Leanne Cunningham
Senior Vice President and Chief Financial Officer at Brown-Forman
Thank you, Lawson and good morning, everyone. As Lawson reviewed the key themes for our fiscal year and the performance of our brands, I will provide additional details on our geographic performance, other business results, and our outlook for fiscal 2023. First as Lawson mentioned, we built upon our momentum in fiscal 2021 and delivered another year of top line growth. From a geographic perspective, we experienced broad-based growth across all of our geographic clusters.
The US, emerging markets and developed international markets, along with the rebound of the travel retail channel, all contributed to our organic net sales growth. The US business has been resilient and delivered double-digit organic net sales growth for the fiscal year. Even as supply chain challenges adversely impacted our business. Jack Daniel's Tennessee Whiskey was the largest contributor to this performance driven by higher volumes and a favorable channel mix shift with the continued reopening of the on-premise channel. In addition, distributor inventories increased compared to the prior year.
As supply chain challenges, specifically glass supply constraints continued to ease allowing for the rebuilding of inventories. Woodford Reserve and Old Forester were also key contributors to the growth of the US market, benefiting from increased volume and the positive impact of price increases taken earlier in the fiscal year. Herradura and el Jimador continued the strong growth as Premium plus tequila, is among the fastest growing spirits categories and continues to gain share. Beyond the spirits category, we are pleased that Sonoma-Cutrer return to growth and surpassed the 500,000 case milestone as the reopening of the on-premise channel drove a double-digit increase in volume.
We continue to monitor consumer mobility trends observed by Google Mobility and open table and based on this data, the on-premise trends have fully bounced back after the Omicron disruption experienced in our third quarter and have continued to hover around pre COVID levels. In the e-premise channel, our market share was slightly above 2% for most of the fiscal year. The trend of at-home consumption remained strong, even as the on-premise channel is reopening and consumers return to in-store shopping. This is approximately four times higher than our share prior to the pandemic, while still small e-commerce is an important space due to its rapid growth as consumer purchase patterns shift, along with its attractive economics.
Current estimates from our e-commerce partners indicate that profit per case and basket size are higher in the e-premise channel compared to brick and mortar stores, primarily due to product mix. Through our recent investment in our IMC organization, we believe we are well positioned to capture this opportunity and participate in the channels growth. In fiscal 2022, emerging markets collectively delivered strong double-digit organic net sales growth, despite the headwinds of supply chain disruption and the suspension of our commercial operations in Russia during the fourth quarter. This strong performance was driven by broad-based growth of Jack Daniel's Tennessee Whiskey, notably in Turkey, Romania and Chile.
Innovation with the continued launch of Jack Daniel's Tennessee Apple led by Chile and Brazil where consumers have embraced it's refreshing flavor. And our full strength tequila brands Herradura and el Jimador driven by Mexico as the premiumization trend continued and we benefited from a healthy pricing environment, leading to double-digit organic net sales growth. Collectively, developed international markets grew organic net sales double digits for the fiscal year, with the reopening of the on-premise channel and the rebound of travel and tourism and some markets being the key contributors to growth, while facing the headwind of supply chain challenges.
The Jack Daniel's Family of Brands continue to drive overall gains as Jack Daniel's Tennessee Whiskey delivered strong double-digit organic net sales growth led by markets such as the UK and Germany, where we are gaining market share. And Spain, which is benefiting from the gradual return of tourism. Japan and Korea also experienced strong growth as we rebuilt inventory in Japan and Korea benefited from a shift in whiskey consumption to international brands. This consumer shift in Korea also benefited the growth of Jack Daniel's Tennessee Honey.
Jack Daniel's Ready To Drinks delivered another year of double-digit organic net sales growth for the fiscal year lapping very strong prior-year comparisons, largely driven by Australia and Germany. As we have previously shared in fiscal 2022, we invested in the increased focus of our super premium portfolio such as the Woodford Reserve family of brands, Chambord, single malt scotches, Herradura and el Jimador through the international expansion of our emerging brands group model, particularly in the UK. With this increased focus, these brands collectively delivered very strong double-digit organic net sales growth.
The travel retail channel experienced a strong rebound, as it continued to cycle against easier prior-year comparisons, due to the impact of the pandemic lockdown and restrictions, growing organic net sales 67% driven by increased volumes. While our travel retail business continues to recover, it remains below pre-pandemic levels. Lastly for net sales, volume represented nine of the 17 points of organic net sales growth for fiscal 2022 and price mix was eight points.
Favorable price mix was driven by faster growth from our higher-priced brands led by the strong resurgence of Jack Daniel's Tennessee Whiskey and the favorable channel mix shift due to the continued reopening of the on-premise channel. Moving to gross profit and gross margin. For the full year reported gross profit increased 14% with organic growth of 17%, which was in line with our organic top line growth. Reported gross margin expanded slightly ahead of our expectations, increasing 30 basis point year-over-year as favorable price mix and the positive effect from divestitures in the prior fiscal year were largely offset by higher input cost and the negative effect of foreign exchange.
Consistent with our comments throughout the 2022 fiscal year, the increases in our cost were driven by additional logistics cost supporting our efforts to minimize the impact of supply chain disruptions and input cost headwinds related to grain and agave. In addition, due to the impacts of the Russian invasion of Ukraine during our fourth quarter, we reduced the value of our inventory in the related markets. Turning to operating expenses, which represents the investments we make behind our brands and our people that drive sustainable long-term top line growth. Total organic operating expenses increased 8% in line with our expectations.
As we continue to invest behind our brands, our reported and organic advertising expense increased 10% and 11% respectively, driven primarily by higher investment in our developed international and emerging markets to support Jack Daniel's Tennessee Whiskey, as the on-premise reopen as travel and tourism returned and in support of the continued launch of Jack Daniel's Tennessee Apple. We continued to invest behind our people. SG&A expenses increased 3% on a reported and 7% on an organic basis, as we lapped lower discretionary spend during fiscal 2021, due to restricted mobility related to the pandemic, higher compensation and benefits-related expenses and expenses related to the impacts of the Russian invasion of Ukraine.
From a reported perspective, the increase in SG&A was partially offset by the absence of the prior year $20 million commitment to the Brown-Forman Foundation. Reported operating income increased 3% for the full year, driven by net sales growth and the absence of the prior year Brown-Forman Foundation commitment, partially offset by the effect of acquisitions and divestitures, a non-cash impairment charge for the Finlandia brand and the negative effect of foreign exchange. As noted in our earnings release, in the fourth quarter, we recognized a $52 million or $0.09 per share non-cash impairment charge for the Finlandia brand name.
The impairment reflects a decline in the long-term outlook for Finlandia, due to our suspension of operations in Russia, which is a key market for the brand. Organic operating income, which excludes the impact of acquisitions and divestitures, the Brown-Forman Foundation commitment, foreign exchange and impairment charges grew 27%. Diluted earnings per share decreased 7% to $1.74 per share, as the increase in reported operating income was more than offset with a year-over-year increase in our effective tax rate along with the estimated $0.20 per share prior year benefit from the gain on sale of Early Times Canadian Mist and Collingwood brands and related assets.
In regards to capital deployment, we approach our decisions with the core objective of sustainable long-term value creation. Our long-term perspective and commitment to our shareholders has made Brown-Forman a reliable source for growth. We believe our capital allocation philosophy and strategic priorities will continue to drive superior returns. In fiscal 2022, we returned $831 million to stockholders, which included a special dividend of $1 per share or approximately $480 million and $351 million in regular dividends. And finally, to our outlook for fiscal 2023. We are optimistic as we look ahead, even in this the current volatility and uncertainty of the global macroeconomic and geopolitical environment.
In this dynamic operating environment, we believe the strength of our portfolio of brands and the strategic investments we have and are making, will support continued growth. Strong consumer demand for our brands continue to be a tailwind. However, we remain cautious due to the potential impact of inflation and rising energy prices on consumer spending. While many of the international markets have stabilized, as we cycled against the early days of the pandemic, we remain confident in the collective strength of our US, developed and emerging international markets. We anticipate our results should continue to benefit from the reopening of the on-premise channel internationally and the further return of tourism, along with stronger pricing and innovation.
We also expect travel retail will continue to recover and that we will not resume operations in Russia. Further, we do not expect the non-core business, mainly used barrel sales to have a material impact on our results this fiscal year. Quantitatively, we expect organic net sales growth for fiscal 2023 to reflect our longer-term growth rate in the mid-single digit range. It is important to note that the seasonality of our fiscal 2023 results will be impacted by the abnormal seasonality of our fiscal 2022 shipments, due to the impact of supply chain disruptions.
In the first half of fiscal 2022, distributor inventories did not increase ahead of the important holiday season, as is typical and we experienced stronger shipments in the second half of fiscal 2022, as supply chain challenges continued to ease. In the first half of fiscal 2023, we expect distributor inventories to return to more normalized levels. Therefore, we expect our growth rate in the first half to benefit from the net change in distributor inventory, while the second half will lap the increase in the net change in distributor inventory related to rebuilding of our inventory position in the prior year period.
The disproportionate impact of the EU and UK tariffs on American whiskey, on Brown-Forman will be a significant tailwind, as the EU tariffs were removed January 1 of this calendar year and the UK tariffs were removed last week on June 1. We also expect to continue to benefit from the favorable pricing environment and we believe the cost associated with supply chain disruption will be less of an impact in fiscal 2023. As inflation increased in fiscal 2022, we have planned that it will remain a headwind in fiscal 2023.
Based on these headwinds and tailwinds, we are projecting reported gross margin to expand slightly for the full year as our trajectory of expansion continues. As we have shared during our three years have been negatively impacted by the EU and UK tariffs on American whiskey. Our plan has been to reinvest a portion of this relief, back behind our brands once they were removed. We are very pleased that, that time has come and that we are positioned to further support our top line growth ambition, as we invest in an increased level of focus on Herradura in the US, our super premium portfolio internationally, Jack Daniel's Tennessee Honey and Jack Daniel's Tennessee Apple in Europe and Jack Daniel's Tennessee Whiskey globally.
We will also invest behind our people to support our business needs in a post-pandemic environment, while continuing to leverage new ways of working. Based on these expectations, we anticipate organic operating income growth in the mid single-digit range for the full year. We expect our fiscal 2023 effective tax rate to be in the range of approximately 22% to 23%. And lastly for capital expenditures, over the past 10 years, we have completed a number of major projects to expand our capacities to support the strong consumer demand for our American whiskey portfolio, as well as two expansions with the significant focus on providing an exceptional customer experience.
Namely, the Old Forester Urban distillery and the Slane Irish Whisky distillery. We also completed a major technology driven modernizations, which is a cost savings project at our largest barrel making operation. Based on the continuing strong consumer demand for our brands, specifically our age products as well as Herradura and el Jimador, further expansions are required to support this growth. We estimate the capital expenditures will be in the range of $190 million to $210 million for the full year.
In summary, we are pleased with our very strong broad-based growth in fiscal 2022 from both a brand and geographic perspective, which delivered double-digit organic top and bottom-line growth, despite the many significant challenges and headwinds. While we have been disproportionately impacted by tariffs and supply chain disruptions largely related to glass supply and impacted by the pandemic and the consequences of the Russian invasion of Ukraine, Brown-Forman's portfolio of brands and its team members continue to demonstrate a high level of resilience and ability to deliver continued top-line growth.
We believe, we have the right long-term strategic priorities to guide us to continue long-term growth, further supported by the investments we made and the strategic initiatives implemented in fiscal 2022, partnered with stronger price positioning and the removal of the EU and UK tariffs on American whiskey creating tailwinds for fiscal 2023. We are proud of the results and accomplishments of fiscal 2022 and are optimistic about the year ahead. This concludes our prepared remarks, please open the line for questions.
