Brown-Forman, the maker of Jack Daniel’s, said on Wednesday that alcohol demand, particularly in developed markets, is expected to remain weak this year, with renewed trade tensions with Canada adding to the challenges facing the company.

Despite the difficult outlook, shares of the spirits maker, which also produces Tequila Herradura, rose about 4 per cent after the company narrowly exceeded quarterly profit expectations and maintained its full-year targets amid subdued consumer spending.

Cost-conscious United States consumers are cutting back on alcohol consumption and reducing discretionary purchases, while the growing use of GLP-1 weight-loss drugs and increased focus on calorie intake are also putting pressure on demand.

Brown-Forman also reported softer demand across key European markets, including Germany, France and the UK.

In Canada, Chief Executive Officer Lawson Whiting said U.S.-made spirits remained off store shelves in most provinces and were likely to stay that way for the remainder of the company’s fiscal year.

Traditional spirits companies are increasingly turning to flavoured products, ready-to-drink cocktails and other innovations to attract consumers, particularly those prioritising convenience and value.

At Brown-Forman, sales in its core whiskey segment were flat, while its ready-to-drink portfolio, the company’s second-largest sales category, grew by 20 per cent.

However, sales in the tequila segment, which accounted for about 6 per cent of the company’s annual sales in 2026, declined by 12 per cent during the quarter.

The company reported earnings of 38 cents per share, narrowly beating analysts’ estimate of 37 cents.

Quarterly gross margin increased by 40 basis points, supported by lower costs, particularly advertising expenses, as well as the conclusion of its longstanding sales and distribution agreement with Korbel California Champagnes.