The makers of Jack Daniels Whiskey, Brown Forman, cut organic net sales forecast for the year, indicating that higher prices are weighing on demand for spirits.
The drinks company cut the forecast for financial year 2024 on Wednesday, sending shares down nearly 5% in pre-market trading.
It was previously reported that the company missed quarterly profit expectations in August 2023.
Increased ingredient costs for spirits – such as agave for tequila – have forced most alcoholic beverage makers to raise product prices in an attempt to protect profit margins.
Higher prices on wood and glass have also impacted the rising cost of spirits.
However, the increased prices have prompted cost-conscious customers to switch to cheaper alternatives.
Inflation across the market has hurt demand for Brown Forman’s spirits and premium whiskey brands.
The company has reported lower volumes for its whiskey business, including Jack Daniels, so far in the 2024 financial year.
As a result, the drinks maker now forecasts flat annual organic new sales, well below its prior growth forecast of 3% to 5%.
The company posted net sales of $1.07 billion for the quarter ending 31 January.
This fell below analysts’ average estimate of $1.12 billion, according to data from the London Stock Exchange Group.
Read More: Jack Daniel's Maker Brown-Forman Misses Profit Estimate As Costs Pinch Amid Tepid Demand
