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By DAVID GOETZ
dgoetz@courier-journal.com
The Courier-Journal
A fortified advertising budget for Jack Daniel's and other liquor brands let Brown-Forman Corp. hit its profit goals last year, so the company has ordered more of the same for fiscal 2004.
On the heels of an 8 percent increase in worldwide advertising spending for the company's spirits brands in the fiscal year ended April 30, Brown-Forman is promising an even higher percentage increase this year.
The company has also started giving a new look to its oldest brand, Old Forester. As part of a $13 million overhaul begun last summer, Old Forester is getting a new bottle design. The changes are being made to the bottle-shaped landmark water tower that looms over the Louisville distillery, shrouded until an unveiling next month.
The volume of Jack Daniel's sold increased in 16 of the brand's 20 markets around the world, the company reported yesterday, and was up 4 percent overall. Southern Comfort, Brown-Forman's No. 2 brand, was up 1 percent.
And the increases came despite higher prices for both brands that contributed to higher profits, offsetting weakness in the company's wine and consumer goods businesses.
Brown-Forman said profit climbed 14 percent in its latest quarter. The Louisville producer of wines, spirits, fine china and luggage reported net income of $58.2 million, or 90 cents a share, for the fiscal fourth quarter ended April 30, compared with $51.2 million, or 75 cents a share, a year ago.
The mean estimate of analysts surveyed by Thomson First Call was for earnings of 91 cents a share in the latest period.
Total sales rose 8 percent to $571.4 million from $527.2 million. Sales of wine and spirits climbed 11 percent to $446.1 million, while sales of china, tableware and luggage fell slightly to $125.3 million from $125.7 million.
Chairman and Chief Executive Owsley Brown II called fiscal 2002 "a year of mixed fortunes," despite solid gains in whiskey sales.
Demand for Brown-Forman's top-selling Fetzer and No. 2 Bolla wine brands was flat and off 1 percent, respectively, while price competition slashed profit margins on wine.
And for the first time in eight years, the company saw a drop in direct-to-consumer sales of its Lennox china collectibles line, a recent mainstay of its consumer goods business.
With no clear idea of how or when conditions might change for either its wine or consumer brands, Brown-Forman estimated per-share earnings for fiscal 2004 would rise as much as 18 percent to $4.10 - $4.30.
The company was being conservative in those estimates, said Chief Financial Officer Phoebe Wood. "If they're at the bottom of that range, we'll be very disappointed in the results."
Half or more of the projected increase in per-share earnings for 2004 will come from a $560 million stock buy-back last March.
One spirits brand that will see more marketing support this year is Finlandia vodka. Brown-Forman upped its stake in Finlandia to 80 percent last fall and introduced it in several new markets.
But U.S. sales were weak as 100 new vodka brands entered the market, Brown said, so the company is stepping up its marketing, including a package re-design set for this year.
Jack Daniel's Original Hard Cola, the company's headline malt beverage introduced last year, won't share in the marketing binge. The company has cut its proposed spending on advertising for the malt until it sees how the overall category fares this summer.
Hard Cola did well shortly after its September rollout , but sales faded and it ran into distribution problems as wholesalers and retailers took a second look at the market, which flattened after an initial surge to a 3 percent share of beer sales.
Distribution of Hard Cola has increased leading into the important summer season, said Brown-Forman spokesman Phil Lynch, but not as much as the company hoped. Advertising for the brand will be on television, he said, but not as much as originally planned.
"We remain committed to Hard Cola, but we don't know what's going to happen this summer," Lynch said. "I think everybody in the marketplace is asking what's going to occur."
