Brown-Forman posts modest growth despite Q4 slump
Brown-Forman ended the year with a 1% rise in organic sales, even as total net sales declined by 5% to US$4 billion. A disappointing fourth quarter and geopolitical uncertainty continue to weigh heavily on the company’s outlook.
Despite a difficult final quarter in which net sales fell by 7%, Brown-Forman managed to achieve full-year organic sales 1% ahead of 2023-24 but net sales fell by 5% to US$4 billion.
Fourth quarter revenues fell well below analysts’ expectations, indicating little end to the gloom and the shares fell by 17% on Wall Street. They have now lost half their value since last autumn and are at their lowest level since 2013.
Leadership remains optimistic despite headwinds
“Our ability to deliver organic growth on both the top and bottom line in a year of softening consumer demand is a testament to the strength and resilience of our team,” said Lawson Whiting, Brown-Forman’s president and CEO.
“While our results did not meet our long-term growth aspirations, we made important progress in an exceptionally challenging macroeconomic environment.
“Looking ahead to fiscal 2026, we expect continued headwinds. Still, we are confident that with agility, innovation, and a clear focus on execution, we are well-positioned to navigate uncertainty and unlock new opportunities for sustainable long-term growth.”
Brown-Forman sees both full-year organic sales and organic operating income dropping by low-single-digit percentages in the next 12 months.
Market volatility and political tensions hit performance
The past 12 months have created much upheaval for Brown-Forman.
Some of the comparative figures, especially for travel retail, were distorted by the sale of Finlandia vodka, but consumers remain wary of spending and resist price rises.
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Meanwhile, the election of President Trump has renewed fears of trade wars over tariffs with the threat of a 50% EU penalty hanging over bourbon, which is an innocent victim.
For the moment, Brussels has called off the threatened levy.
Washington, however, has slapped a 50% import tax on steel and aluminium imports, which poses a threat to the RTD range Brown-Forman has been developing, notably the Jack and Coke offering with Coca-Cola.
Canadian states have removed bourbon from shop shelves in retaliation against Trump’s demand that Canada become the 51st state, a move which Whiting said was “worse than a tariff”. However, Canada accounts for just 1% of Brown-Forman’s sales.
Strategic shifts aim to strengthen future outlook
Against that background, Brown-Forman has been acting to improve its performance as conditions ease.
Apart from unloading Finlandia, it also sold off its low-margin wines more than a year ago.
It is closing its barrel-making activities in favour of outsourcing cooperage and it is radically overhauling its US distribution network.
“We anticipate the operating environment for fiscal 2026 will be challenging, with low visibility due to macroeconomic and geopolitical volatility as we face headwinds from consumer uncertainty, the potential impact from currently unknown tariffs,” the company said.
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