Liquor maker Brown-Forman Corp. mixed a new Jack Daniel's honey-flavored whiskey with strong sales overseas to come up with a 6 percent increase in its first-quarter profit.
Company executives also said Wednesday they see improvement in liquor consumption at U.S. bars and restaurants. Out-on-the-town drinking, a key segment for spirits companies, has been staggered in recent years by the struggling economy.
"It's not roaring back, but it's better for sure, in my view, than it was a couple of years ago," CEO Paul Varga said.
Louisville-based Brown-Forman reaffirmed its full-year earnings projection and said it expects to benefit from brand development and wider distribution to help fuel improved net sales growth.
The company's flagship Jack Daniel's lineup was its top performer in the quarter, posting a 15 percent revenue gain, on a constant currency basis, in the three-month period ending July 31.
Sales for its core Jack Daniel's Tennessee Whiskey grew by 16 percent across international markets and 2 percent in the U.S. Jack Daniels' ready-to-drink products also posted revenue gains.
But company officials credited the new Jack Daniel's Tennessee Honey for much of the U.S. growth in the brand's overall lineup. The honey-flavored product started reaching store shelves in March, and the company calls it one of its most successful product launches.
"Thus far, it has been exciting for the Jack Daniel's trademark and for the U.S. business," Brown-Forman Chief Financial Officer Don Berg said in a conference call with industry analysts.
The new offering is part of an industrywide trend toward infusing new flavors into spirits to attract customers.
Overall, Brown-Forman's brands had a mixed performance in the quarter.
The company reported higher volumes for its Chambord vodka, Herradura, Sonoma-Cutrer and Woodford Reserve brands.
Overall Finlandia vodka revenue was flat for the period on the same constant currency basis, while several other brands had declines.
Southern Comfort continued to struggle with an 11 percent drop in revenue for the overall brand. The company also reported revenue declines for its el Jimador, Canadian Mist and Korbel Champagne brands.
The company said it got a lift from a weaker U.S. dollar in its increasingly important international markets.
About 55 percent of the company's overall sales come in markets outside the U.S. Brown-Forman reported first-quarter gains in Germany, Turkey, the United Kingdom, Russia and Brazil, which more than offset declines in Poland, Spain and Australia.
"In this quarter, we continued to enjoy widespread international growth," Varga said. "We also saw an important acceleration of our U.S. business, driven by the continued growth of the Jack Daniel's trademark and super-premium brands."
Meanwhile, company officials were more upbeat about a rebound in "on premise" consumption of spirits in the U.S.
Berg said economic uncertainties remain a concern as the spirits industry hopes to continue that trend as it heads toward its crucial holiday period at the end of the year.
For the three months ended July 31, the company reported net income of $118.1 million, or 81 cents per share, up from $111.4 million, or 76 cents per share, a year ago.
Net sales rose 13 percent to $840.3 million from $744.9 million a year ago.
Analysts expected earnings of 83 cents per share on revenue of $767.2 million.
Its Class B shares fell $1.73, or 2.4 percent, to close at $71.75 Wednesday.
For the full year, Brown-Forman expects to earn $3.45 to $3.85 per share. Analysts on average expect $3.70 a share for the year.
The company recently introduced new packaging for Jack Daniel's Tennessee Whiskey and Finlandia, following up on packaging remakes for Southern Comfort, Herradura and Chambord. Varga said the investments in packaging and advertising will pay dividends.
"We believe that product, packaging and marketing innovation will continue to be important contributors to sustainable sales and profit growth in our industry," Varga said.