Sales of Jack Daniel's Tennessee Whiskey grew 5 percent in the first quarter of the fiscal year, parent company Brown-Forman reported Wednesday.
Overall, net sales were up a modest 3 percent, to $931 million, for the quarter that ended July 31 for the Louisville-based spirits company. Brown-Forman reported earnings of $150 million, or $0.70 a share, up 5 percent over the same quarter last year.
The company's sales growth was affected by significant stocking-up last year by distributors and retailers ahead of price increases, the company said.
CEO Paul Varga said sales growth should rebound in coming quarters. Varga predicted 6 percent to 8 percent sales growth for the year, led by Jack Daniel's and the company's premium whiskey brands.
"We reaffirm our full-year guidance and our expectations of 9 percent to 11 percent underlying operating income growth in fiscal 2015," Varga said.
Brown-Forman said that, given no further deterioration in global markets, the company expects to deliver earnings of $3.25 to $3.45 a share for the full year.
Overall U.S. sales were basically flat for the quarter, but sales in Turkey, Russia, Brazil and Indonesia showed double-digit growth, the company said.
The quarterly results did not reflect a move earlier this month in Russia to bar sales of Tennessee Honey, reportedly over a labeling issue.
In its news release, Brown-Forman said the company's outlook for fiscal 2015 is for 6 percent to 8 percent growth in reported and underlying net sales, and 9 percent to 11 percent growth in "reported and underlying operating income."
"Just to put this in context, Russia is an important market for us, but in fiscal year 2014, Russia was 2 percent of Brown-Forman total net sales," Jane Morreau, Brown-Forman chief financial officer, said in a conference call with stock analysts.
For the quarter, the company's flagship brand, Jack Daniel's, maintained growth while underlying net sales of Jack Daniel's Tennessee Honey were up 29 percent as distribution expanded to France and other countries.
Testing of Jack Daniel's Tennessee Fire in three states has been so encouraging that Brown-Forman will roll it out to five more states in October while planning further expansion, executives said.
Flavored whiskies have become a big sales category, but Varga said he doesn't foresee many more variations of Jack Daniel's.
The other extremely attractive innovations around the Jack Daniel's trademark are the higher rungs of the "premium" ladder, including Jack Daniel's No. 27 Gold and Jack Daniel's Sinatra, which have limited availability in the United States, he said.
Premium whiskey has become an important category for the company.
Sales of Woodford Reserve's premium whiskey brands were up 29 percent in the past three months, the company reported.
Brown-Forman is investing $36 million in an expansion at the Woodford Reserve distillery outside Versailles, building three aging warehouses that will hold 165,000 more barrels and with plans to add three copper pot stills to double distilling capacity.
Other Brown-Forman brands also showed major gains. Underlying net sales of El Jimador tequila were up 15 percent, and sales of Herradura were up 25 percent. Sales of New Mix ready-to-drink, a category of drinks made with El Jimador tequila, were up 67 percent, the company said.