In a December conference call with analysts, Brown-Forman president and CEO Paul Varga said he sees some stabilization of the trading-down trend. JPMorgan analyst John Faucher agrees that “premiumization” should prevail in the long term, but that Brown-Forman “is seeing an acceleration in trade down and discounting as of late.”

Jack Daniel’s fastest-growing whiskey, however, was its Gentleman Jack brand, which is more expensive than the traditional black-label Old No. 7 whiskey. Net sales of Gentleman Jack, which has a less intense taste due to a second round of charcoal mellowing—the process that differentiates Jack Daniel’s as a Tennessee whiskey and not a bourbon—after barrel aging, increased at a double-digit rate during the six months that ended October 31.

Still, the black-label product accounts for 96 percent of Jack Daniel’s annual 10 million cases of whiskey sales. Old No. 7 recently passed Diageo’s Johnnie Walker Red Label Scotch as the No. 1 whiskey worldwide, and about half of Jack Daniel’s sales now take place outside the United States. Other competitors include Scotch, Irish, and Canadian whiskey brands and Kentucky bourbons such as Fortune Brands’ Jim Beam and Maker’s Mark.

Brown-Forman says it sees great potential for its flagship brand in developing markets such as India and Russia, where only a combined 100,000 cases are distributed today.

Brown-Forman also focuses on countries where whiskey is already popular. For example, the company is more interested in the second-largest whiskey market outside the United States, France, where Jack Daniel’s has 2 percent market share, than the emerging economy of Brazil, where consumers prefer local liquors.

Arnett said there also is the possibility of developing a new brand of Jack Daniel’s whiskey. Gentleman Jack, introduced in 1987, was Jack Daniel’s first new whiskey in 100 years. Jack Daniel’s Single Barrel, the most expensive and intense Jack brand, was added to the line in 1997.

“It’s hard to have a single brand that’s one size fits all. Smaller, nichier brands are kind of where it’s at,” Arnett said, adding that there are no specific plans to add a new line.

Arnett said customers are clamoring for a barrel-proof whiskey, for example. Single Barrel is bottled at 96 proof, but Arnett said it is surprisingly good when it comes out of the barrel at 130 or 140 proof, which is 70 percent alcohol.

“Anybody who has had an opportunity to do that would tell you that is a pinnacle moment,” Arnett said of tasting the barrel-proof whiskey.

Another option for creating a new product would be to alter Jack Daniel’s grain bill, which consists of 80 percent corn, 12 percent malted barley, and 8 percent rye. But, Arnett said there are hesitations.

“I don’t think the strategy should be to mimic two, three, and four,” he said, “when you’re No. 1.”