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Rising prices of raw materials such as wood and grains have forced most of the alcoholic beverage sector, including the Jack Daniel’s whiskey maker, to bump up product prices in previous years.
However, inflation-hit consumers have been deal-hunting and shifting away from pricier non-essentials to stretch their household budgets.
The company, which also makes El Jimador tequilas, now expects annual organic net sales to grow between 3% to 5%, compared with a rise of 5% to 7% expected earlier.
In the second quarter, depletions, which is stock sold to wholesalers or retailers, fell across its portfolio of spirits, with an overall decline of 2% year-over-year.
Higher costs of agave, a crucial raw material for tequilas, wood, and glass, have put sustained pressure on margins for the whiskey maker, offsetting gains made from a letup in supply chain costs.
The company also lowered its forecast for organic operating income growth to 4% to 6% from its earlier growth target of between 6% and 8%.
Net sales for the quarter ended Oct 31 rose 1% to $1.11 billion, missing analysts’ average estimate of $1.15 billion, as per LSEG data.
Excluding items, the company earned 50 cents per share, compared with estimates of a profit of 51 cents per share.
