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Strong Off-Premise Bourbon Sales Salvage Brown-Forman’s Year

By Rich Duprey – Jun 9, 2020 at 10:28AM

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The coronavirus pandemic damaged sales at bars and restaurants in the fourth quarter.

Jack Daniel's Whiskey owner Brown-Forman (BF.A -1.04%) (BF.B -1.23%) said strong off-premise sales and bourbon's continued popularity salvaged what could have turned into a disastrous year.

The distiller said fiscal 2019 fourth-quarter sales fell 5% from the year-ago period to $709 million, a 10% drop on an underlying basis, which accounts for acquisitions and divestitures, currency fluctuations, and distributor inventory adjustments.

Glass of whiskey on a barrel

Image source: Getty Images.

Make it to-go

The pandemic crushed on-premise sales at places like restaurants and bars, which represent about 20% of Brown-Forman's revenue, along with travel-related sales. Fortunately, the distiller was buoyed by strong off-premise sales such as at retail establishments like packaged goods and convenience stores, helping to salvage the quarter.

Bourbon in particular saw robust growth, continuing a trend that began several years ago. Premium brands grew underlying net sales at double-digit rates, with Woodford Reserve rising 19% and its 150-year-old Old Forester brand rising even higher during the fiscal year.

It wasn't quite enough, however, to offset the decline in Jack Daniel's Tennessee Whiskey. While brand extensions such as Tennessee Apple, Tennessee Honey, and ready-to-drink mixes saw underlying net sales gains, Brown-Forman's flagship Jack Daniel's brand saw a 3% decline in depletions of 9-liter cases. Depletions are sales to distributors and retailers and are an industry proxy for consumer demand.

For comparison, there were 13 million cases of Jack Daniel's depletions reported, but just 3.9 million cases of other Jack Daniel's brands and 1.1 million cases of Woodford Reserve.

Brown-Forman was also still dealing with the trade war in Europe from 2018, which saw retaliatory tariffs targeted directly at Jack Daniel's as well as at Harley-Davidson motorcycles. While trade with China has normalized somewhat, Europe is still a hot zone.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Brown-Forman Corporation Stock Quote
Brown-Forman Corporation
$66.57 (-1.23%) $0.83
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Brown-Forman Corporation
$67.56 (-1.04%) $0.71
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