By Shania S Thomas
Sept 2 (Reuters) - Jack Daniel's maker Brown-Forman said on Wednesday alcohol demand, especially in developed markets, is likely to remain under pressure this year, while renewed trade tensions with Canada pose an additional challenge.
Yet, shares of the company, which also makes Tequila Herradura, were up about 4% after it narrowly beat quarterly profit estimates and stuck to its annual targets in a weak spending environment.
Budget-conscious U.S. consumers are drinking less and
making fewer casual purchases, with growing GLP-1 use and a greater focus on calorie intake further weighing on demand.
Brown-Forman also flagged demand softness in European countries, including Germany, France and the UK. For Canada, CEO Lawson Whiting said U.S.-made spirits remained off shelves in most provinces and were likely to remain so for the rest of the fiscal year.
The developed international segment, which includes these countries, contributed about 28% to the company's annual revenue in 2026, while its biggest market, the U.S., generated 42% of sales.
Rival Pernod Ricard, which ended merger talks with Brown-Forman earlier this year, has also reported softer demand in major markets, including the U.S.
Brown-Forman expects annual organic net sales to be flat and organic operating income to decline between 3% and 5%.
The forecast reiteration is not "totally unsurprising," although investor skepticism is expected, especially within the context CEO Whiting's planned retirement, RBC Capital Markets analyst Nik Modi said.
The company's first-quarter sales declined 1% to $911 million, below analysts' average estimate of $914.9 million, according to data compiled by LSEG.
READY-TO-DRINK GAINS, BUT TEQUILA SLIDES
Traditional spirits companies are now increasingly relying on flavored products, ready-to-drink cocktails and other innovations to attract consumers, particularly those who seek convenience and value.
While Brown-Forman's major whiskey segment sales were flat, its ready-to-drink portfolio, the second-largest by sales, grew 20%.
Sales in its tequila segment, which contributed around 6% of annual sales in 2026, fell 12% in the quarter.
The company earned 38 cents per share, slightly above the estimate of 37 cents.
Quarterly gross margin expanded 40 basis points, driven by lower costs, especially in advertising, and the end of its long-running sales and distribution relationship with Korbel California Champagnes.
(Reporting by Shania S Thomas in Bengaluru; Editing by Shilpi Majumdar)
