Whiskey Giant’s Shocking Brown-Forman Sales Forecast Cut: Uncover the Dramatic Shift in Consumer Habits!
On Wednesday, Brown-Forman revised its net sales forecast for 2024 downward, as cost-conscious consumers in the United States increasingly turned to more affordable alternatives, impacting the demand for the whiskey-maker’s higher-priced brands and causing a 7% premarket trade dip in the company’s shares.
The surge in prices for raw materials like wood and grains has compelled many players in the alcoholic beverage sector, including Jack Daniel’s whiskey maker, to raise product prices in previous years. However, consumers grappling with inflation have been actively seeking budget-friendly options and shifting away from premium non-essential purchases to manage their household expenses.
Brown-Forman
Brown-Forman, known for products such as Jack Daniel’s whiskey and El Jimador tequilas, now anticipates annual organic net sales growth of 3% to 5%, a decrease from the earlier projection of 5% to 7%. In the second quarter, depletions across the spirits portfolio saw a 2% year-over-year decline, indicating reduced stock sold to wholesalers or retailers.
Rising costs of essential raw materials like agave for tequilas, wood, and glass have exerted sustained pressure on profit margins for the whiskey maker, counteracting gains from a relief in supply chain costs. Consequently, the company has also adjusted its forecast for organic operating income growth to a range of 4% to 6%, down from the initial target of 6% to 8%.
For the quarter ending October 31, net sales rose by 1% to $1.11 billion, falling short of analysts’ average estimate of $1.15 billion, according to LSEG data. Excluding exceptional items, the company reported earnings of 50 cents per share, slightly below the anticipated profit of 51 cents per share.
