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Brown-Forman Management Discusses Q4 2012 Results - Earnings Call Transcript

Our net sales growth was broad-based. Each of our 12 largest markets grew, with these gains powered by volumes. But just as volumes have taken some time to accelerate post-recession to current rates of growth in the high single-digits, we are increasingly confident that the pricing environment has been slowly improving, driven today by improving mix and reduced discounting. I'll talk more about the pricing environment in a minute, when I get to our expectations for 2013, but the takeaway is that we expect price increases to drive better balanced sales growth in fiscal '13.

We estimate the product innovation, drove about 2 points of our 9% net sales growth, including our first full year of results from Jack Daniel's Tennessee Honey, which depleted over 400,000 cases in the year. We have been pleased to see what we believe, is a positive halo effect on Black Label from the launch of Tennessee Honey, proving that a new product can create momentum within the trademarks and actually accelerate the sales growth of the parent brand, rather than cannibalize existing sales.

Jack's family of brands grew global constant currency sales 12% in the year, powered by the return of market share gains in the U.S. and continued strong interest in the brand outside of the United States. RTDs grew sales in line with the parent brand, driven by growth in Mexico, Germany, the U.K. and Australia. Just as RTDs have created new opportunities for us to connect with consumers and new locations through convenience and great flavors, Tennessee Honey has recruited new consumers to the brand, including African-Americans, Latinos and females. While Gentleman Jack and Single Barrel grew well in the United States, depletions jumped over 30% outside of the U.S. and surpassed 0.5 million cases globally. So while the powerful Jack Daniel's trademark is essential to each of these line extensions, we have been diversifying our consumer mix across geographies, race, sex, socio-economic classes and expanding into new locations.

Read the rest of this transcript for free on seekingalpha.com

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