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Brown-Forman's (BF.B) Brands & Strategies Provide Growth Impetus
Brown-Forman's (BF.B) Brands & Strategies Provide Growth Impetus
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Brown-Forman Corporation (BF.B) has been in a good spot, courtesy of strength in its brands, mainly Jack Daniel’s Tennessee Whiskey. The company has been gaining from the premiumization of its portfolio and aggressive brand investments. The gains of these efforts have been well reflected in its share price.Shares of the Zacks Rank #3 (Hold) company have risen 5% in the past three months against the industry and the sector’s declines of 2.9% and 1.3%, respectively.BF.B also remains on track with its long-term pricing strategy, which aims to increase prices year over year to grow sales as part of its revenue growth management initiatives. Consequently, management has issued an upbeat fiscal 2024 view.Brown-Forman anticipates organic sales growth of 5-7% for fiscal 2024. The company remains optimistic about organic sales and organic operating income growth. It predicts trends to normalize after two consecutive years of double-digit organic sales growth. Based on the aforementioned assumptions, Brown-Forman expects the organic operating income to increase 6-8%, driven by lower supply-chain disruption costs, partly offset by continued input cost pressures.The Zacks Consensus Estimate for BF.B’s fiscal 2024 sales and earnings suggests growth of 6.6% and 8.5%, respectively, from the year-ago period’s reported numbers.Robust Trends in PlaceBrown-Forman has been displaying portfolio strength thanks to its ongoing premiumization efforts. The company’s underlying sales for fiscal 2023 were aided by its strong brand portfolio and growth across all geographic regions. Premium bourbon brands reported sales growth of 23% and organic sales growth of 24% in fiscal 2023, driven by double-digit growth in Woodford Reserve and Old Forester. An estimated rise in distributor inventories, along with higher volumes and pricing, boosted sales for Woodford Reserve and Old Forester.New Mix reported sales growth of 53% and organic sales growth of 45%, driven by market share gains in Mexico, as well as higher volumes and prices. Brown-Forman’s tequila portfolio witnessed year-over-year sales growth of 10% each on a reported basis and organic basis. This was driven by double-digit sales growth for the el Jimador and Herradura brands.Another key contributor to the company’s growth story has been the continued momentum of its Jack Daniel family of brands. Jack Daniel’s RTDs/Ready-to-Pour...