LOUISVILLE — Liquor company Brown-Forman said Wednesday that its fourth quarter net income fell 9 percent as higher expenses and continued sluggish sales at bars and restaurants watered down gains by its Jack Daniel's Tennessee Whiskey.
CEO Paul Varga called it a "challenging consumer and competitive environment" as the company previewed plans for line extensions and new packaging for the coming year in hopes of spurring sales growth. The company said it also sees opportunities to expand its Jack Daniel's brands overseas.
The company said that liquor sales at bars and restaurants remained weak compared with sales at liquor stores and other outlets as more consumers choose to drink at home.
Brown-Forman's results have been hurt in recent quarters by the struggling economy as consumers have chosen less expensive drinks and ventured out less frequently to drink. Part of its higher costs were a result of retargeting advertising toward people drinking at home and less at selling drinks at bars and restaurants.
The Louisville-based company reported strong sales of its ready-to-drink products — mostly pre-mixed bottled cocktails such as Lynchburg Lemonade. Their popularity has been another sign that many consumers are choosing to drink at home.
In the three months ended April 30, net income declined 9 percent, to $72.7 million, or 49 cents a share, from $79.6 million, or 53 cents a share, last year. Revenue rose 7 percent, to $733 million from $683 million last year.
For the year, net income rose 3 percent, to $449.2 million, or $3.02 a share, from $434.4 million, or $2.87 a share last year. Revenue rose 1 percent, to $3.23 billion from $3.19 billion last year.
The company said it expects a "moderately better" global economy in fiscal 2011.
International case sales for its Jack Daniel's Tennessee Whiskey brand grew 6 percent in the fourth quarter and 3 percent for the year. U.S. case sales grew 1 percent in the quarter and were flat for the year. For the year, overall global case sales for the Jack Daniel's lineup rose 3 percent, led by a 39 percent surge in Jack Daniel's ready-to-drink products.
Finlandia case sales fell by 1 percent globally for the year, due in part to a downturn in Poland, a key market. The Southern Comfort lineup had a 5 percent overall drop in case sales for the year despite a 41 percent increase for Southern Comfort ready-to-drink products.
The company said it sees opportunities to increase market share for Jack Daniel's in developed markets such as France, where the flagship Jack Daniel's Tennessee Whiskey brand has just a 2 percent share of the whiskey category, and in emerging markets such as Russia, Poland and Mexico.
It said several line extensions are planned in the United States, including Southern Comfort Lime and Southern Comfort Lemonade.