Jack Daniel’s flowed during covid. Now comes the hangover.
The biggest American whiskey is losing its punch. Demand has been sliding for Jack Daniel’s Old No. 7 for months and the company behind it, Brown-Forman , is forecasting a sluggish
U.S. whiskey business for at least the next year.
Drinkers guzzled whiskey and other spirits during the pandemic , driving banner sales growth for Brown-Forman and other distillers, but the party has ended. Whiskey makers’ revenue in the U.S. fell 2.2% in 2023 to $12.3 billion, according to the
Distilled Spirits Council of the United States, while revenue was flat overall for makers of spirits.
“The phenomenal sales growth we saw during the pandemic was unprecedented and unpredictable but also unsustainable, and now, the spirits market is recalibrating,” Chris Swonger , the group’s president, said last month.
Consumers are under pressure from rising prices and interest rates hovering near their highest level in years. People have returned to their prepandemic activities and are spending less time at the home bars they stocked during Covid-19 lockdowns. Many people are cutting back on their alcohol consumption for health reasons—or choosing marijuana instead.
The whiskey market is also facing shifts in the types of products people buy when they opt for liquor. Cheaper canned cocktails and other spirits like tequila are growing in popularity. Some drinkers of Jack Daniel’s Old No. 7—often used to make the cocktail Jack and
Coke—are trading down to cheaper alternatives while others are trading up.
Brian Moran, a tile-setter who lives in the Chicago suburbs, used to order a Jack Daniel’s and Co’ca-Cola whenever he went to a bar with friends. About a year ago, a client offered him a trade to tile a kitchen backsplash: five pricier bottles of bourbon, including Stagg, Eagle Rare and E.H. Taylor. From his first sips, Moran was enthralled.
“I don’t know anyone who even drinks it anymore,” he said of Jack Daniel’s Old No. 7, which has a national average price of about $22. “You spend an extra $10 and you get something that’s so much better.”
Moran, 42 years old, now buys a variety of whiskeys and has returned to the Jack Daniel’s brand for its higher-end offerings, including Jack Daniel’s Single Barrel Barrel Proof and Jack Daniel’s 12-Year-Old Tennessee Whiskey.
Brown-Forman is leaning into its pricier drinks, which are gaining fans among whiskey aficionados. Jack Daniel’s Single Barrel Barrel Proof is priced around $64. Dollar sales of the product rose about 60% in the first two months of this year, according to Nielsen data analyzed by consulting firm Bump Williams. Those gains haven’t made up for the decline in Old No. 7, however.
Brown-Forman, which is
based in Louisville, Ky., reported dismal sales over the critical winter holiday season and the hangover has lasted into 2024. In the eight weeks through Feb. 24, Jack Daniel’s black-label whiskey sales in U.S. stores were down 1% compared with the same period last year, data show. The company’s whiskey brands include Woodford Reserve, Benriach, Slane and Old Forester.
“Christmas stunk,” Chief Executive Lawson Whiting said on a call with analysts in early March.
Brown-Forman is wooing younger legal-age drinkers to Jack Daniel’s Old No. 7 with personalized labels and digital ads, Matias Bentel , the company’s chief brands officer, said at an investorconferencethisweek.A recent TV commercial set to the AC/DCsong“BackinBlack”featured cameos by musicians popularwithyoungadults,including Christone“Kingfish”Ingram,St. Vincent and Este Haim.
Flavored versions such as Jack Daniel’s Tennessee Apple and Jack Daniel’s Tennessee Honey are bringing new drinkers into the fold, Bentel said. A canned Jack and Coke cocktail introduced in the U.S. last year allows people to try the whiskey for the first time without having to buy an entire bottle. The flavored and canned drinks appeal more to younger adults and women, Bentel said.
Sales of spirits-based, readyto-drink cocktails such as High Noon and Cutwater climbed 32% in U.S. stores in the 12 weeks ended Feb. 24, compared with the same period a year earlier, according to a Goldman Sachs analysis of Nielsen data. Canned Jack and Coke is growing quickly but still represents a small piece of the category with 2.5% of dollar sales in U.S. stores.
Brown-Forman executives said they also see opportunities in tequila, the fastest-growing spirit category other than canned cocktails. BrownForman sells el Jimador and Herradura tequilas.
Analysts remain concerned about the slide in whiskey sales. They say Brown-Forman might have to offer discounts to entice consumers and that retailers could continue drawing down their overstock rather than placing new orders. BrownForman said that retailers’ inventory levels, after growing too large, have normalized. Industry leaders are describing the moment as a reset.
Brown-Forman’s leaders say their 154-year-old company takes the long view. The current sales dip is an anomaly, they say—as were the previous two years of double-digit-percentage growth.
The company has weathered Prohibition and the Great Depression, and has steadily built the Jack Daniel’s brand since acquiring it nearly 70 years ago, Chairman Campbell Brown , a great-great-grandson of founder George Garvin Brown , told investors this week.
Finance chief Leanne Cunningham said: “We don’t necessarily deliver that every year, like the year that we’re having right now, but in fairness, if you look at [fiscal year 2023], that wasn’t a really normal year for us either.”