Jack Daniel’s has been the highest priced American whiskey of any significant volume on the market. The brand is probably the only one which by policy has never granted quantity discounts of any kind. The fact that there has been a supply shortage from time to time has added to the mystique surrounding the label, and no doubt has been a factor contributing to long-term sales growth. Jack Daniel’s is a unique product and advertising over the years has emphasized the character of the distillery and the whiskey it produces. Finally, the most exciting thing for us for the long term is that the big increase in demand, which is on the top of the normal 10% to15% compounded annual growth, is coming primarily from the youth market … the corporation sees a very healthy, long life cycle ahead for this brand. Whereas skillful branding and product positioning could improve the sales performance of a particular product or product group, another factor, product-line mix, would also affect the sales growth of the company in the long run. The demand for distilled spirits had changed during the previous ten years. Regarding the near future, Value Line expected sluggish industry growth overall, although “mystique” brands such as Jack Daniel’s would continue to grow.
Jack Daniel’s’ compounded annual growth rate over the last five years has been between 10% and 15% and yet we know from tests in certain markets where we’ve allowed free supply both this year and last, that the growth has jumped to between 25% and 40%. I believe we can state without equivocation that Jack Daniel’s has the strongest and most loyal consumer franchise of any product in the industry.
The spirits companies are beset with a number of problems. While the shift to non-whiskeys is firmly entrenched, the white goods (vodka, gin, rum, and tequila) aren’t as profitable…. Since the overall liquor market hasn’t gotten significantly larger, sales penetration by any one product type has come at the expense of another category.