Sometimes the financial (or other) news that catches our eye and hooks our interest is less important than the parts of the same story that don't have the same "Oh, my goodness" element of surprise. We thought this was true of some of the reports of the last few days covering Brown-Forman's fiscal 2017 results. The company reported that sales slipped to $3.9 billion in the latest fiscal year from $4.0 billion for the 2016 period. One story led with the idea that the company planned $100 million in cost savings over the next three years. How does one read that?
It's natural, of course, that what's going right isn't going to create the nagging sense of worry that the suggestion of something going wrong will. B-F, of course, plays on a world stage and the world is a volatile place right now. (Foreign markets account for just over 50% of B-F sales.) Large internationals are always bedeviled by currency fluctuations and disparate and changing trends in demand for their products in different overseas markets. Supplier sales are always subject to some misinterpretation caused by wholesaler inventory levels that may not always be tightly aligned to marketplace demand.
The key factor encouraging us to take a deeper look—that is a dive into our DrinkTell™ database was Brown-Forman's sale last year of Southern Comfort and Tuaca to Sazerac. That meant the gain booked for fiscal 2016 would create a disparity for 2017. The DrinkTell™ numbers speak for themselves as far as B-F core brands are concerned. Here are the last two years' growth rates for the top selling whiskies (domestic only; our years are calendar).