New York (CNN Business) The trade war continues to pinch profits for Jack Daniel's owner Brown-Forman. But the company has been able to eat the expense.

Brown-Forman said Thursday its sales and earnings topped forecasts, even though it's paying the costs of higher tariffs from the European Union and China without passing them onto customers by raising prices.

CEO Lawson Whiting said in the earnings report that rather than raise prices on its trademark Tennessee whiskey and other spirits, "We continue to invest in consumer momentum by absorbing most tariff-related costs."

The company, which also owns premium Kentucky bourbon brands Woodford Reserve and Old Forester and tequila makers Herradura and el Jimador, added that it is boosting its marketing to tout new products like Jack Daniel's Tennessee Apple whiskey. Brown-Forman said advertising expenses rose 10% in the quarter.

Overall sales in America remain strong, rising 10% from a year ago. The company has benefited from shifting consumer tastes, as drinkers (particularly Millennials) are shying away from less-expensive beers and wine in favor of premium spirits.

Read More