other alcoholic beverages such as Anheuser-Busch (BUD), Boston beer (SAM), Constellation of brands (STZ), Molson Course (CLICK) as well as Diageo (DEO) lagged behind.
The company has also picked up on the canned cocktail craze and has been successful with drinks such as Jack and Coke in a can, as a result partnership with Coca Cola (knockout). Brown-Forman said on Wednesday that sales of its so-called Ready-to-Drink/Ready-to-Pour drinks were up 12% year-over-year on strong demand from Australia and Germany.

“Brown-Forman persevered because we have some of the most compelling spirits brands in some of the most sought-after categories and continue to innovate and grow our portfolio,” Whiting said on a conference call with analysts.

Concerns about inflation and broader fears about the economy do not appear to have a major impact on the demand for liquor either. Consumers who no longer worry about the pandemic are taking vacations again… and drinking in the process.

In fact, Brown-Foreman noted that the high demand for booze at airports and on cruise ships also boosted sales. Revenue from the company’s travel segment, which includes duty-free shops, grew 77% year-over-year.

CFO Lynn Cunningham said on a conference call that while travel-related sales “have not yet fully recovered to pre-pandemic levels…[they continue] close the gap.”

Cunningham acknowledged that “we remain cautious given the potential impact of inflation and higher energy prices on consumer spending” and added that higher commodity prices would remain a “headwind”. But this clearly does not yet have a strong effect on profits.

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