A World of
OPPORTUNITY
2024 Integrated Annual Report
More than 150 years ago, Brown-Forman
was founded by George Garvin Brown who sold
one brand, Old Forester, in one market, the
United States. Our employees now number 5,700,
and our portfolio has grown to more than 40 brands
sold in more than 170 countries. This extraordinary
global growth has been driven by our unwavering
desire to meet the preferences of our consumers
and stay true to our founding promise that there is
Nothing Better in the Market. As we deepen our resolve
and further our investment in our brands, our people, and
our environmental and social commitments, we see
A World of
OPPORTUNITY.
2024 Integrated Annual Report 1
Our
OPPORTUNITIES
Our Priorities
Dear Shareholders,
When I stepped into the role of President and CEO of Brown-Forman in January 2019, I did
so with tremendous confidence in Brown-Forman’s position within the spirits industry and
an unwavering belief that we had all the necessary components—the strategy, the portfolio,
the people, and the geographic breadth—to build our business for generations to come.
At the time, I recognized we worked in a dynamic
environment, where technological advancements,
generational and cultural shifts, and social and economic
uncertainty would require us to be agile, thoughtful, and
innovative. What I didn’t anticipate was the persistent
headwinds that would continually challenge our world,
our industry, and our company—tariffs, a global pandemic,
major supply chain disruptions, and significant inventory
fluctuations across the entire spirits industry, to name
only a few. Brown-Forman’s business has not been
immune to this adversity and the pressure it places
on our performance.
Even so, after nearly six years of leading this company
through uncertain and unprecedented times, I can
genuinely say my confidence and belief in
Brown-Forman has never wavered. We still have a solid
foundation on which to drive consistent, reliable growth
for our long-term shareholders—and we’ve made this
foundation stronger by investing boldly and thoughtfully
behind our brands, our global distribution network, and
our people. In the spirit of this year’s annual report theme,
you might say we’ve created “a world of opportunity.”
Unlocking Portfolio Growth
Opportunities
Unlocking new growth opportunities begins foremost
with our portfolio of brands. Brown-Forman has been on
a premiumization journey for the last two decades, and
today, I believe our portfolio is the strongest it has ever
been, with premium, super-premium, and ultra-premium
brands well-positioned to meet consumer trends and
preferences, today and in the future.
In fiscal 2024, our brands were recognized by spirits
enthusiasts as some of the best. Glenglassaugh Sandend
was named 2023 Whisky of the Year by Whisky Advocate,
the second year in a row a Brown-Forman brand claimed
the top spot, with Jack Daniel’s Bonded receiving the
honor the previous year. In the following pages of this
report, you will read about similar accolades for Woodford
Reserve, Old Forester, Herradura, and our Jack Daniel’s
super-premium innovations, such as Jack Daniel’s
10-Year-Old and Jack Daniel’s 12-Year-Old.
From our newest brands, including Diplomático Rum
and Gin Mare, to our long-standing stalwarts, such as
Jack Daniel’s Tennessee Whiskey and Woodford Reserve,
to our popular ready-to-drink (RTD) offerings, including
New Mix and the Jack Daniel’s & Coca-Cola RTD,
Brown-Forman’s portfolio provides us a strong
foundation to engage diverse consumers the world over.
Broadening Our Geographic Reach
Today, Brown-Forman brands are sold in more than
170 countries, yet there is still a long runway for growth as
we expand and elevate our route to market and introduce
our brands to new consumers around the world.
By the end of fiscal 2024, we had owned distribution
businesses in 16 countries, including Slovakia and
Japan, which launched in August 2023 and April 2024,
respectively. By owning our route to market, we gain
greater control over how our brands are marketed and
sold in these geographies. With our local teams focusing
their time and energy on the Brown-Forman brands with
the greatest growth potential, we believe we can expand
our portfolio in these markets and increase both our value
and market share.
In countries where we cannot own our distribution
business, such as the United States, we rely on
distribution partners and key relationships to help us
expand our presence in both the on- and off-premise
channels. In recent years, we have established
new relationships with Pabst Brewing Company,
Reyes Beverage Group, and The Coca-Cola Company to
extend our RTDs into new markets and outlets—ultimately
increasing brand awareness, visibility, and accessibility.
Guided by Strong Leadership
Of course, it takes a talented team of individuals to
anticipate trends, capitalize on opportunities, and
cultivate growth—and the strength of Brown-Forman’s
team is as unparalleled as our portfolio. My greatest
source of hope, pride, and inspiration has always been
the 5,700 people around the world who work tirelessly
on behalf of this great company. They continually rise to
every challenge and opportunity, meet obstacles with
fortitude and resolve, uphold our spirit of commitment in
interactions with colleagues and partners, and maintain
our company values as their guiding force.
In fiscal 2024, Brown-Forman announced the retirement
of three long-serving members of our Executive
Leadership Team: Matthew Hamel, EVP, General Counsel
and Secretary; Kirsten Hawley, EVP, Chief People, Places,
and Communications Officer; and Thomas Hinrichs, EVP,
President, Emerging International.
“With your continued
support, we can deliver
strong results for
generations to come.”
LAWSON E. WHITING
President and Chief Executive Officer
2 Brown-Forman
2024 Integrated Annual Report 3
CAMPBELL P. BROWN
Chair of the Board
Together, Matt, Kirsten, and Thomas dedicated more than
70 years in service to Brown-Forman. They have been
instrumental in our company’s growth over the last three
decades and will leave behind a legacy rich with care
and compassion, curiosity and courage, collaboration
and innovation. I extend my deepest gratitude to
each of them—Brown-Forman is better because of
their leadership.
With these retirements—as well as Marshall Farrer now
dedicating his time solely to his role as Chief Strategic
Growth Officer—I have the privilege of appointing new
members to the Executive Leadership Team. I am
pleased to welcome Mike Carr as EVP, General Counsel
and Secretary; Michael Masick as EVP, President,
Emerging International; Diane Nguyen as Chief People,
Places, and Communications Officer; and Yiannis Pafilis
as EVP, President, Europe. Mike, Michael, Diane, and
Yiannis are talented leaders with significant experience
within the spirits industry and their respective fields.
They each possess a keen intellect, exceptional
strategic thinking and planning skills, and sophisticated
enterprise mindsets. I look forward to working with
them and know they will be valuable contributors to
Brown-Forman’s future growth.
Reflecting on the Past and
Looking Ahead
It is true that fiscal 2024 may have brought more challenges
than any of us anticipated. Yet when you consider our
depletion-based business—which we believe represents
the true health of our brands—our net sales growth was
in line with, and operating income growth was well above,
historical trends. With your continued support, we believe
we can deliver strong results for generations to come.
And so, as we close out another chapter in Brown-Forman’s
154-year journey, I reaffirm my belief in Brown-Forman’s
growth potential. I do so with great respect for our
long-standing track record of success, with strong
focus on the dynamic realities of our current business
environment, and with great confidence in our ability to
capitalize on the world of opportunity ahead of us.
With my deepest gratitude,
LAWSON E. WHITING
President and Chief Executive Officer
BROWN-FORMAN
EXECUTIVE LEADERSHIP TEAM
Lawson Whiting
President and
Chief Executive Officer
Matias Bentel
EVP, Chief Brands Officer
Leanne Cunningham
EVP, Chief Financial Officer
Marshall Farrer
EVP, Chief Strategic
Growth Officer
Matthew Hamel
EVP, General Counsel
and Secretary
Kirsten Hawley
EVP, Chief People, Places,
and Communications
Officer
Thomas Hinrichs
EVP, President,
Emerging International
Tim Nall
EVP, Chief Global Supply
Chain and Technology
Officer
Yiannis Pafilis
EVP, President, Europe
Crystal Peterson
EVP, Chief Inclusion
and Global Community
Relations Officer
Jeremy Shepherd
EVP, President,
USA and Canada
Dear Shareholders,
As we mark the passage of our company’s
154th year, I’d like to recognize the hard
work and dedication of our people and
partners around the world. It’s been a
demanding year with notable changes in
the operating environment. In moments
like this—where there are challenges
facing our industry and resilience is
required—it’s important that we lean
into the long-term view of a committed
and united family shareholder base, the
strength of Brown-Forman’s people,
culture, and brands, and our sound
governance model.
This year, experiences visiting with our shareholders,
colleagues, and homeplaces around the world served
as a reminder that at Brown-Forman, our glass is
much more than half full. We remain confident in the
talents of our people, the relevance of our portfolio,
and our collective ability to deliver in “a world of
opportunity” while honoring our spirit of commitment
to sustainability, alcohol responsibility, a culture of
inclusion, and being a good neighbor.
The Value of Long-Term
Shareholders’ Perspective
In March, our family shareholders visited Louisville and
toured the expanded Brown-Forman Distillery in Shively,
a community just south of our global headquarters. To
walk the floor of the distillery, see our capital expansion
firsthand, and meet our world-class production
team filled me with pride. That week we also hosted
institutional investors at our Old Forester and Woodford
Reserve distilleries. They, too, had the opportunity to
meet our people, experience our brands, and better
understand what makes Brown-Forman such a sound
investment and great company.
To our shareholders, thank you. It is years like fiscal
2024 that truly speak to the value of our long-term
perspective. You remain a pillar of stability, which allows
us to balance winning in the near term and creating
value over generations. We know better than most that
crafting something special takes time.
Power of Our People and Brands
This same spirit of excellence was on full display during
my visit to Japan to celebrate the launch of our owned
distribution business. I witnessed a team completely
invested in growing our business in this important market
and poised to unleash our brand portfolio for greater
growth. During a stop in South Korea, the same level of
commitment and drive to win was visibly on display.
There is enormous pride in the talents of our people when
seeing how they boldly activated Woodford Reserve,
Old Forester, and Herradura at the 150th running of the
Kentucky Derby, Jack Daniel’s at Formula 1 races, and
Jack Daniel’s & Coca-Cola RTD in our neighborhood liquor
or grocery store.
There are many more examples throughout this report
highlighting the powerful combination of our people and
our portfolio. They are inspiring because they illustrate
the strength of our culture, the global reach of our brands,
and the world of opportunity in front of Brown-Forman.
To our nearly 5,700 employees around the world, thank
you. You are simply the best in the business.
2024 Integrated Annual Report 5
4 Brown-Forman
Fresh Perspectives and Strengthening
Board Governance
The Brown-Forman Board of Directors had the opportunity to
visit Scotland to immerse ourselves in our unique Scotch whisky
distilleries and learn firsthand about the quality craftsmanship
involved. During that trip—as with every engagement I’ve had with our
Board—I found myself full of gratitude for their leadership acumen,
passion for our business and people, and the consistency of their
contributions in and out of the boardroom.
We continue to elevate our governance practices to leverage
the different perspectives and voices on our Board and provide
leadership opportunities within the Board structure. For example, we
recently updated our Corporate Governance Guidelines to implement
certain tenure parameters, including a five-year term limit on the
Lead Independent Director role and Board committee chairs. These
adjustments are aimed at creating more diverse contributions from our
Directors, building a more resilient Board, and ensuring Brown-Forman
continually benefits from the collective leadership of all our Directors.
In fiscal 2024, we welcomed Elizabeth (Eliza) Brown to the
Brown-Forman Board. Eliza is a fifth-generation Brown family
member who has been an owner and operator of various agribusiness
ventures. Eliza’s commitment and dedication to sustainability is
reflected in her leadership as the President of Dendrifund, Inc.
She also serves on the Board of Jack Daniel’s Properties, Inc.,
owner of the Jack Daniel’s trademark and a subsidiary of
Brown-Forman. Eliza follows in the footsteps of her brother,
Martin Brown Jr., who served on the Board for ten years.
I want to express my appreciation to Stuart Brown who is
not standing for reelection after nine years of board service.
Stuart has been a strong advocate for our brands, culture,
and people, and served as a friend and mentor to many of
us in the Brown family, Brown-Forman management, and
Board of Directors. Stuart has also taken an active interest
in helping develop our next generation of shareholders and
our broader family governance efforts to continually enhance
the connection between our long-term shareholders and
the company. We thank him for his service, guidance, and
friendship over the years. Sadly, Stuart’s father, W.L. Lyons
Brown Jr., who served as our Chair and CEO, passed away
recently. For many of us in the fifth-generation of the Brown
family, Lee was the first Chair and CEO we knew. The pride
we feel in Brown-Forman today as a global spirits company
is a direct result of Lee’s vision and legacy. Lee’s many
accomplishments and wonderful family serve as reminders
that the ideas of service and responsibility live far beyond our
time as employees and shareholders of Brown-Forman.
Our family governance framework continues to adapt
and evolve to best meet the needs of our growing family.
I’d like to recognize and commend the work that the Next
Generation Subcommittee is doing together to uphold
Brown-Forman’s multi-generational partnership with our
long-term shareholders. Members of this subcommittee
are cultivating connections with each other and
deepening their understanding of the company and
engagement as shareholders. Seeing the next generation
assemble is in itself inspiring and serves as a great
reminder that there is indeed a “world of opportunity”
awaiting them and Brown-Forman.
A World of Opportunity
This year’s theme is fitting as it’s important that we not
lose sight of where we have been and the incredible
possibilities before us. We have weathered squalls
and storms before and we will again. I can’t help but be
optimistic about the opportunities that lie ahead for
Brown-Forman. We are just scratching the surface of
what’s possible.
I’m excited about our future together and look forward to
working with you to help Brown-Forman unlock its future
potential. To all of our shareholders, thank you for your
unwavering and enduring support.
With respect and gratitude,
CAMPBELL P. BROWN
Chair of the Board
BROWN-FORMAN
BOARD OF DIRECTORS
Campbell P. Brown
Chair of the Board,
Brown‑Forman Corporation
(1, 5,*, #)
Elizabeth M. Brown
President of Dendrifund, Inc. (#)
Stuart R. Brown
Managing Partner,
Typha Partners, LLC (#)
Mark A. Clouse
President and Chief Executive Officer,
Campbell Soup Company (4)
Marshall B. Farrer
EVP, Chief Strategic Growth Officer,
Brown‑Forman Corporation (#)
Michael J. Roney
Retired Chief Executive Officer,
Bunzl plc (4, 5)
Jan E. Singer
Former Chief Executive
Officer, J.Crew (3,4)
Tracy L. Skeans
Chief Operating Officer
and Chief People Officer,
Yum! Brands, Inc. (3, 5)
Elizabeth A. Smith
Retired Chief Executive Officer,
Bloomin’ Brands (3)
Michael A. Todman
Retired Vice Chairman,
Whirlpool Corporation (1, 2, 3, 5)
Lawson E. Whiting
President and Chief Executive Officer,
Brown‑Forman Corporation (1, *)
(1) Member of Executive Committee of the Board of Directors
(2) Lead Independent Director
(3) Member of Audit Committee
(4) Member of Compensation Committee
(5) Member of Corporate Governance and Nominating Committee
(*) Member of Brown-Forman/Brown Family Shareholders Committee
(#) Member of the Brown Family
S&P
S&P
500
Dividend Aristocrats Index
80
80
years
quarterly cash dividends
40
40
consecutive years
regular dividend increases
“We remain confident in the
talents of our people, the
relevance of our portfolio, and
our collective ability to deliver
in a world of opportunity.”
CAMPBELL P. BROWN
Chair of the Board
6 Brown-Forman
2024 Integrated Annual Report 7
Our past informs the present and inspires our future. Brown-Forman is an independent,
publicly listed, family-controlled company, with shareholders six generations descended from
our company’s founder, George Garvin Brown. Brown family shareholders bring a generational
perspective that has led to consistent growth and superior returns over the long term.
Brown family members engage regularly with company senior leadership through participation on
our Board of Directors, family shareholder committees, and other governance-related positions. In
fiscal 2024, we welcomed a new family Director, Elizabeth M. Brown, maintaining the total number of
Brown family members on our Board at four. The Brown-Forman/Brown Family Shareholders Committee,
co-chaired by Lawson E. Whiting, President and CEO, and Campbell P. Brown, Chair of the Board, serves
as an opportunity for ongoing connection between the family and the company. Today, there is a growing
number of George Garvin Brown’s descendants who are in the sixth and seventh generation. The Next
Generation Subcommittee of the Brown-Forman/Brown Family Shareholders Committee creates more
connected, engaged, and informed shareholders. We hope to foster a sense of pride in Brown-Forman
within future generations of the Brown family by focusing on developing relationships and education
opportunities to further establish a deeper connection with the company.
Guided by
OUR
HISTORY
BROWN-FORMAN/BROWN FAMILY
SHAREHOLDERS COMMITTEE
Pictured L-R:
Samuel Scales
Tammy Godwin
Owsley Brown III
Cary Brown
Martin Brown Jr.
McCauley Adams
Robinson Brown IV
Dace Polk Brown
Lawson Whiting
Sandra Frazier
Campbell Brown
Clay Kannapell
Not pictured:
Garvin Deters
Jim Joy
Elaine Musselman
Our Integrated Strategy
As we strive to achieve our highest ambition
of Nothing Better in the Market, our integrated
strategy focuses on four key pillars: portfolio,
geographies, people, and investments.
In addition, we have long prioritized commitments
to alcohol responsibility, diversity and inclusion,
community relations, and environmental
sustainability, and integrated them into our
corporate strategy. We call these efforts Living a
Spirit of Commitment. This work is overseen by our
Commitments Council, comprised of our President
and CEO; EVP, Chief Global Supply Chain and
Technology Officer; EVP, Chief Inclusion and Global
Community Relations Officer; and EVP, General
Counsel. The Council provides updates with the full
Executive Leadership Team and Board of Directors
as needed, but at a minimum once a year.
To learn more about our commitments, progress, and performance,
visit www.brown-forman.com/our-commitments.
2024 Integrated Annual Report 9
8 Brown-Forman
A World of
OPPORTUNITY
55%
55%
international sales
as a percentage of total reported
net sales versus 26% in fiscal 2000*
Since our founding in Kentucky in
1870 to today’s worldwide presence,
Brown-Forman has been on a
steady path of global expansion.
In fiscal 2024, 55% of our reported
net sales were generated outside
the United States. As our company
has grown, we’ve acquired and
introduced brands aligned with
consumer trends and preferences in
each global market, ensuring broad
appeal across varied audiences.
Just like oak trees and aged spirits, seeing the outcomes of
these investments takes time. Though it was a challenging
year for spirits worldwide, the evolution of our portfolio
enabled Brown-Forman to outperform industry averages in
many countries, with reported net sales growth in several
emerging international markets. In addition, as airline travel
and the cruise industry return to normalized growth levels,
reported net sales continue to improve in this channel.
No matter where consumers are or their drink of choice,
Brown-Forman is ready, with a reach broad enough and a
portfolio diverse enough, to suit their taste.
* Fiscal 2000 Wine and Spirits segment Net Sales (including excise taxes)
In fiscal 2017, Brown-Forman
acquired an outstanding
portfolio of single malt
scotch brands. Today,
brand awareness for
Glenglassaugh, Benriach, and
The Glendronach continues
to grow, particularly among
whisky connoisseurs, with
Glenglassaugh Sandend being
named 2023 Whisky of the
Year according to
Whisky Advocate.
Woodford Reserve
is the number-one
super-premium American
whiskey in the world*
and is accelerating its
geographic expansion.
As we look to capture the
opportunity of expanding tequila
to more geographies, el Jimador is
now the number-one 100% agave
tequila by volume in Australia,
Brazil, and the United Kingdom.*
Super-premium Jack Daniel’s
expressions, including
Jack Daniel’s Sinatra Select,
Jack Daniel’s Single Barrel
Barrel Proof Rye, and
Jack Daniel’s Bonded Rye,
delivered strong double-digit
reported net sales growth in
fiscal 2024—demonstrating
the ongoing potential of
premiumization throughout
our portfolio.
In fiscal 2024, we completed
our transitions to owned
distribution in Slovakia and
Japan, bringing the total
to 16 markets, as well as
announcing our plans to
transition in Italy. Owned
distribution allows us to fuel
share growth, strengthen
our position, unlock future
potential, and capture more
of the value chain.
New Mix, our tequila-
based RTD beverage,
delivered its second
consecutive year of
double-digit reported
net sales growth. This
product capitalizes on
the consumer trends
of convenience and
flavor, leveraging the
Mexican market’s
native spirit.
With the addition
of Gin Mare and
Diplomático,
Brown-Forman owns
one of the top five brands
globally in two strong
growth categories:
ultra-premium gin and
ultra-premium rum.
* International Wine and Spirits Record (IWSR) 2023
10 Brown-Forman
2024 Integrated Annual Report 11
OPPORTUNITY:
Continue to Lead in
American Whiskey
The most iconic name and leader in our American whiskey portfolio—and the largest driver of the
value growth of this category worldwide—is the Jack Daniel’s family of brands.* For the eighth year in
a row, Jack Daniel’s Tennessee Whiskey is the most valuable spirits brand in the world, according to
Interbrand. We see significant potential for the brand to continue its growth trajectory. In addition,
we are elevating our other super-premium brands and capturing global growth across the category.
* IWSR 2023
WINNING THE HEARTS AND
MINDS OF WHISKEY EXPERTS
The Jack Daniel’s family of brands offers something for
everyone. The brand’s premium expressions exemplify
our whiskey-making craftsmanship and are recognized
by whiskey enthusiasts, including:
•
Whisky Advocate—Bartender Spirit Awards Gold &
Silver Medal 2023, #1 Whiskey of the Year 2022
Jack Daniel’s Bonded
•
Breaking Bourbon—#1 Rye Whiskey of 2023
Jack Daniel’s Bonded Rye
•
Ultimate Spirits Challenge Great Value Award 2023
Jack Daniel’s Bonded & Jack Daniel’s Triple Mash
•
2023 San Francisco World Spirits Double Gold Medal
Jack Daniel’s 10-Year-Old, Jack Daniel’s 12-Year-Old, and
Jack Daniel’s Twice Barreled American Single Malt
Jack Daniel’s
Tennessee Whiskey
The world’s most valuable
spirits brand, according
to Interbrand
REPEAT RECOGNITION
FOR OUR WHISKEYS
Brown-Forman’s American whiskeys
receive accolades year after year for their
quality and craftmanship. Since 2018, a
Brown-Forman whisk(e)y has been in the
top 10 of Whisky Advocate’s Whisky of the
Year, and both Woodford Reserve and
Old Forester have each been named an
Impact Hot Brand for the past six years.
Woodford Reserve and Woodford Reserve
Double Oaked earned Double Gold
from the 2023 San Francisco World
Spirits Competition.
Taking a Super-Premium
Brand to New Heights
Woodford Reserve has grown volume at a strong
double-digit compound annual growth rate since its
founding more than a quarter-century ago. Today, it
is the number-one super-premium American whiskey
brand in the world by volume and value, based on IWSR
2023. Now, we are setting our sights for this brand
even higher, with an ambition to become one of the
top 10 super-premium spirit brands worldwide.
Woodford Reserve launched in the U.S. in 1996, and
the U.S. remains our most developed market for this
brand. Global Travel Retail continues to introduce
Woodford Reserve to consumers worldwide, and we
are using this groundwork to extend the brand into
international markets.
Innovation is at the core of Woodford Reserve’s
journey. Our Double Oaked expression, launched in
2012, has grown to be the third-largest ultra-premium
American whiskey by volume in the world.* The brand’s
most premium offerings, including Woodford Reserve
Batch Proof and Woodford Reserve Master’s Collection,
were important drivers of reported net sales growth
in fiscal 2024.
These beloved releases continue to elevate the profile
of Woodford Reserve. The brand’s success allowed us
to leverage alliances with other powerful brands such
as Williams-Sonoma and Baccarat. Woodford Reserve
remains the presenting sponsor of The Kentucky
Derby and explored the intersection of fashion and
bourbon with the debut of The Flavor Note Collection
on the red carpet at the 150th Kentucky Derby.
A Beloved Brand That
Never Gets Old
Old Forester holds the distinction of being the only
bourbon distilled, aged, and bottled before, during,
and after Prohibition. The brand continues to expand
its Whiskey Row series of ultra-premium expressions,
each celebrating a different era in its long history.
The most recent, Old Forester 1924, is a 10-year-old
whiskey that gives fans a taste of what Old Forester
was like a century ago. These ultra-premium
expressions create a halo for the Old Forester family
of brands, which recently crossed the 500,000 9-liter
case milestone.
* IWSR 2023
12 Brown-Forman
2024 Integrated Annual Report 13
Jack Daniel’s is already sold in over 170 countries worldwide, yet this iconic
brand still has a long runway for future growth. We are increasing Jack Daniel’s
reach by accelerating geographic expansion, recruiting the next generation of
legal drinking age (LDA) consumers, premiumizing the portfolio, and extending
the brand’s presence into new occasions. We are focused on seven ways to
drive future growth.
WAYS FOR
TO GROW
1. Reach new fans through their
passion points.
Jack Daniel’s entered its second year of
sponsorship with McLaren Racing, a Formula 1
racing team. Becoming involved with Formula 1,
the fastest-growing sport worldwide, allows
us to engage with new audiences. In the first
year of this relationship, there were races in
more than 20 countries, across 34 markets,
increasing visibility and brand recognition for
the Jack Daniel’s brand worldwide. We encourage
all fans to enjoy the race and our products
responsibly and to never drink and drive.
2. Offer two iconic global
brands in one can.
In fiscal 2024, the Jack Daniel’s and Coca-Cola
RTD has sold over 120 million cans in over
25 markets. That’s 120 million impressions of
the Jack Daniel’s brand, increasing visibility
for the growing RTD category and our full-
strength portfolio among the next generation
of legal drinking age (LDA) consumers. RTDs
also allow the Jack Daniel’s trademark to
participate in a broader range of consumer
occasions, such as casual get-togethers, or
paired with a meal.
3. Capture super-premium opportunities.
Jack Daniel’s has been crafted in Lynchburg, Tennessee, for over 150
years. We continue to showcase our whiskey-making credentials
through limited editions and new permanent expressions, such as
Jack Daniel’s Sinatra Select, Jack Daniel’s Single Barrel Barrel Proof
Rye, Jack Daniel’s 10-Year-Old and 12-Year-Old expressions, and
the newest member of the Bonded series, Jack Daniel’s Bonded Rye.
4. Seize opportunities
to enhance our routes
to consumer.
In international markets where
American whiskey is less
developed, we see tremendous
potential in capturing additional
market share and net sales
growth. We are unlocking access
in geographies where we see the
largest potential by transitioning
to owned distribution, as we did in
Slovakia and Japan in fiscal 2024.
5. Continue to leverage our
influence in music.
Jack Daniel’s has long been a favorite of
musicians across genres and generations. For
20 years, we have sponsored Art, Beats + Lyrics,
a U.S. art and hip-hop roadshow. A new
Art, Beats + Lyrics documentary on Hulu
celebrates the legacy of this cultural
phenomenon.
6. Make new friends in
new occasions.
Flavors, including Jack Daniel’s
Tennessee Honey, Jack Daniel’s
Tennessee Fire, and Jack Daniel’s
Tennessee Apple, provide an accessible
entry point to the Jack Daniel’s family
of brands. In the U.S., these brands
have strong appeal among women
and multicultural consumers, as
well as the next generation of LDA
consumers. We collectively sold
more than 3 million 9-liter cases of
these products in fiscal 2024. Flavors
also offer convenience, providing an
appealing base for an easy mixed drink.
7. Share world-class creative.
Jack Daniel’s continues finding new
ways to surprise and inspire, and
to evolve the “Make It Count” global
creative campaign. In fiscal 2024,
we launched “In the Moment,” a new
U.S.-based campaign that encourages
friends of Jack to live life on their own
terms. We also introduced “Make Your
Own Labels,” a global campaign that
gives a nod to the brand’s iconic black
and white label, while tapping into
Jack Daniel’s spirit of independence.
2024 Integrated Annual Report 15
14 Brown-Forman
Montserrat Ventura, a.k.a.
Moon Venture
OPPORTUNITY:
Expand the
Global Reach
of Tequilas
Tequila is the fastest-growing category in full-strength spirits,**
driven by increasing interest of consumers from LDA to age 29. In
fact, the margarita is a top bar call in the U.S. and Mexico.***
With both clear and aged expressions, tequila is a versatile product suitable for
a wide range of cocktails and occasions. The category has grown globally at
a 17% compound annual growth rate over the last five years and is forecasted
to grow three times faster than the total distilled spirits category.** The U.S.
is expected to remain the core market for tequila, which has the potential to
become the largest spirits category based on value. We are taking advantage
of this momentum and priming our tequila brands for growth.
Leaning into Authenticity and Heritage
Like whiskeys, fine tequilas are made with a sense of provenance and process.
Tequila Herradura is the oldest super-premium tequila brand in the world;
in fact, it was founded in 1870, the same year as Brown-Forman. More than
50 years ago, Casa Herradura began aging its tequilas in wooden barrels,
thereby inventing the reposado category. Herradura Reposado recently won a
Master’s Medal from The Spirits Business, and in fiscal 2025, we will introduce
a limited-edition expression to celebrate 50 years of reposado tequilas.
Embracing Premium
Premium-plus brands are driving growth in the tequila category. As a result of
recent price increases and revenue growth management activities, el Jimador is
now positioned in the premium-plus segment, and a forthcoming redesigned
bottle will elevate the brand’s premium cues. Meanwhile, Herradura Legend and
Selección Suprema expressions are priced at the prestige-plus level.
Growing Geographically
We are driving brand awareness and distribution for
our tequila brands in the U.S. and in Mexico, and
are focused on recruiting the next generation of
LDA consumers. We are bringing the promise
of these brands to Europe, South America,
and Asia-Pacific through two global creative
platforms, el Jimador’s “Reserved for Everyone”
and Herradura’s “Extraordinary Awaits.”
Investing in Capacity
To support our global growth, we announced a multi-year
expansion of our tequila production capacity. As we will be able to
produce at higher levels to meet consumer demand, we will do so
sustainably: this includes further investments in water recycling
and treatment necessary to support production and care for
our environment.
SEEKING THE EXTRAORDINARY IN THE EVERYDAY
Beyond crafting exceptional tequilas, Tequila Herradura crafts experiences
that redefine the extraordinary. To bring its “Extraordinary Awaits” campaign
to life in Mexico City, the brand commissioned three local artists to create
murals installed throughout the city. Tequila Herradura challenged artists to
create work inspired not only by the campaign, but also a new sense of what it
means to be Mexican: modern, fresh, cosmopolitan, and experience-driven.
To add an extra touch of the unexpected, the murals were coated with PURETi,
a pioneering varnish that reduces air pollutants when activated by sunlight. The
cumulative benefits of installing these murals equates to planting 1,569 trees.
1 in 5
1 in 5
on-premise tequila
servings in the U.K. are made
with el Jimador*
* CGA Data by NielsenIQ
** IWSR 2023
***IWSR Bevtrack 2023 Wave 1
2024 Integrated Annual Report 17
16 Brown-Forman
OPPORTUNITY:
Be Bolder with Emerging
Brands and RTDs
Our emerging brands portfolio, which includes brands such as
The Glendronach, Benriach, Glenglassaugh, Slane, Fords Gin,
Gin Mare, and Diplomático, represents our next generation of
growth. Through strategic portfolio reshaping, new routes to
consumer, and alliances with other world-class brands, we will
unlock new occasions and reach new consumers at premium
price points in high-growth categories.
Investing in Every Brand’s Potential
The term “emerging brand” refers to a brand’s current stage of growth.
It can be a new brand to our portfolio or one that has been part of the
family for years. Emerging brands also vary by geography: for example,
while tequila is well-established in Mexico and the U.S., we consider it an
emerging brand in many other parts of the world.
We have invested in dedicated teams in certain markets, such as the
U.S. and U.K., that manage emerging brands to create a foundation for
future growth. One of many successes using this brand building model
is Old Forester. While our founding brand is certainly not new in terms of
time spent in the market, we saw potential to increase its consumer reach.
When Old Forester joined the emerging brands portfolio in the U.S., it sold
approximately 200,000 9-liter cases annually. In fiscal 2024, Old Forester
family of brands grew out of the emerging brands portfolio, as it
reached the 500,000 9-liter case mark and became a top 15 American
whiskey brand.*
Staying Current with Old and Rare
Brown-Forman’s single malt scotch brands, Benriach, The
Glendronach, and Glenglassaugh, are examples of our successful
portfolio reshaping over the past decade—and our ability to stay
current and relevant with well-established brands. Due to focused
efforts over the past eight years, Glenglassaugh is becoming a
standout performer. Awareness and prestige of the brand among
whisky connoisseurs is growing, with Glenglassaugh Sandend being
named Whisky Advocate’s 2023 Whisky of the Year. In 2023, through
the old and rare program, we sold a Glenglassaugh cask from 1967 that
was one of the largest cask sales in the history of the scotch whisky
industry in terms of rarity, volume, and value. With its first-ever
12-year-old expression, new packaging, and fresh creative assets, this
brand made a new debut. In addition to Glenglassaugh, we continue to
increase supply to meet demand for our single malt scotch brands and
believe these brands represent opportunities for future growth.
Leveraging Relationships to
Take Jack to New Places
We’re capitalizing on demand for
convenience and flavor with the continued
global rollout of the Jack Daniel’s and
Coca-Cola RTD. This product, which brings
two iconic and celebrated brands together
in one can, is the most successful U.S.
launch in Brown-Forman history in terms
of percent of distribution achieved based
on accounts sold. The product is currently
available in over 25 countries, and we’re just
getting started.
New Mix, Brown-Forman’s
tequila-based RTD,
was the world’s first tequila RTD and is
the #1 RTD in Mexico* with more than
10 million 9-liter cases sold in fiscal 2024.
#1
whiskey RTD
according to U.S. Nielsen
2%
value share
of the Cocktails & Long
Drinks RTD Segment
Globally*
80%
of Jack Daniel’s & Coca-Cola RTD
shoppers in the U.S. are new to the Jack Daniel’s
family of brands within the last year**
#2
product in the U.S.
in terms of off-premise
distribution—second only to
Jack Daniel’s Tennessee Whiskey
Over
100
million
cans sold in
fiscal 2024
Best New Product of 2023
The Spirits Business
Best Innovation
The Coca-Cola Company Networked Marketing Awards
Best Canned Cocktail, Best Drink Concept
Beverage Digest
* IWSR 2023
* IWSR 2023
** U.S. Numerator 2024
18 Brown-Forman
2024 Integrated Annual Report 19
OPPORTUNITY:
Be Better in
Everything
We Do
For more than 150 years, Brown-Forman
has operated with a long-term perspective
and respect for all of our stakeholders. This
steadfast spirit of commitment is integral
to our long-term strategy and success.
As we work toward the future, we will
continue to focus on ensuring that a
sustainable supply of the high-quality
materials we depend on exists for years
to come. We will further strengthen a
culture where people feel like they belong
and that reflects the diversity of our
consumers. As always, we continue to
promote responsible alcohol consumption
and strive to be good neighbors in the
communities where we operate.
Our Environmental Ambitions
2030 Ambition: Halve greenhouse
gas (GHG) emissions
PROGRESS: 13% increase
From fiscal year 2022 to fiscal year 2023, emissions
increased as a result of production increases that outpaced
energy efficiency improvements. While we progress, we
are identifying improvements in energy efficiency and
investing in new process heating technologies that will
reduce our footprint.
2030 Ambition: Use 100%
renewable electricity
PROGRESS: 79% renewable electricity
We have made meaningful investments in renewable energy
across our brands, from onsite solar installations to power
purchase agreements. And we continue pursuing new
renewable electricity projects across our portfolio to meet
our 2030 ambition.
2030 Ambition: Achieve water balance in
at-risk watersheds
PROGRESS: Improving measurement of water
risk at our production facilities
We continue to build site-specific water stewardship
plans for key watersheds that include reuse, efficiency
improvements, and project collaborations.
2030 Ambition: Integrate circular
economy principles
PROGRESS: Implementing opportunities
for integration
From converting spent grain into energy to testing
reusable cups at events and activations, we are promoting
circular economy principles across our business.
2030 Ambition: 100% of primary packaging
to be recyclable or reusable
PROGRESS: 98% recyclable
Using our Sustainable Packaging guidelines, we continue
to improve the recyclability of our primary packages. In
addition, we are increasing recycled content in our primary
packaging, providing post-consumer plastic options in 50 mL
bottles for airline customers.
2025 Ambition: Engage with 100% of
our direct farmers on regenerative
agricultural practices
PROGRESS: 100% of direct farmers engaged
We launched a regenerative agriculture scorecard
initiative in calendar 2023 with direct grain farmers in the
U.S. to document existing practices and identify areas for
improvement. We are in the process of establishing new
agricultural goals to advance sustainable practices across
our supply chain.
Ambition: Support sustainable forestry
PROGRESS: Evaluating our wood supply chain
and developing new sustainable forestry goals
Brown-Forman and Dendrifund continue to convene
stakeholders and support the White Oak Initiative to inspire
joint action to promote the health of forests that are home
to white oak trees.
Ambitions for Our People
Brown-Forman is working toward a set of ambitions focused on our U.S. and global
workforce. We are proud to have exceeded our ambition for women in senior leadership
and seek to maintain this high level of representation.
2030 AMBITION: 50% women in
professional- and leader-level
positions globally
PROGRESS: 48%
2030 AMBITION: 40% women in
senior leadership positions globally
PROGRESS: 45%
2030 AMBITION: 25% people of color
in U.S. workforce
PROGRESS: 20%
2030 AMBITION: 6% individuals who
self-identify as LGBTQ+ among
salaried U.S. employees
PROGRESS: 3%
Please refer to our 2023 Impact Scorecard for a complete review of our
commitments and performance.
20 Brown-Forman
2024 Integrated Annual Report 21
Making a
Difference Across
OUR VALUE
CHAIN
“Every day we make it, we make it the best we can.” We’ve adhered to
this philosophy for generations. Today, it is critical that our best is more
sustainable. Here’s how we do this at every step.
1. Agriculture
We work closely with direct grain farmers to
encourage sustainable agricultural practices
and seek opportunities for collaboration
through Dendrifund’s Initiative to
Bring Back Rye to Kentucky.
2. Packaging
We collaborate with key
packaging suppliers to identify
opportunities to reduce GHG
emissions and improve overall
packaging sustainability.
3. Distillation
Once grains are dried and ground,
we follow a time-honored process
to ferment and distill them into fine
spirits. We’re making this process
more efficient with renewable
electricity, state-of-the-art
heating technology, and anaerobic
digestion that converts spent grain
into renewable energy.
4. Barrel Making
White oak trees are formed into
barrels, lending many of our
spirits their distinctive color
and flavor. We are committed to
the conservation of the existing
hardwood forests we depend on and
use technology in our cooperage to
minimize any wood waste.
5. Maturation
The process of aging spirits relies on
traditional practices and natural elements.
For example, many of our barrel houses are
naturally energy efficient: barrels expand and
contract with the seasons, forcing moisture
into and out of the wood. The barrel run at the
Woodford Reserve Distillery makes use of
gravity to move barrels from the filling area
to the rickhouse where they go to age.
6. Bottling
After aging to perfection, our
spirits are ready to be bottled.
We are focused on increasing the
recycled content of our bottles
and ensuring 100% of bottles are
recyclable or reusable. At our
Newbridge Bottling Facility, which
supports our three scotch brands,
a portion of bottling operations
runs on solar electricity.
7. Transportation
Our bottles make their way from
bottling plants to retail stores,
restaurants, and bars around the
world. We continuously search for
opportunities that drive greater
efficiencies, such as collaborating
with transportation vendors to
optimize routes.
8. Packaging End-of-Life
We are exploring ways to improve end-
of-life use, such as our collaboration with
the New Hampshire Liquor Commission
on a takeback program to encourage
recycling of empty glass spirits bottles.
We also design our packaging to reduce
environmental impacts at end-of-
life. For example, we transitioned the
Glenglassaugh secondary package
from our standard tube to a paperboard
folding carton, which improves
recyclability and reduces emissions of
the overall package.
22 Brown-Forman
2024 Integrated Annual Report 23
The Source of
OUR SPIRITS
Some of the most important commodities used to make our products are the grains
distilled into our spirits and the trees that become barrels for aging. Brown-Forman
partners with growers and suppliers to work toward better ecosystems and a steady
supply of these products for years to come.
Our sustainable agriculture working group spearheads engagement with direct farmers on
regenerative agriculture practices. Now, the group is setting a strategy to scale sustainable
agriculture efforts across the supply chain. In addition, Dendrifund, a nonprofit seed fund
created by Brown-Forman and the Brown family, focuses on regeneration of crucial natural
resources essential for whiskey distillation and aging, including grains, water, and wood.
In fiscal 2024, Dendrifund received a $2.5 million commitment from Brown-Forman and
an additional $2.5 million from the Brown family, contributions that will further advance
sustainability initiatives within the whiskey industry.
Essential Grains
We source grains, including wheat, barley, corn, and rye, for our whiskey
portfolio. To meet our direct farmer engagement goal, we introduced
a scorecard that all direct grain farmers in the U.S. completed in
calendar year 2023. The scorecard provided a guide for farmers to adopt
regenerative practices related to soil, water, climate, and biodiversity.
Completed scorecards provide a greater understanding of farmers’
progress and priorities to date, and future opportunities to advance
sustainable agriculture.
Rye was once widely grown in Kentucky. It is not only a key ingredient
in whiskeys—it also enhances soil and water quality and improves the
sustainability of other grains when used as a cover crop. Most of the rye
that distillers use today is sourced from farms in Canada and Europe, but
we are working to make rye a viable and beneficial crop in Kentucky once
again. Building on the research that began in 2017, Woodford Reserve
has deepened its commitment to purchase new varieties of Kentucky-
grown rye over the next five years. As part of this commitment, the brand,
along with Dendrifund, supports on-farm field trials, flavor trials, and
shared learning activities, including rye growers’ meetings and convening
stakeholders to establish the Ohio Valley Grain Exchange, committed to
sustainable, local grains.
Supporting White Oak Forests
In 2017, Dendrifund co-founded the White Oak
Initiative along with a coalition of partners committed
to the long-term sustainability of America’s white
oak forests. Representatives from Brown-Forman
and the Brown family visited Capitol Hill in calendar
2023 to show support for the White Oak Resilience
Act. Dendrifund and Jack Daniel’s also co-hosted a
Tennessee Forestry Association steering committee to
discuss active work to restore 2,000 acres of forest for
white oak and shortleaf pine restoration.
We are working
to make rye a viable and
beneficial crop in Kentucky
once again.
24 Brown-Forman
2024 Integrated Annual Report 25
Committed to
Operating
AT OUR BEST
Excellence applies not only to the quality of our products, but
also the practices by which we operate.
As we expand our distilling and bottling capacity, as well as make
enhancements to our production facilities, we are constantly
evaluating ways to make our products more efficiently. The majority
of our direct emissions come from burning natural gas or other
fuels to make steam in our distilleries, and Brown-Forman is
adopting technologies that improve energy efficiency and reduce
GHG emissions. We are also transitioning to more efficient HVAC
technologies such as electric heat pumps and geothermal systems.
Renewable energy sources are becoming an increasingly important
part of our energy mix. We completed installation on a 620-kilowatt
solar array at our bottling facility near Edinburgh, Scotland. If the
installation generates more energy than we need for our operations,
we will export it back to the grid, further reducing our onsite energy
costs. Meanwhile, Slane Irish Whiskey signed a power purchase
agreement to buy electricity for its distillery from a nearby wind
farm. The purchase will meet approximately 60% of the distillery’s
electricity demand.
Doing More to Use Less
When consumers are done enjoying our products, an empty
bottle remains. We’re making strides to limit the amount of
packaging materials we use and encouraging the recycling of
empty bottles. Here are a few ways Brown-Forman is embracing
sustainable packaging:
Design for Sustainability
We use a packaging scorecard to evaluate new
bottle designs to highlight opportunities to lower our
GHG impact compared to the designs they replace.
Sustainable Glass
One of our major glass suppliers is building a facility
with new glass furnace technology that will operate
with lower emissions and less waste—which will
reduce our supply chain impact.
Recycled Plastic
Both Jack Daniel’s Tennessee Whiskey and
Woodford Reserve are offered in 50 mL plastic bottles
for airline customers. We recently transitioned both
products to 100% post-consumer plastic, resulting in
a 46% GHG emission reduction for Jack Daniel’s and a
44% GHG emission reduction for Woodford Reserve,
compared to the previous bottles.
Bottle Takeback
For the second year, “Bring Back Jack,” a campaign
with the New Hampshire Liquor Commission,
encourages consumers, along with bar and
restaurant owners, to return empty glass wine and
spirits bottles to state-controlled liquor stores in
exchange for a coupon.
RECOGNITION FOR
DOING THINGS RIGHT
Many Brown-Forman facilities received
recognition in fiscal 2024 for sustainable
operating practices. For example:
•
In the first year that the U.S. Environmental
Protection Agency’s ENERGY STAR program
offered a certification for distilleries, the
Jack Daniel Distillery became one of the first
to participate and become certified.
•
Bord Bia, the Irish food board, recognized
Slane Irish Whiskey, as well as 96 other local
food and drink brands, for attaining Origin
Green Gold Membership in 2023. Slane earned
this award for energy and water efficiency
improvements at its distillery.
•
Casa Herradura obtained Green Company
certification from the Ministry of Environment
and Territorial Development of the state of
Jalisco, Mexico. This is the fifth consecutive
year the distillery obtained this certification,
which outlines standards for environmental
compliance.
26 Brown-Forman
2024 Integrated Annual Report 27
Creating
OPPORTUNITIES
for All
In 1959, Brown-Forman published its first-ever company creed. This creed laid
out a series of promises the company made to a range of stakeholders, including
employees. It stated that “the company must provide a good place to work, fair
treatment, opportunities for recognition and reward…a favorable climate for
individual growth and development.”
Brown-Forman continues to believe in this philosophy today because we
know a diverse and inclusive workplace leads to better performance. In
fiscal 2024, we introduced a D&I strategic framework with four pillars:
Colleagues, Culture, Consumers, and Communities. This framework will
allow us to further create a culture of inclusion, which is particularly
important as the consumer landscape continues to evolve and
Brown-Forman grows internationally and expands into new markets.
Colleagues
Our Colleagues pillar focuses on attracting, retaining, and
growing a workforce that is reflective of the consumers
and communities we serve. We are making good progress
toward each of our ambitions on representation (see page
21) and continue to exceed our ambition for women in
senior leadership positions worldwide.
Culture
Beyond encouraging diverse representation, we are
working to foster an inclusive culture where we can all
bring our best selves to work. Brown-Forman has an
inclusive leadership program, Lead Better: Inclusive
Leadership @ B-F, that educates participants about
what it means to be an inclusive leader in an inclusive
culture. We have shared it with all executive and
business leaders, and we plan to cascade it to the next
level: our people leaders. We also continue to encourage
conversations about the foundations of an inclusive
culture through our “Let’s Talk” series.
Since 2009, ERGs have been integral to our culture,
building awareness of key issues and creating space
for colleagues to learn and explore. In fiscal 2024, we
launched our newest ERG, Awareness and Advocacy
of Visible & Invisible Disabilities (AAVID), bringing our
total to ten.
Consumers
Part of strengthening our brands is being inclusive of
all LDA consumers. To do this, we consider all aspects
of how we go to market across all communication
channels. This includes seeking out diverse camera
crews, on-screen talent, content creators, and
media platforms. As we work toward meaningful
representation across dimensions of gender, ethnicity,
sexual orientation, and ability, we seek to ensure
representation is reflected authentically in all that we do.
Communities
We have opportunities to foster inclusion across our
industry and in the communities where we operate.
We are co-creators of the Nearest & Jack Advancement
Initiative, the first-of-its-kind program for increasing
diversity in the spirits industry. Through the Business
Incubation Program, we welcomed two new business
partners in 2023, Blackleaf Organic Vodka and Mission
Craft Cocktails. We also held the second annual Spirits
on the Rise Summit in fiscal 2024, which shared
resources for Black, Indigenous, and People of Color
(BIPOC) entrepreneurs entering the spirits industry.
Brown-Forman is also making a difference for
communities in our Louisville hometown and around the
world. Learn more about the work of the Brown-Forman
Foundation on p. 32.
In fiscal 2024, Brown-Forman
Brazil signed the UN Women's
Empowerment Principles. Our GROW
Employee Resource Group (ERG) participated
in advocating this action, which reinforces
Brown-Forman’s commitment to gender
equality and female empowerment in the work
environment, market, and community.
95%
95%
global annual retention
among salaried employees
15
15
years of Employee
Resource Groups
at Brown-Forman
28 Brown-Forman
2024 Integrated Annual Report 29
An
Award-Winning
WORKPLACE
Brown-Forman received a number of awards in fiscal
2024 that serve as a testament to the diverse and
inclusive culture we’re creating around the world:
Great Place to WorkTM
Australia, Belgium, Brazil, Czechia, France, Germany,
Greater China, India, Italy, The Netherlands, Poland,
Spain, Taiwan, Thailand, Türkiye, United Kingdom
Best Workplaces for Women
Türkiye
100% Score on Human Rights
Campaign Corporate Equality Index
13 consecutive years
Race Equality Matters Trailblazer
United Kingdom
TalentBoard Candidate
Experience Awards
United States and Europe
Disability Equality Index:
Best Places to Work
United States
Equal Opportunities
Company Certification
Poland
Doing Business the
RESPONSIBLE WAY
Ethics and Compliance
In fiscal 2024,
Brown-Forman was
recognized as one of
the World’s Most Ethical
Companies for the third
consecutive year by
Ethisphere, and our ethical
culture survey scores exceeded industry benchmarks. We
believe this demonstrates Brown-Forman’s commitment
to ethical business practices. Our compliance program, a
global initiative, is underpinned by the following elements:
•
Assessing risk against criteria, including trade
sanctions, anti-corruption, environmental, human
rights, cybersecurity, and data privacy.
•
Educating our employees on compliance risk annually
and via targeted training covering anti-corruption,
human rights, data privacy, and cybersecurity, along
with training business partners on compliance
expectations.
•
Communicating compliance trends and updates globally
via our Compliance Champion network that cascades
messages to employees.
•
Maintaining a Code of Conduct Committee, chaired
by the company’s Chief Risk, Ethics, and Compliance
Officer that meets twice a year to set objectives and
review progress.
•
Providing reporting channels where employees and
non-employees can report concerns anonymously via
email or phone from 46 countries in 12 languages.
•
Updating our Code of Conduct annually to connect our
core values to our work and provide guidance into our
investigative process.
•
Continuously evolving our compliance program based
on external developments, benchmarking, company
strategy, and data trends.
•
Communicating expectations to vendors and suppliers
via the Brown-Forman Supplier Code of Conduct.
Human Rights
Brown-Forman prioritizes the health, safety, respect, and
well-being of all people within our organization, across our
operations, and in the communities in which we operate. Our
Human Rights Steering Committee, chaired by our Chief Risk,
Ethics, and Compliance Officer, continues to make progress
on our three-year human rights strategy that covers
risk assessment, training, and due diligence.
Health and Safety
Whether employees are building barrels in our cooperage,
crafting spirits in our distilleries, leading homeplace tours,
conducting sales, or working in an office, their safety is our
priority. Per our Health and Safety Policy, Brown-Forman is
committed to safeguarding our employees, contractors, and
visitors. We create and maintain a safe work environment and
establish programs and teams responsible for mitigating risk.
We monitor injury performance through dashboards that
include near misses, first care, and recordable cases.
In calendar year 2023, Brown-Forman experienced 2.08
recordable injuries per 100 full-time employees, which includes
global production and our Louisville corporate campus, a five
year low. We also experienced zero work-related employee
fatalities globally. We use this data to establish injury reduction
programs through targeted loss control initiatives and
continuous improvement.
Information Security
Brown-Forman relies on information technology systems,
networks, and services to manage all aspects of our business.
Our information security team works vigilantly to protect the
company against increasingly sophisticated cybercrimes and
attacks. As the company moves toward a more mobile and
hybrid workforce, the team uses a zero-trust architecture
based on a philosophy of “never trust, always verify.” It requires
all users, irrespective of whether they are inside or outside
an organization’s network, to continuously validate their
identities, using multi-factor authentication where needed, to
gain access to applications and data. This framework, and its
related security improvements, make Brown-Forman’s systems,
network, and data more secure.
30 Brown-Forman
2024 Integrated Annual Report 31
Contributing to
COMMUNITIES
Brown-Forman Corporation and the Brown-Forman
Foundation contributed $14.9 million to organizations
serving the community in fiscal 2024. We focus
our giving on organizations that are committed to
ensuring essential living standards, empowering
responsible and sustainable living, and enhancing
arts and culture.
Investing in Louisville
Brown-Forman has been in Louisville, Kentucky,
since its founding in 1870 and has called the California
neighborhood home to our headquarters for 100 years.
We strive to be a good neighbor by taking an approach
that is locally focused and relationship-driven.
In fiscal 2022, the Brown-Forman Foundation made
the largest investment in its history, a 10-year, $50
million commitment to five organizations committed
to transforming educational opportunities in West
Louisville. One of these organizations is the West End
School, a tuition-free independent school serving
boys in pre-K through 8th grade. With the Foundation’s
support, the school is now expanding, breaking ground
on a new campus for girls. West End Girls’ School will
welcome 150 students into an educational system that has
demonstrated academic success.
Investing Globally
Globally, we empower all employees around the world to
identify priorities and opportunities in their communities.
Since fiscal 2020, our contributions outside of Louisville
have increased by 20%. We also encourage employees to
volunteer and serve on nonprofit boards, with employees
logging 18,500 hours of time in fiscal 2024. Global
highlights include:
•
More than 100 team members supported 12 community
organizations near Hamburg, Germany, spending a
day sorting clothing for refugees, cleaning up trash,
distributing food, and beautifying natural areas.
•
Employees in South Africa partnered with Breadline
Africa to fund and organize a holiday beach day event
for children at a local school. For some children it was
their first trip to the beach, and employees ensured
the day was special for each student.
•
Colleagues in India participated in The Vedanta Delhi
Half Marathon in partnership with United Way Delhi.
Brown-Forman employees raised money to promote
women’s empowerment and life skill development.
$34M
$34M
Brown-Forman Foundation
grants since inception in 2018
Empowering Mindful Choices
Our products bring people together to connect,
celebrate, and make lasting memories. With this
comes a responsibility to promote and empower
safe alcohol consumption.
Through our 2030 Alcohol Responsibility strategy,
focused on empowering mindful choices around our
brands, we work to:
•
Prevent drunk driving.
•
Prevent underage access and consumption.
•
Empower bystander intervention.
•
Promote responsible drinking and decisions.
We execute this work through our Pause Campaign,
which inspires action among colleagues, business
partners, consumers, and other stakeholders. Other ways
we help promote responsible choices—within our business
and among consumers—include:
•
Providing hospitality members with tools and
trainings to mitigate harm within bars, restaurants,
and other venues where beverage alcohol is served.
•
Leveraging our SPIRIT ERG to empower mindful
choices and promote inclusion of all employees,
regardless of their choice whether or not to
drink alcohol.
•
Participating in the International Alliance for
Responsible Drinking, which actively supports
international goals to reduce harmful consumption.
•
Complying with all relevant beverage alcohol
advertising codes, including the DISCUS Code, which
specifies that at least 71.6% of the viewers of each
media placement should be LDA; data indicate that on
platforms where we advertise, LDA viewers make up
over 80% of cumulative total impressions.
•
Partnering with local and national organizations
that offer hope and recovery for those experiencing
addiction, including Volunteers of America,
The Healing Place, and Ben’s Friends.
•
Encouraging responsible consumption at events
sponsored by our brands, such as hydration stations
and zero-proof options of our branded cocktails.
32 Brown-Forman
2024 Integrated Annual Report 33
Selected
FINANCIAL DATA
For Year Ended April 30:
(Dollars in millions, except per share amounts)
2020
20211
2022
2023
2024
2
SALES
$ 4,306
$ 4,526
$ 5,081
$ 5,372
$ 5,328
EXCISE TAXES
$
943
$ 1,065
$
1,148
$
1,144
$ 1,150
NET SALES
$ 3,363
$ 3,461
$ 3,933
$ 4,228
$ 4,178
GROSS PROFIT
$ 2,127
$ 2,094
$ 2,391
$ 2,494
$ 2,526
OPERATING INCOME
$
1,091
$
1,166
$ 1,204
$
1,127
$ 1,414
NET INCOME
$
827
$
903
$
838
$
783
$ 1,024
WEIGHTED-AVERAGE SHARES (IN MILLIONS) USED TO
CALCULATE EARNINGS PER SHARE
— Basic
477.8
478.5
478.9
479.2
476.4
— Diluted
480.4
480.7
480.6
480.5
477.2
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
— Basic
$
1.73
$
1.89
$
1.75
$
1.63
$ 2.15
— Diluted
$
1.72
$
1.88
$
1.74
$
1.63
$ 2.14
GROSS MARGIN
63.2%
60.5%
60.8%
59.0%
60.5%
OPERATING MARGIN
32.4%
33.7%
30.6%
26.7%
33.8%
EFFECTIVE TAX RATE
18.0%
16.5%
24.7%
23.0%
21.2%
AVERAGE INVESTED CAPITAL3
$ 4,301
$ 4,969
$ 5,104
$ 5,551
$ 6,486
RETURN ON AVERAGE INVESTED CAPITAL3
20.8%
19.5%
17.6%
15.3%
17.3%
CASH PROVIDED BY OPERATIONS
$
724
$
817
$
936
$
640
$ 647
CASH DIVIDENDS DECLARED PER COMMON SHARE4
$ 0.6806
$ 0.7076
$ 1.7360
$ 0.7880
$ 0.8466
DIVIDEND PAYOUT RATIO4,5
39.3%
37.5%
99.2%
48.3%
39.4%
as of April 30:
TOTAL ASSETS
$ 5,766
$ 6,522
$ 6,373
$ 7,777
$ 8,166
LONG-TERM DEBT
$ 2,269
$ 2,354
$ 2,019
$ 2,678
$ 2,372
TOTAL DEBT
$ 2,602
$ 2,559
$ 2,269
$ 2,913
$ 3,100
1. Results for fiscal 2021 include a pre-tax gain on sale of $127 million from the divestiture of Early Times, Canadian Mist, and Collingwood and related assets.
2. Results for fiscal 2024 include a pre-tax gain on sale of $92 million from the divestiture of Finlandia and a pre-tax gain on sale of $175 million from the divestiture of
Sonoma-Cutrer and related assets.
3. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Presentation Basis – Non-GAAP Financial Measures” for details on
our use of “return on average invested capital,” including how we calculate this measure and why we think this information is useful to readers.
4. Cash dividends declared per common share and the dividend payout ratio include special cash dividends of $1.00 in fiscal 2022.
5. We define dividend payout ratio as cash dividends divided by net income.
To learn more about our commitments, progress, and performance, visit www.brown-forman.com/our-commitments.
2019
2020
2021
2022
2023
2024
$200
$150
$100
$50
Corporate
INFORMATION
Corporate Headquarters
850 Dixie Highway / Louisville, Kentucky 40210 / (502) 585-1100
www.brown-forman.com / brown-forman@b-f.com
Listed
New York Stock Exchange -- BFA/BFB
Stockholders
As of April 30, 2024, there were 2,347 holders of record of Class A
Common Stock and 4,401 holders of record of Class B Common Stock.
Stockholders reside in 50 states and in 14 foreign countries.
Registrar, Transfer Agent,
and Dividend Disbursing Agent
Computershare
web.queries@computershare.com
(866) 622-1917 (U.S., Canada, Puerto Rico)
(781) 575-4735 (International)
Correspondence: P.O. Box 43006 / Providence, RI 02940-3006
Overnight Correspondence: 150 Royall St Suite 101,
Canton, MA 02021
Employees
As of April 30, 2024, Brown-Forman employed approximately
5,700 employees, excluding those employed on a part-time or
temporary basis. Brown-Forman Corporation is committed to
equality of opportunity in all aspects of employment. It has been,
and will continue to be, the policy of Brown-Forman to provide full
and equal employment opportunities to all employees and potential
employees without regard to race, color, religion, national or ethnic
origin, veteran status, age, gender, gender identity or expression,
sexual orientation, genetic information, physical or mental disability,
or any other legally protected status. It is also the policy of
Brown-Forman to take affirmative action to employ and to advance
in employment all persons regardless of race, color, religion, national
or ethnic origin, veteran status, age, gender, gender identity or
expression, sexual orientation, genetic information, physical or
mental disability, or any other legally protected status, and to base
all employment decisions only on valid job requirements. This policy
applies to all terms, conditions, and privileges of employment,
such as those pertaining to selection, training, transfer, promotion,
compensation, and educational assistance programs.
Form 10-K
Our 2024 Form 10-K is included with this 2024 Integrated Annual
Report in its entirety, except for exhibits. Interested stockholders may
obtain without charge a copy of our 2024 Form 10-K, or a copy of any
exhibit, upon written request to: Investor Relations, Brown-Forman
Corporation, 850 Dixie Highway, Louisville, Kentucky 40210. The
2024 Form 10-K can also be downloaded from the company’s website
at www.brown-forman.com. Click on the “Investors” section of the
website and then on Financial Reports & Filings to view the 2024 Form
10-K and other important documents.
Forward-Looking Statements
The 2024 Integrated Annual Report and the embedded electronic
content referenced herein contain “forward-looking statements” as
defined under U.S. federal securities laws. By their nature, forward-
looking statements involve risks, uncertainties, and other factors
(many beyond our control) that could cause our actual results to
differ materially from our historical experience or from our current
expectations or projections. Except as required by law, we do not intend
to update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise. For a description of
these risks and uncertainties, please see “Forward-Looking Statement
Information,” which precedes Part I, Item 1, Business, as well as Item 1A,
Risk Factors, of the 2024 Form 10-K included with this 2024 Integrated
Annual Report.
Use of Non-GAAP Financial Information
Certain matters discussed in this 2024 Integrated Annual Report
include measures not derived in accordance with generally accepted
accounting principles (“GAAP”), including “return on average invested
capital” and organic changes in income statement line items.
Reconciliations of these measures to the most closely comparable GAAP
measures, and reasons for the company’s use of these measures, are
presented in Part II, Item 7, around “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” under the heading
“Non-GAAP Financial Measures” of the Form 10-K included with this 2024
Integrated Annual Report.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Stock Performance Graph
This graph compares the cumulative total shareholder return of our
Class B Common Stock against the total return of the Standard & Poor’s
(S&P) 500 Index and the S&P 500 Consumer Staples Index. The graph
assumes $100 was invested on April 30, 2019, and that all dividends were
reinvested. The cumulative returns shown on the graph represent the
value that these investments would have had on April 30 in the years
since 2019.
2019
2020
2021
2022
2023
2024
Brown-Forman
Corporation
$100
$118
$146
$132
$129
$ 96
S&P 500 Index
$100
$101
$147
$148
$151
$186
S&P 500 Consumer
Staples Index
$100
$104
$127
$148
$152
$155
Environmental Stewardship
As a responsible corporate citizen, Brown-Forman is committed to
environmental sustainability. Our efforts focus primarily on climate
action, water stewardship, circular economy,
and supply chain. This 2024 Integrated Annual
Report is printed on FSC®-certified paper.
Indexed Total Shareholder Return
as of April 30, 2024, dividends reinvested
34 Brown-Forman
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-00123
BROWN-FORMAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
61-0143150
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
850 Dixie Highway
Louisville, Kentucky
40210
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code (502) 585-1100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Class A Common Stock (voting), $0.15 par value
BFA
New York Stock Exchange
Class B Common Stock (nonvoting), $0.15 par value
BFB
New York Stock Exchange
1.200% Notes due 2026
BF26
New York Stock Exchange
2.600% Notes due 2028
BF28
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value, as of the last business day of the most recently completed second fiscal quarter, of the voting and nonvoting equity held by
nonaffiliates of the registrant was approximately $19,400,000,000.
The number of shares outstanding for each of the registrant’s classes of Common Stock on June 10, 2024, was:
Class A Common Stock (voting), $0.15 par value
169,123,305
Class B Common Stock (nonvoting), $0.15 par value
303,536,661
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant’s Proxy Statement for use in connection with the Annual Meeting of Stockholders to be held July 25, 2024, are incorporated by reference
into Part III of this report.
Table of Contents
PART I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Item 1A.
Risk Factors
15
Item 1B.
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
Item 1C.
Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
PART II
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Item 6.
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . .
29
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
Item 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . .
86
Item 9A.
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
Item 9B.
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
PART III
Item 10.
Directors, Executive Officers, and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
Item 11.
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . .
87
Item 13.
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . .
87
Item 14.
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
PART IV
Item 15.
Exhibits and Financial Statements Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
Item 16.
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90
SIGNATURES
91
SCHEDULE II – Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
2
Forward-Looking Statement Information. Certain matters discussed in this report, including the information presented
in Part II under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contain
statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws.
Words such as “aim,” “ambition,” “anticipate,” “aspire,” “believe,” “can,” “continue,” “could,” “envision,” “estimate,”
“expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,”
“would,” and similar words indicate forward-looking statements, which speak only as of the date we make them. Except as
required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information,
future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many
beyond our control) that could cause our actual results to differ materially from our historical experience or from our current
expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part I under
“Item 1A. Risk Factors” and those described from time to time in our future reports filed with the Securities and Exchange
Commission, including:
•
Our substantial dependence upon the continued health of the Jack Daniel’s family of brands
•
Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products,
or result in higher fixed costs
•
Disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers
•
Changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor
of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our
ability to anticipate or react to them; further legalization of marijuana; bar, restaurant, travel, or other on-premise declines;
shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions,
package changes, product reformulations, or other product innovation
•
Substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities,
such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing,
category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks
•
Production facility, aging warehouse, or supply chain disruption
•
Imprecision in supply/demand forecasting
•
Higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor
•
Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration,
termination difficulties or costs, or impairment in recorded value
•
Impact of health epidemics and pandemics, and the risk of the resulting negative economic impacts and related
governmental actions
•
Unfavorable global or regional economic conditions and related economic slowdowns or recessions, low consumer
confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity
measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension
assets, or lower discount rates for pension obligations
•
Product recalls or other product liability claims, product tampering, contamination, or quality issues
•
Negative publicity related to our industry, company, products, brands, marketing, executive leadership, employees, Board
of Directors, family stockholders, operations, business performance, or prospects, including labor strikes and work
stoppages
•
•
Risks associated with being a U.S.-based company with a global business, including commercial, political, and financial
risks; local labor policies and conditions, including labor strikes and work stoppages; protectionist trade policies, or
economic or trade sanctions, including additional retaliatory tariffs on American whiskeys and the effectiveness of our
actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and
other regulations;
•
Failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations
•
Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
Changes in laws, regulatory measures, or governmental policies, especially those affecting production, exportation,
importation, marketing and promotion, labeling, pricing, distribution, sale, or consumption of our beverage alcohol
products
•
Tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export
duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability
and suddenness with which they can occur
•
Decline in the social acceptability of beverage alcohol in significant markets
•
Significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products
•
Counterfeiting and inadequate protection of our intellectual property rights
•
Significant legal disputes and proceedings, or government investigations
3
•
Cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or
direct and indirect business partners, or failure to comply with personal data protection laws
•
Our status as a family “controlled company” under New York Stock Exchange rules, and our dual-class share structure
Use of Non-GAAP Financial Information. Certain matters discussed in this report, including the information presented
in Part II under “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,” include
measures that are not measures of financial performance under U.S. generally accepted accounting principles (GAAP). These
non-GAAP measures should not be considered in isolation or as a substitute for any measure derived in accordance with
GAAP, and also may be inconsistent with similarly titled measures presented by other companies. In Part II under “Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations,” we present the reasons we use these
measures under the heading “Non-GAAP Financial Measures,” and we reconcile these measures to the most closely comparable
GAAP measures under the heading “Results of Operations.”
PART I
Item 1. Business
Overview
Brown-Forman Corporation (the “Company,” “Brown-Forman,” “we,” “us,” or “our” below) was incorporated under the
laws of the State of Delaware in 1933, successor to a business founded in 1870 as a partnership and later incorporated under the
laws of the Commonwealth of Kentucky in 1901. We primarily manufacture, distill, bottle, import, export, market, and sell a
wide variety of beverage alcohol products under recognized brands. We employ approximately 5,700 people (excluding
individuals who work on a part-time or temporary basis) on six continents, including approximately 2,600 people in the United
States (approximately 13% of whom are represented by a union) and 1,100 people in Louisville, Kentucky, USA, home of our
world headquarters. According to International Wine & Spirit Research (IWSR), we are the largest American-owned spirits and
wine company with global reach. We are a “controlled company” under New York Stock Exchange rules because the Brown
family owns more than 50% of our voting stock.
For a discussion of recent developments, see “Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations – Executive Summary.”
Brands
Beginning in 1870 with Old Forester Kentucky Straight Bourbon Whisky – our founding brand – and spanning the
generations since, we have built a portfolio of more than 40 spirit, ready-to-drink (RTD) cocktail, and wine brands that includes
some of the best-known and most loved trademarks in our industry. The most important and iconic brand in our portfolio is
Jack Daniel’s Tennessee Whiskey, the #1 selling American whiskey in the world.1 Jack Daniel’s Tennessee Whiskey was
recently named the most valuable spirits brand in the world in the 2023 Interbrand “Best Global Brands” rankings, and the
newly released Glenglassaugh Sandend was named the “2023 Whisky of the Year” by Whisky Advocate. Our premium
bourbons, Woodford Reserve and Old Forester, were once again selected for the Impact “Hot Brands”2 list, marking eleven and
six consecutive years on the list, respectively, as were Jack Daniel's RTDs.
4
Principal Brands
Jack Daniel's Tennessee Whiskey
el Jimador Tequilas5
Jack Daniel's RTD3
el Jimador New Mix RTD
Jack Daniel's Tennessee Honey
Herradura Tequilas9
Gentleman Jack Rare Tennessee Whiskey
Korbel California Champagnes6
Jack Daniel's Tennessee Apple
Korbel California Brandy6
Jack Daniel's Tennessee Fire
Sonoma-Cutrer California Wines7
Jack Daniel's Single Barrel Collection4
Old Forester Whiskey Row Series
Jack Daniel's Bonded Tennessee Whiskey
Old Forester Kentucky Straight Bourbon Whisky
Jack Daniel's Sinatra Select
Old Forester Kentucky Straight Rye Whisky
Jack Daniel’s Winter Jack
Finlandia Vodkas8
Jack Daniel's Tennessee Rye
The Glendronach Single Malt Scotch Whiskies9
Jack Daniel's Triple Mash Blended Straight Whiskey
Glenglassaugh Single Malt Scotch Whiskies9
Jack Daniel's Bottled-in-Bond
Benriach Single Malt Scotch Whiskies9
Jack Daniel's American Single Malt
Diplomático Rums9
Jack Daniel’s 12 Year Old
Chambord Liqueur
Jack Daniel’s 10 Year Old
Gin Mare9
Woodford Reserve Kentucky Bourbon
Fords Gin
Woodford Reserve Double Oaked
Slane Irish Whiskey
Woodford Reserve Batch Proof
Coopers' Craft Kentucky Bourbon
Woodford Reserve Kentucky Rye Whiskey
Woodford Reserve Baccarat Edition
1IWSR 2023 Data.
2Impact Databank, March 2024.
3Jack Daniel's RTD includes Jack Daniel's & Cola, Jack Daniel’s & Coca-Cola RTD, Jack Daniel's Country Cocktails, Jack Daniel's
Double Jack, and other malt- and spirit-based Jack Daniel’s RTDs.
4The Jack Daniel's Single Barrel Collection includes Jack Daniel's Single Barrel Select, Jack Daniel's Single Barrel Barrel Proof, Jack
Daniel's Single Barrel Rye Barrel Proof, and other Jack Daniel’s Single Barrel special-release expressions.
5el Jimador Tequilas comprise all full-strength expressions of el Jimador.
6Korbel is not an owned brand. We sell Korbel products under contract in the United States and other select markets.
7Sonoma-Cutrer California Wines was divested on April 30, 2024.
8Finlandia Vodka was divested on November 1, 2023.
9Comprises all expressions of this brand.
See “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of
Operations – Fiscal 2024 Brand Highlights” for brand performance details.
Our vision in marketing is to be the best brand-builder in the industry. We build our brands by investing in platforms that
we believe create enduring connections with our consumers. These platforms cover a wide spectrum of activities, including
media advertising (TV, radio, print, outdoor, digital, and social), consumer and trade promotions, sponsorships, and visitors'
center programs at our distilleries. We aim to grow our sales and profits by consistently delivering creative, responsible
marketing programs that drive brand recognition, brand trial, brand loyalty, and, ultimately, consumer demand around the
world.
5
Markets
We sell our products in over 170 countries. The United States, our most important market, accounted for 45% of our net
sales in fiscal 2024 and the other 55% were outside of the United States. The table below shows the percentage of total reported
net sales for our top markets in our three most recent fiscal years:
Percentage of Total Reported Net Sales by Geographic Area
Year ended April 30
2022
2023
2024
United States
49 %
47 %
45 %
Mexico
5 %
6 %
7 %
Germany
6 %
6 %
6 %
Australia
6 %
5 %
5 %
United Kingdom
6 %
5 %
4 %
Other
28 %
31 %
32 %
TOTAL
100 %
100 %
100 %
Note: Totals may differ due to rounding
For details about net sales in our top markets, see “Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations – Results of Operations – Fiscal 2024 Market Highlights.” For details about our reportable segment
and for additional geographic information about net sales and long-lived assets, see Note 19 to the Consolidated Financial
Statements in “Item 8. Financial Statements and Supplementary Data.” For details on risks related to our global operations, see
“Item 1A. Risk Factors.”
Distribution Network and Customers
Our distribution network, or our “route to consumer” (RTC), varies depending on (a) the laws and regulatory framework
for trade in beverage alcohol by market, (b) our assessment of a market's long-term attractiveness and competitive dynamics,
(c) the relative profitability of distribution options available to us, (d) the structure of the retail and wholesale trade in a market,
and (e) our portfolio's development stage in a market. As these factors change, we evaluate our RTC strategy and, from time to
time, adapt our model.
In the United States, which generally prohibits spirits and wine manufacturers from selling their products directly to
consumers, we sell our brands either to distributors or to state governments (in states that directly control alcohol sales) that
then sell to retail customers and consumers.
Outside the United States, we use a variety of RTC models, which can be grouped into three categories: owned
distribution, partner, and government-controlled markets. We own and operate distribution companies for Australia, Belgium
and Luxembourg, Brazil, Czechia, France, Germany, Japan, Mexico, Poland, Slovakia, South Korea, Spain, Taiwan, Thailand,
Türkiye, and the United Kingdom. In these owned-distribution markets, and in a large portion of the Travel Retail channel, we
sell our products directly to retailers or wholesalers. In many other markets, we rely on third parties to distribute our brands,
generally under fixed-term distribution contracts. In Canada, we sell our products to provincial governments.
We believe that our customer relationships are good and that our exposure to concentrations of credit risk is limited due to
the diverse geographic areas covered by our operations and our thorough evaluation of each customer. In fiscal 2024, our two
largest customers accounted for approximately 13% and 11% of consolidated net sales, respectively. No other customer
accounted for 10% or more of our consolidated net sales in fiscal 2024.
Seasonality
Holiday buying makes the fourth calendar quarter the peak season for our business. Approximately 29%, 27%, and 28%
of our reported net sales for fiscal 2022, fiscal 2023, and fiscal 2024, respectively, were in the fourth calendar quarter.
6
Competition
Trade information indicates that we are one of the largest global suppliers of premium spirits. According to IWSR, for
calendar year 2023, the ten largest global spirits companies controlled over 20% of the total spirits volume sold around the
world. While we believe that the overall market environment offers considerable growth opportunities for us, our industry is,
and will remain, highly competitive. We compete against many global, regional, and local brands in a variety of categories of
beverage alcohol, but our brands compete primarily in the industry's premium-and-above price points. Our competitors include
major global spirits and wine companies, such as Bacardi Limited, Becle S.A.B. de C.V., Davide Campari-Milano N.V., Diageo
PLC, LVMH Moët Hennessy Louis Vuitton SE, Pernod Ricard SA, Rémy Cointreau, and Suntory Global Spirits. In addition,
particularly in the United States, we compete with national companies and craft spirit brands, many of which entered the market
in the last few years.
Brand recognition, brand provenance, quality of product and packaging, availability, flavor profile, and price affect
consumers' choices among competing brands in our industry. Other factors also influence consumers, including advertising,
promotions, merchandising at the point of sale, expert or celebrity endorsement, social media and word of mouth, and the
timing and relevance of new product introductions. Although some competitors have substantially greater resources than we do,
we believe that our competitive position is strong, particularly as it relates to brand awareness, quality, availability, and
relevance of new product introductions.
Ingredients and Other Supplies
The principal raw materials used in manufacturing and packaging our distilled spirits, liqueurs, RTD products, and wines1
are shown in the table below.
Principal Raw Materials
Distilled Spirits
Liqueurs
RTD Products
Wines1
Packaging
Agave
Flavorings
Carbon dioxide
Grapes
Aluminum cans
Barley
Neutral spirits
Flavorings
Wood
Cartons
Corn
Sugar
Malt
Closures
Malted barley
Water
Neutral spirits
Glass bottles
Molasses
Whiskey
Sugar
Labels
Rye
Wine
Tequila
PET2 bottles
Sugar
Water
Water
Whiskey
Wood
1Sonoma-Cutrer California Wines was divested on April 30, 2024.
2Polyethylene terephthalate (PET) is a polymer used in non-glass containers.
None of these raw materials are in short supply, but shortages could occur in the future. From time to time, our
agricultural ingredients (agave, barley, corn, grapes1, malted barley, molasses, rye, sugar, and wood) could be adversely
affected by weather and other forces out of our control that might constrain supply or reduce our inventory below desired levels
for optimum production.
Whiskeys, certain tequilas, rums, and some other distilled spirits must be aged. Because we must produce these distilled
spirits years in advance to meet projected future demand, our inventories of these products may be larger in relation to sales and
total assets than in many other businesses.
For details on risks related to the unavailability of raw materials and the inherent uncertainty in forecasting supply and
demand, see “Item 1A. Risk Factors.”
Intellectual Property
Our intellectual property includes trademarks, copyrights, proprietary packaging and trade dress, proprietary
manufacturing technologies, know-how, and patents. Our intellectual property, especially our trademarks, is essential to our
business. We register our trademarks broadly around the world, focusing primarily on where we sell or expect to sell our
products. We protect our intellectual property rights vigorously but fairly. We have licensed some of our trademarks to third
parties for use with services or on products other than alcoholic beverages, which we believe enhances the awareness and
protection of our brands. Depending on the jurisdiction, trademarks are valid as long as they are in use and/or their registrations
are properly maintained. We also have various licenses and distribution agreements for the production, sale, and marketing of
our products, and for the sale and marketing of products of others. These licenses and distribution agreements have varying
terms and durations.
7
For details on risks related to the protection of our intellectual property, see “Item 1A. Risk Factors.” For details on our
most important brands, see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations –
Results of Operations – Fiscal 2024 Brand Highlights.”
Regulatory Environment
Federal, state, local, and foreign authorities regulate how we produce, store, transport, distribute, market, and sell our
products. Some countries and local jurisdictions prohibit or restrict the marketing or sale of distilled spirits in whole or in part.
In the United States, at the federal level, the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the
Treasury regulates the spirits and wine industry with respect to the production, blending, bottling, labeling, advertising, sales,
and transportation of beverage alcohol. Similar regulatory regimes exist at the state level and in most non-U.S. jurisdictions
where we sell our products. In addition, beverage alcohol products are subject to customs duties, excise taxes, and/or sales taxes
in many countries, including taxation at the federal, state, and local level in the United States.
Many countries set their own distilling and maturation requirements. For example, under U.S. federal and state
regulations, bourbon and Tennessee whiskeys must be aged in new, charred oak barrels; we typically age our whiskeys at least
three years. Mexican authorities regulate the production and bottling of tequilas; they mandate minimum aging periods for extra
añejo (three years), añejo (one year), and reposado (two months). Irish whiskey must be matured at least three years in a wood
cask, such as oak, on the island of Ireland. Scotch whisky must be matured in oak casks for at least three years in Scotland. We
comply with all of the applicable laws and regulations.
Our operations are also subject to various environmental protection statutes and regulations, and our policy is to comply
with them. Complying with these statutes and regulations has not materially impacted our capital expenditures, earnings, or
competitive position, and is not expected to have a material impact during fiscal 2025.
8
Integrated Strategy and Performance
For more than 150 years, Brown-Forman and the Brown family have been committed to driving sustainable growth and
preserving Brown-Forman as a thriving, family-controlled, independent company. The image on the left illustrates our highest
ambition, “Nothing Better in the Market,” surrounded by the values that have guided us for decades: integrity, respect, trust,
teamwork, and excellence. In addition to these guiding principles, our success depends on several strategic priorities, as
illustrated in the image on the right: the quality of our brands within our portfolio, our geographic reach, the talent and diversity
of our people, and the return on our investments. Moreover, taking an integrated approach means that many aspects of our
company contribute to this value creation and are fundamental to our strategy, including our commitment to environmental
sustainability, alcohol and marketing responsibility, diversity and inclusion, and to building communities in which we live and
work. We call these efforts Living a Spirit of Commitment.
Over the past four fiscal years, we faced a challenging, volatile environment, including supply chain disruptions and a
global pandemic. Our employees' unique mix of agility, resilience, energy, and collaboration enabled us to succeed despite
these challenges. Our values drive our decisions, and our core purpose and our highest ambition continue to guide us as we
move forward to a reimagined future with renewed enthusiasm for the opportunities that lie ahead. We believe we are well
positioned to navigate the ever-changing landscape. We will make bold moves with a commitment to improve continuously as
we work together to deliver sustained long-term growth.
This Integrated Annual Report on Form 10-K for the fiscal year ended April 30, 2024, presents not only our financial
performance but also our environmental, social, and governance strategies, commitments, and results. It provides a more
holistic view of Brown-Forman, our culture, our strategic approach to our business, and how we achieve results.
Portfolio and Responsibility
We seek to build brands and create stockholder value responsibly by delivering strong, sustainable growth, solid margins,
and high returns on invested capital. We focus on building brands that can be meaningful for our company and our legal
drinking age consumers (consumers) over the longer term. We aim to grow our premium spirits portfolio both organically and
through innovation. Opportunistically and thoughtfully, we also consider acquisitions and partnerships that will enhance our
capacity to deliver meaningful growth, improve margins, and increase stockholder returns.
We strive to grow our brands and enhance consumers' experience with them. Even as we do so, we remain committed to
marketing our brands responsibly and promoting responsible drinking. Regulation of our industry is not new, and external
interest from the World Health Organization and other health bodies has grown over time. We uphold high standards of self-
regulation by adhering to industry guidelines on responsible marketing and advertising. We promote alcohol responsibility both
independently and with industry organizations such as the International Alliance for Responsible Drinking, the Foundation for
Advancing Alcohol Responsibility (responsibility.org) in the United States, the Portman Group in the United Kingdom,
DrinkWise in Australia, and FISAC in Mexico.
9
The Jack Daniel's family of brands, led by Jack Daniel's Tennessee Whiskey (JDTW), is our most valuable asset – the
engine of our overall financial performance and the foundation of our leadership position in the American whiskey category.1
We strive to strengthen the brand's leadership position continually, and will work steadfastly to keep JDTW relevant to
consumers worldwide. We will also pursue opportunities to grow the Jack Daniel's family of brands across markets, premium-
and-above price points, channels, and consumer groups. Product innovation continues to contribute meaningfully to our
performance. Different Jack Daniel's expressions have brought new consumers to the franchise, including Jack Daniel's
Tennessee Honey (2011), Jack Daniel's Tennessee Fire (2015), Jack Daniel's Tennessee Apple (2019), Jack Daniel's Bonded
Tennessee Whiskey and Triple Mash Blended Straight Whiskey (2022), and our most recent launches, Jack Daniel’s Bonded
Tennessee Rye Whiskey and Jack Daniel’s American Single Malt (2023), which individually and collectively add great value to
the company and to our consumers the world over.
In addition to the leadership of our Jack Daniel's family of brands, we expect strong worldwide growth from our other
whiskey brands, particularly Woodford Reserve and Old Forester. Woodford Reserve is the leading super-premium American
whiskey globally,1 growing volumes at a strong double-digit compound annual growth rate since the brand was introduced over
25 years ago. Woodford Reserve sold over 1.7 million nine-liter cases for the fiscal year ended April 30, 2024. We believe the
brand is poised for continued growth as the bourbon category continues to grow around the world. Old Forester has continued
its return to prominence in the United States and in select international markets. Innovation has played an important role in the
premiumization of both of these brands, including the success of high-end expressions such as Woodford Reserve Double
Oaked and the Old Forester Whiskey Row Series.
Outside of our American whiskey brands, we believe our portfolio remains well positioned in other high-growth
categories, with meaningful premium brands and a focus on accelerating our super-premium portfolio. Our tequila portfolio is
led by two brands steeped in Mexican heritage, Herradura and el Jimador. Despite the cyclical cost pressures of agave, we
remain committed to the growth of our tequila business in the United States and the long-term growth prospects of this business
globally. We believe that our Scotch whiskies The Glendronach, Benriach, and Glenglassaugh, and our Irish whiskey, Slane,
are well-positioned in their respective categories. We expect them all to contribute meaningfully over the longer term. In
addition, the acquisitions of Gin Mare (2022) and Diplomático (2023) provide us with leadership positions in the super-
premium-and-above gin and rum categories, respectively, and we look to grow these brands globally.
Our RTD portfolio continues to evolve globally. In June 2022, we jointly announced a global relationship with The Coca-
Cola Company to introduce the iconic Jack & Coke cocktail as a branded, ready-to-drink, pre-mixed cocktail. Since the
announcement, we have launched the product in over 25 markets, including the top RTD markets such as the United States,
Japan, the United Kingdom, Mexico, and Germany. Jack Daniel's Country Cocktails in the United States are produced, sold,
and distributed under our relationship with the Pabst Brewing Company.
We appreciate the power of our brands to enrich the experience of life, and we believe it is our duty to ensure that our
products are marketed with deep respect for our consumers. Our mission for alcohol responsibility is to empower mindful
choices around beverage alcohol. We launched the Pause campaign in 2019. Pause is Brown-Forman’s driving effort to
encourage mindful choices. In 2022, we launched our 2030 Alcohol Responsibility strategy to prioritize strategic programs and
partnerships, in-market tools and resources, and to continue empowering our employees and business partners. We execute our
2030 Alcohol Responsibility strategy through the lens of our Pause campaign to showcase the importance of alcohol
responsibility and inspire action among our consumers, colleagues, and business partners.
Geography
The United States remains our largest market, and growth there is important to our long-term success. We expect to foster
this growth by emphasizing fast-growing spirits categories, continuing product and packaging innovation, and building brands
within growing consumer segments. This includes increasing emphasis on inclusive, digital, and integrated marketing and the
growth of our e-commerce capabilities to better connect and engage with consumers where they are.
Outside the United States, our improved routes to consumers continue to increase our competitiveness. In fiscal 2024, we
established our owned-distribution organizations in Japan and Slovakia; and announced plans to distribute our own brands in
Italy, effective May 1, 2025. More direct connection with customers and consumers enabled through owned distribution is an
important part of our strategic growth.
10
1 IWSR 2023 Data
People, Diversity & Inclusion, and Ethics & Compliance
As we work to increase our brands' relevance and appeal to diverse consumer groups around the world, we believe a
diversity of experiences, perspectives, and mindsets within our own workforce is essential. Our vision is to create an
environment where leveraging diversity and fostering inclusion occurs naturally, giving us a sustainable marketplace advantage.
By 2030, we aspire to have 50% women in professional- and leader-level roles globally, 40% women in senior leadership
positions globally, 25% people of color in our United States workforce, and 6% self-identified LGBTQ+ employees in our
United States workforce. Also by 2030, we aspire for 16% of our supplier spend to be with businesses that are woman- or
minority-owned in locations such as the United States, the United Kingdom, and Australia. For more than a decade, we have
earned a perfect score in the Corporate Equality Index, a national benchmarking survey and report on corporate policies and
practices related to LGBTQ+ workplace equality administered by the Human Rights Campaign Foundation. We also extended
our diversity and inclusion commitment more deeply in our communities, especially our hometown of Louisville, Kentucky.
One of the main drivers of our inclusive culture is the continued growth and leadership of our ten Employee Resource
Groups (ERGs). We believe ERGs are instrumental in enriching our company's culture and our employees experience by:
•
supporting development and engagement of our diverse workforce;
•
driving cultural awareness and competency across the organization;
•
enabling authentic engagement with our consumers; and
•
creating spaces for our employees and their allies to connect with, support, and advocate for one another.
Our core values of integrity, respect, trust, teamwork, and excellence form the foundation of our ethics and compliance
program. “Values Drive Decisions” is the key theme of this program, and we use it to teach our employees to rely on our values
when faced with a difficult decision and to “speak up” if they believe they, a colleague, or a business partner may have violated
the law, our Code of Conduct, or company policy. In 46 countries, we offer a third-party service to employees and others who
choose to “speak up” anonymously. As we train our managers, we reinforce our commitment to non-retaliation and maintaining
a “speak up” culture.
We convey our compliance expectations to employees via our Code of Conduct, and our employees certify annually that
they will comply with it and report potential violations. The Code of Conduct details expectations for 20 different risks; links to
Q&A, policies, and training; and gives contact details for subject-matter experts. We refresh our Code of Conduct and
certification annually and make them available in 12 languages.
Investment and Sustainability
For over a century and a half, we have learned that long-term success requires investment and a mindset of sustainability.
We understand the need to invest in our brands, global supply chain facilities, homeplace and visitor centers, and aging
inventory. For example, in May 2023, we announced a $200 million capital investment to expand our Casa Herradura tequila
distillery to meet anticipated consumer demand. Additionally, during fiscal 2022, we announced a £30 million expansion of our
The Glendronach distillery to meet strong demand. We also understand the importance of investing in our people, communities,
and the environment. We recognize that climate change is a business issue with risks and opportunities. As such, we are
committed to actions that will ensure the long-term health of the planet and our business. In fiscal 2021, we established a new
2030 Sustainability Strategy to align our efforts with industry best practices and the most current climate science. Our goals
broaden our focus beyond business operations to include our supply chain, where the majority of our environmental footprint
resides. With this evolving strategy, we have a roadmap for continued progress over the next quarter-century.
11
Our continued investments in renewable energy and resource stewardship underscore our long-term focus:
•
Renewable Electricity: In fiscal 2024, we installed a rooftop solar system at our Newbridge bottling plant in
Edinburgh, Scotland, in partnership with YLEM Energy, and our Slane Distillery signed a Corporate Power
Purchase Agreement with Flogas Enterprise for renewable electricity from a wind farm in Ireland.
•
Byproducts to Energy: In fiscal 2024, construction continued on the anaerobic digester at the Jack Daniel Distillery
that will convert a portion of the distillery byproducts to renewable energy and fertilizer. The project is expected to
become operational in fiscal 2025.
•
Water Stewardship: In fiscal 2024, we continued our work with Waterplan to improve the measurement of water-
related risk at eight of our facilities and to identify opportunities for water efficiency improvements and water reuse
at our Casa Herradura facility. We will expand this collaboration in fiscal 2025 to begin measuring water risk in our
supply chain and further enhance our water stewardship program.
•
Sustainable Agriculture: In June 2023, our Woodford Reserve Distillery announced a five-year commitment to
purchase the rye grown by Kentucky farmers as part of the Rye in Kentucky research being led by the University of
Kentucky. In fiscal 2024, we met our target to engage with 100% of our direct farmers on regenerative agriculture
practices, and will continue engaging with direct farmers in fiscal 2025.
•
Sustainable Forestry: In June 2023, the Jack Daniel Seed Orchard and our continued relationship with the
University of Tennessee celebrated its 25th anniversary. In December 2023, the Tennessee Forestry Association,
supported by Jack Daniel’s, announced that it received a grant from the National Fish and Wildlife Federation to
engage with family forest landowners on sustainable management practices to improve Tennessee’s shortleaf pine
and white oak forests.
Community
We believe we are a responsible and caring corporate citizen and invest in the communities where employees live and
work. We encourage employees to participate in philanthropic outreach efforts by giving their time and talents to support those
non-profit organizations most meaningful to them. This civic engagement, as well as our philanthropic contributions, further
promotes Brown-Forman’s caring culture and commitment to the community.
We continue to expand our civic engagement in Brown-Forman global office locations, allowing those employees closest
to the needs of their communities to decide how to invest their charitable-giving resources. We leverage our key community
relations partners to stay informed of collaborative opportunities where we work and live and to shape our charitable-giving
strategy to meet the essential needs of the communities that sustain us. We created the Brown-Forman Foundation (the
Foundation) in fiscal year 2018 to help fund our ongoing philanthropic endeavors, with an emphasis on the communities
surrounding Brown-Forman’s headquarters in Louisville, KY. The Foundation's resources provide a consistent source of
support for charitable giving independent of our annual earnings. We work to partner with organizations that support our key
focus areas: empowering responsible and sustainable living, ensuring essential living standards, and enhancing arts and cultural
living. As part of our commitment to be better and do better as neighbors and as corporate citizens, the Brown-Forman
Foundation made a 10-year, $50 million commitment to five organizations in west Louisville in fiscal year 2022, which is the
12
largest investment in its history. Our partner organizations include AMPED, the Louisville Central Community Center, the
Louisville Urban League, Simmons College of Kentucky, and the West End School. Together, these organizations will advance
educational opportunities from early childhood through adult learning.
We believe that having a long-term-focused, committed, and engaged stockholder base, anchored by the Brown family,
gives us a distinct strategic advantage, particularly in a business with multi-generational brands and products that must be aged.
We are committed to continually improving our environmental, social, and governance performance and acting upon our deeply
held values. Recognizing the strong cash-generating capacity and the capital efficiency of our business, we will continue to
pursue top-tier stockholder return through stockholder-friendly capital allocation and socially and environmentally conscious
investments to fuel long-term growth.
Human Capital Resources
Overview
We put our values at the forefront of all our decisions and actions in an effort to make our employees feel respected, safe,
and supported so they can make, market, and sell our products with the finest craftsmanship, quality, and care. What enables
our success are the approximately 5,700 people (excluding individuals that work on a part-time or temporary basis) we employ
in over 45 countries around the world. This includes approximately 3,600 salaried employees and 2,100 hourly employees, with
the largest percentage of our employees residing within the United States, Mexico, and the United Kingdom. We believe our
employee relations are good and our turnover rate is low.
Total Rewards
We strive to pay our employees fairly and competitively. Each fiscal year, we review the compensation for all salaried
roles both internally and externally, ensuring that every employee is paid fairly compared to each other and competitively
against the market. All roles are priced based on compensation survey data for the market where the employee resides. We will
continue to refresh our data and monitor pay equity annually.
Talent Development
We continually seek opportunities to develop our employees to ensure that we have the capabilities to grow our business.
We do this through a combination of succession planning, planned learning, short-term assignments, international opportunities,
and thoughtful talent management. Given our low turnover, we are intentional about moving employees through new roles,
ensuring that they have the opportunity to learn new skills. We track all internal movement and are comfortable that we are
providing an appropriate level of growth and development for our employees.
Diversity & Inclusion
We are continuing to pursue our 2030 Diversity & Inclusion ambitions, as outlined in our Many Spirits, One Brown-
Forman strategy. We remain focused on ensuring our workforce mirrors the consumers and communities we serve. We
regularly monitor our progress with women in senior leadership globally, and people of color and LGBTQ+ salaried employees
in the United States. We track promotion and lateral movement by gender (globally) and ethnicity (in the United States) and,
based on that data, we can confirm that our growth opportunities for women and people of color are proportional to our salaried
employee population.
To support our culture of inclusion, we have continued to build awareness of the foundations of inclusive leadership and
inclusive behaviors. We also have ten ERGs that help foster an inclusive environment across the organization.
Workforce Stability
We have historically enjoyed low turnover among our salaried population and continue to track our departures, given the
acceleration in the job market in recent years. We analyze our quantitative and qualitative attrition data each quarter, and our
voluntary turnover among salaried employees remains consistent with our historical levels. We will continue to monitor our
data carefully.
13
Executive Officers
Information about Our Executive Officers
The following persons served as executive officers as of June 14, 2024:
Name
Age
Principal Occupation and Business Experience
Lawson E. Whiting
55 President and Chief Executive Officer since January 2019. Executive Vice President and Chief
Operating Officer from October 2017 to December 2018. Executive Vice President and Chief
Brands and Strategy Officer from February 2015 to September 2017. Senior Vice President and
Chief Brands Officer from January 2013 to January 2015.
Matias Bentel
49 Executive Vice President and Chief Brands Officer since March 2023. Senior Vice President and
Chief Brands Officer from January 2020 to March 2023. Senior Vice President and Managing
Director of Jack Daniel’s Family of Brands from August 2018 to January 2020. Vice President and
General Manager of Mexico from January 2016 to August 2018. Vice President Latin America
Marketing and Chief of Staff from October 2009 to January 2016.
Michael E. Carr, Jr.
44 Executive Vice President, General Counsel and Secretary since May 2024. Vice President,
Associate General Counsel - Regional and Corporate Development from October 2022 to April
2024. Vice President, Associate General Counsel - Europe from May 2018 to October 2022. Vice
President, Managing Attorney and Assistant Corporate Secretary from September 2013 to May
2018.
Leanne D.
Cunningham
54 Executive Vice President and Chief Financial Officer since March 2023. Senior Vice President and
Chief Financial Officer from July 2021 to March 2023. Senior Vice President, Shareholder
Relations Officer, Global Commercial Finance, and Financial Planning and Analysis from August
2020 to July 2021. Senior Vice President, Shareholder Relations Officer from August 2019 to July
2020. Senior Vice President, and General Manager - Brown-Forman Brands from May 2015 to July
2019. Vice President, Director of Finance Global Production from October 2013 to April 2015.
Marshall B. Farrer
53 Executive Vice President, Chief Strategic Growth Officer since March 2024. Executive Vice
President, Chief Strategic Growth Officer and President Europe from January 2023 to March 2024.
Senior Vice President, President Europe from August 2020 to January 2023. Senior Vice President,
Managing Director, Global Travel Retail and Developed APAC Region from August 2018 to July
2020. Senior Vice President, Managing Director, Global Travel Retail from May 2015 to July 2018.
Vice President, Managing Director, Jack Daniel’s Tennessee Honey from January 2014 to April
2015.
Kirsten M. Hawley
54 Executive Vice President, Chief People, Places, and Communications Officer since March 2023.
Senior Vice President, Chief People, Places, and Communications Officer from May 2021 to March
2023. Senior Vice President, Chief Human Resources and Corporate Communications Officer from
March 2019 to April 2021. Senior Vice President and Chief Human Resources Officer from
February 2015 to February 2019. Senior Vice President and Director of Human Resources Business
Partnerships from August 2013 to January 2015.
Thomas W.
Hinrichs
62 Executive Vice President, President Emerging International since March 2023. Senior Vice
President, President Emerging International from August 2020 to March 2023. Senior Vice
President, President, International Division from June 2018 to July 2020. Senior Vice President and
President for Europe, North Asia, and ANZSEA from February 2015 to June 2018. Senior Vice
President and Managing Director for Europe from January 2013 to January 2015.
Timothy M. Nall
53 Executive Vice President, Chief Global Supply Chain and Technology Officer since March 2023.
Senior Vice President, Chief Global Supply Chain and Technology Officer from March 2022 to
March 2023. Senior Vice President, Chief Information and Advanced Analytics Officer from
January 2015 to February 2022. Vice President Director Technical Services from May 2013 to
December 2014.
Yiannis Pafilis
53 Executive Vice President and President, Europe since March 2024. Senior Vice President,
Managing Director of Germany, Czechia, Poland and Europe Commercial Strategy from September
2023 to February 2024. Vice President, Managing Director of Germany, Czechia, Poland and
Europe Strategy from October 2022 to August 2023. Vice President, Managing Director of
Germany, Czechia and Europe Commercial Strategy from August 2020 to September 2022. Vice
President, General Manager of Germany and Czechia from September 2017 to July 2020. General
Manager of Russia from July 2014 to August 2017.
Crystal L. Peterson
53 Executive Vice President, Chief Inclusion and Global Community Relations Officer since March
2023. Senior Vice President, Chief Inclusion and Global Community Relations Officer from June
2022 to March 2023. Vice President and Chief Diversity Officer from February 2022 to June 2022.
Vice President and Human Resources Director - Global Production, Diversity and Inclusion from
March 2021 to January 2022. Vice President and Human Resources Director - Global Production
from August 2017 to February 2021. Vice President and Human Resources Director - North
America Region from May 2015 to July 2017. Human Resources Director - North America Region
and Latin America Region from May 2013 to April 2015.
14
Name
Age
Principal Occupation and Business Experience
Jeremy J. Shepherd
49 Executive Vice President, President USA & Canada since March 2023. Senior Vice President,
President USA & Canada from July 2022 to March 2023. Vice President, General Manager for the
United Kingdom & Ireland from January 2018 to July 2022. Vice President Director Midwest
Division from May 2015 to December 2017. Portfolio Integration Director from September 2014 to
May 2015.
Kelli N. Brown
54 Senior Vice President and Chief Accounting Officer since August 2018. Vice President and Director
Finance (North America Region) from May 2015 to August 2018. Director NAR Division Finance
(North America Region) from November 2013 to April 2015.
Available Information
Our website address is www.brown-forman.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and any amendments to these reports are available free of charge on our website as soon as
reasonably practicable after we electronically file those reports with the Securities and Exchange Commission (SEC). The
information provided on our website, and any other website referenced herein, is not part of this report, and is therefore not
incorporated by reference into this report or any other filing we make with the SEC, unless that information is otherwise
specifically incorporated by reference.
On our website, we have posted our Code of Conduct that applies to all our directors and employees, and our Code of
Ethics that applies specifically to our senior financial officers. If we amend or waive any of the provisions of our Code of
Conduct or our Code of Ethics applicable to our principal executive officer, principal financial officer, or principal accounting
officer that relates to any element of the definition of “code of ethics” enumerated in Item 406(b) of Regulation S-K under the
Securities Exchange Act of 1934 Act, as amended, we intend to disclose these actions on our website. We have also posted on
our website our Corporate Governance Guidelines and the charters of our Audit Committee, Compensation Committee,
Corporate Governance and Nominating Committee, and Executive Committee of our Board of Directors. Copies of these
materials are available free of charge by writing to our Secretary at 850 Dixie Highway, Louisville, Kentucky 40210 or
emailing Secretary@b-f.com.
Item 1A. Risk Factors
We believe the following discussion identifies the material risks and uncertainties that could adversely affect our business.
If any of the following risks were actually to occur, our business, results of operations, cash flows, or financial condition could
be materially and adversely affected. Additional risks not currently known to us, or that we currently deem to be immaterial,
could also materially and adversely affect our business, results of operations, cash flows, or financial condition.
Risks Related to Our Business and Operations
Our business performance depends substantially on the continued health of the Jack Daniel's family of brands.
The Jack Daniel's family of brands is the primary driver of our revenue and Jack Daniel's is an iconic global trademark
with a loyal consumer fan base. We invest much effort and many resources to protect and preserve the brand's reputation for
authenticity, craftsmanship, and quality. A brand's reputational value is based in large part on consumer perceptions, and even
an isolated incident that causes harm – particularly one resulting in widespread negative publicity – could adversely influence
these perceptions and erode consumer trust and confidence in the brand. Significant damage to the brand equity of the Jack
Daniel's family of brands would adversely affect our business. Given the importance of Jack Daniel's to our overall success, a
significant or sustained decline in volume or selling price of our Jack Daniel's products, as a result of negative publicity or
otherwise, would have a negative effect on our financial results. Additionally, if we are not successful in our efforts to maintain
or increase the relevance of the Jack Daniel's brand to current and future consumers, our business and operating results could
suffer. For details on the importance of the Jack Daniel's family of brands to our business, see “Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Fiscal 2024 Brand
Highlights.”
Changes to our route-to-consumer models and consolidation among beverage alcohol producers, distributors, wholesalers,
suppliers, and retailers, could hinder the marketing, sale, or distribution of our products.
We use various business models to market and distribute our products in different countries around the world. In the
United States, we sell our products either to distributors for resale to retail outlets or e-commerce retailers or, in those states that
control alcohol sales, to state governments who then sell them to retail customers and consumers. In our non-U.S. markets, we
use a variety of route-to-consumer models – including, in many markets, reliance on third parties to distribute, market, and sell
our products. We own and operate distribution companies for 16 international markets. Transitioning from a third-party
15
distribution model to an owned-distribution model involves a significant undertaking, and subjects us to risks associated with
that geographic region. If we are unsuccessful in our route-to-consumer strategies, including any transition to owned
distribution, the sale and marketing of our products could be disrupted.
Changes to any of our route-to-consumer models or distribution partners in important markets could result in temporary or
longer-term sales disruption, higher costs, and harm to other business relationships we might have with that partner. Disruption
of our distribution network or fluctuations in our product inventory levels at distributors, wholesalers, or retailers could
negatively affect our results for a particular period. Moreover, other suppliers, as well as wholesalers and retailers of our
brands, offer products that compete directly with ours for shelf space, promotional displays, and consumer purchases. Pricing
(including price promotions, discounting, couponing, and free goods), marketing, new product introductions, entry into our
distribution networks, and other competitive behavior by other suppliers, and by wholesalers and traditional and e-commerce
retailers, could adversely affect our growth, business, and financial results. While we seek to take advantage of the efficiencies
and opportunities that large retail customers can offer, they often seek lower pricing and increased purchase volume flexibility,
offer competing private label products, and represent a large number of other competing products. If the buying power of these
large retail customers continues to increase, it could negatively affect our financial results. Further, while we believe we have
sufficient scale to succeed relative to our major competitors, we nevertheless face a risk that continuing consolidation of large
beverage alcohol companies could put us at a competitive disadvantage.
Consolidation, whether domestically or internationally, among spirits producers, distributors, wholesalers, suppliers, or
retailers and the increased growth of the e-commerce environment across the consumer product goods market has created and
could continue to create a more challenging competitive landscape for our products. Consolidation at any level could hinder the
distribution and sale of our products as a result of reduced attention and resources allocated to our brands both during and after
transition periods, because our brands might represent a smaller portion of the new business portfolio. Furthermore,
consolidation of distributors may lead to the erosion of margins. Changes in distributors' strategies, including a reduction in the
number of brands they carry, the allocation of shelf space for our competitors' brands, or private label products, may adversely
affect our growth, business, financial results, and market share. Our competitors may respond to industry and economic
conditions and shifts in consumer behaviors more rapidly or effectively than we do. To remain competitive, we must be agile
and efficient in adopting digital technologies and building analytical capabilities, which our competitors may be able to achieve
with more agility and resources.
Changes in consumer preferences and purchases, any decline in the social acceptability of our products, or governmental
adoption of policies disadvantageous to beverage alcohol could negatively affect our business results.
We are a branded consumer products company in a highly competitive market, and our success depends substantially on
our continued ability to offer consumers appealing, high-quality products. Consumer preferences and purchases may shift, often
in unpredictable ways, as a result of a variety of factors, including health and wellness trends; changes in economic conditions,
demographic, and social trends; public health policies and initiatives; changes in government regulation of beverage alcohol
products; concerns or regulations related to product safety; legalization of cannabis and its use on a more widespread basis in
the markets where we operate; and changes in trends related to travel, leisure, dining, gifting, entertaining, and beverage
consumption. As a result, consumers may begin to shift their consumption and purchases from our premium and super-premium
products, or away from alcoholic beverages entirely. This shift includes consumption at home as a result of various factors,
including shifts in social trends, and shifts in the channels for the purchases of our products. These shifts in consumption and
purchasing channels could adversely impact our profitability. Consumers also may begin to prefer the products of competitors
or may generally reduce their demand for brands produced by larger companies. Over the past several decades, the number of
small, local distilleries in the United States has grown significantly. This growth is being driven by a trend of consumers
showing increasing interest in locally produced, regionally sourced products. As more brands enter the market, increased
competition could negatively affect demand for our premium and super-premium American whiskey brands, including Jack
Daniel’s. In addition, we could experience unfavorable business results if we fail to attract consumers from diverse
backgrounds and ethnicities in all markets where we sell our products.
Expansion into new product categories by other suppliers, or innovation by new entrants into the market, could increase
competition in our product categories. For example, we have observed an increase in diversification by various consumer goods
companies such as the entrance of both traditional beer and soft drink companies into the ready-to-drink market and the
entrance of both beer and spirits companies into the cannabis market – expanding the potential for competition in the spirits
market from various sectors of the consumer goods industry. Increased competition may, among other things, negatively impact
our ability to maintain or gain market share; increase pricing pressure, which inhibits our ability to adequately respond to
inflationary changes in commodities used in making our products; require increases in marketing and promotional activities;
and negatively impact the market for our premium and super-premium products. To continue to succeed, we must anticipate or
react effectively to shifts in demographics, our competition, consumer behavior, consumer preferences, drinking tastes, and
drinking occasions.
16
Our long-term plans call for the continued growth of the Jack Daniel's family of brands. If these plans do not succeed, or
if we otherwise fail to develop or implement effective business, portfolio, and brand strategies, our growth, business, or
financial results could suffer. More broadly, if consumers shift away from spirits (particularly brown spirits such as American
whiskey and bourbon), our premium-priced brands, or our ready-to-drink products, our financial results could be adversely
affected.
We believe that new products, line extensions, label and bottle changes, product reformulations, and similar product
innovations by both our competitors and us will increase competition in our industry. Product innovation, particularly for our
core brands, is a significant element of our growth strategy; however, there can be no assurance that we will continue to
develop and implement successful line extensions, packaging, formulation or flavor changes, or new products.
Unsuccessful implementation or short-lived popularity of our product innovations could result in inventory write-offs and
other costs, could reduce profits from one year to the next, and could also damage consumers' perception of our brands. Our
inability to attract consumers to our product innovations relative to our competitors' products – especially over time – could
negatively affect our growth, business, and financial results.
Production facility disruption could adversely affect our business.
Some of our largest brands, including Jack Daniel's and our tequilas, are distilled at single locations. A catastrophic event
causing physical damage, disruption, or failure at any one of our major distillation or bottling facilities, including facilities that
support the production of our premium brands such as Woodford Reserve and Old Forester, could adversely affect our business.
Further, because whiskeys, rums, and some tequilas are aged for various periods, we maintain a substantial inventory of aged
and maturing products in warehouses at a number of different sites. The loss of a substantial amount of aged inventory –
through fire, other natural or man-made disaster, contamination, or otherwise – could significantly reduce the supply of the
affected product or products. These and other supply (or supply chain) disruptions could prevent us from meeting consumer
demand for the affected products in the short and medium term. In addition to catastrophic events identified above, supply
disruptions could include the temporary inability to make our products at normal levels or at all. We could also experience
disruptions if our suppliers are unable to deliver supplies. Our business continuity plans may not prevent business disruption,
and reconstruction of any damaged facilities could require a significant amount of time and resources.
The inherent uncertainty in supply/demand forecasting could adversely affect our business, particularly with respect to our
aged products.
There is an inherent risk of forecasting imprecision in determining the quantity of aged and maturing products to produce
and hold in inventory in a given year for future sale. The forecasting strategies we use to balance product supply with
fluctuations in consumer demand may not be effective for particular years or products. For example, in addition to our
American and Irish whiskeys, rums, and some tequilas, which are aged for various periods, our Scotch whisky brands require
long-term maturation – an average of 12 years with limited releases of 30 years or more – making forecasts of demand for such
products in future periods subject to significant uncertainty. Our tequila supply also depends on the growth cycle of agave
plants, which take approximately six to seven years to reach full maturity, requiring us to make forecasts of demand for our
tequilas over a long-time horizon to determine in advance how much agave to plant or otherwise source. Factors that affect our
ability to forecast accurately include changes in business strategy, market demand, consumer preferences, macroeconomic
conditions, introductions of competing products, and other changes in market conditions. Additionally, our supply of aged
products can deviate from expectations due to changes in forecasted maturation loss. Such forecasting errors could lead to our
inability to meet the objectives of our business strategy, failure to meet future demand, or a future surplus of inventory and
consequent write-down in value of such inventory. A failure to accurately forecast demand for our products or efficiently
manage inventory could have a material adverse effect on our business and financial results. Further, we cannot be certain that
we will be successful in using various levers, such as pricing changes, to create the desired balance of available supply and
consumer demand for particular years or products. As a consequence, we may be unable to meet consumer demand for the
affected products for a period of time. Furthermore, not having our products in the market consistently may adversely affect our
brand equity and future sales.
Higher costs or unavailability of water, raw materials, product ingredients, or labor could adversely affect our financial
results.
Our products use materials and ingredients that we purchase from suppliers. Our ability to make and sell our products
depends on the availability of the raw materials, product ingredients, finished products, wood, glass and PET bottles, cans,
bottle closures, packaging, and other materials used to produce and package them. Without sufficient quantities of one or more
key materials, our business and financial results could suffer. For instance, only a few glass producers make bottles on a scale
sufficient for our requirements, and a single producer supplies most of our glass requirements. During the recent global supply
chain challenges, our primary glass provider could not produce sufficient quantities to meet our needs, which increased our cost
17
to produce, constrained supply of some of our products, and adversely affected our financial results. In response to these events,
we took action to diversify suppliers of our raw materials, including glass. Our glass supply, as well as global supply chains,
have stabilized. However, similar supply chain challenges may occur in the future, making it difficult and more expensive to
produce and deliver our products. For example, a disruption in the supply of American white oak logs, staves, heading, or steel
it could constrain our ability to produce or procure the new charred oak barrels in which we age our whiskeys. If any of our key
suppliers were no longer able to meet our timing, quality, or capacity requirements, ceased doing business with us, or
significantly raised prices, and we could not promptly develop alternative cost-effective sources of supply or production, our
operations and financial results could suffer.
Higher costs or insufficient availability of suitable grain, agave, water, molasses, wood, glass, closures, and other input
materials, or higher associated labor costs or insufficient availability of labor, may adversely affect our financial results.
Similarly, when energy costs rise, our transportation, freight, and other operating costs, such as distilling and bottling expenses,
also may increase. Our freight cost and the timely delivery of our products could be adversely affected by a number of factors,
including driver or equipment shortages, higher fuel costs, weather conditions, traffic congestion, ocean freight lane disruptions,
shipment container availability, rail shutdowns, increased government regulation, and other matters that could reduce the
profitability of our operations. Our financial results may be adversely affected if we cannot pass along energy, freight, or other
input cost increases through higher prices to our customers without reducing demand or sales. For example, during the
COVID-19 pandemic and subsequent economic recovery, we experienced supply chain disruptions in connection with the
availability of timely modes of transportation to ship our products globally, which resulted in higher costs and delays in
supplying some of our products.
International or domestic geopolitical or other events, including the imposition of any tariffs or quotas by governmental
authorities on any raw materials that we use in the production of our products, could adversely affect the supply and cost of
these raw materials to us. While we do not currently expect our production operations to be directly impacted by conflicts
around the world, changes in global grain and commodity pricing and availability may impact the markets where we operate. If
we cannot offset higher raw material costs with higher selling prices, increased sales volume, or reductions in other costs, our
profitability could be adversely affected.
Weather, acute or chronic climate change impacts, fires, diseases, and other agricultural uncertainties that affect the
health, yield, quality, or price of the various raw materials used in our products also present risks for our business, including in
some cases potential impairment in the recorded value of our inventory. Increasing average temperatures could also affect the
maturation and yield of our aged inventory over time. Changes in weather patterns or intensity can disrupt our supply chain as
well, which may affect production operations, insurance costs and coverage, and the timely delivery of our products.
Water is an essential component of our products, so the quality and quantity of available water is critical to our ability to
operate our business. If extended droughts become more common or severe, or if our water supply is interrupted for other
reasons, high-quality water could become scarce in some key production regions for our products,which in turn could adversely
affect our business and financial results.
We might not succeed in our strategies for investments, acquisitions, dispositions, and other strategic transactions.
From time to time, we acquire or invest in additional brands or businesses. We expect to continue to seek acquisition and
investment opportunities that we believe will increase long-term stockholder value, but we may not be able to find investment
opportunities, or purchase brands or businesses, at acceptable prices and terms. Acquisitions and investments involve risks and
uncertainties, including paying more than a brand or business is ultimately determined to be worth; potential difficulties
integrating acquired brands and personnel; the possible loss of key customers or employees most knowledgeable about the
acquired business; implementing and maintaining consistent U.S. public company standards, controls, procedures, policies, and
information systems; exposure to unknown liabilities; business disruption; and management distraction or departure. We have
in the past, and could in the future, incur restructuring charges or record impairment losses on the value of goodwill or other
intangible assets resulting from previous acquisitions, or the risk of potential losses on equity investments which may also
negatively affect our financial results.
From time to time, we also consider disposing of assets or businesses that may no longer meet our financial or strategic
objectives. In selling assets or businesses, we may not get prices or terms as favorable as we anticipated. We could also
encounter difficulty in finding buyers on acceptable terms in a timely manner, which could delay accomplishment of our
strategic objectives. Expected cost savings from reduced overhead, relating to the sold assets, may not materialize. The
overhead reductions could temporarily disrupt our other business operations. Any of these outcomes could negatively affect our
financial results.
18
Our business faces various risks related to health epidemics and pandemics that could materially and adversely affect our
business, our operations, our cash flows, and our financial results.
Our business, operations, cash flows, and financial results have previously been, and in the future could be, impacted by
health epidemics, pandemics, and similar outbreaks, such as the COVID-19 pandemic. Any future epidemic, pandemic, or other
outbreak could cause negative impacts such as (a) a global or U.S. recession or other economic crisis; (b) credit and capital
markets volatility (and access to these markets, including by our suppliers and customers); (c) volatility in demand for our
products; (d) changes in accessibility to our products due to illness, quarantines, “stay at home” orders, travel restrictions, retail,
restaurant, bar, and hotel closures, social distancing requirements, and other government action; (e) changes in consumer
behavior and preferences; and (f) disruptions in raw material supply, in our manufacturing operations, or in our distribution and
supply chain. In addition, we may incur increased costs and otherwise be negatively affected if a significant portion of our
workforce (or the workforces within our distribution or supply chain) cannot work or work effectively, including because of
illness, quarantines, “stay at home” orders, social distancing requirements, other government action, facility closures, or other
restrictions. Accordingly, a future widespread health epidemic or pandemic could materially and adversely affect our business,
our operations, our cash flows, and our financial results.
Unfavorable economic conditions could negatively affect our operations and results.
Unfavorable global or regional economic conditions may be triggered by numerous developments beyond our control,
including geopolitical events, health crises, and other events that trigger economic volatility on a global or regional basis. Those
types of unfavorable economic conditions could adversely affect our business and financial results. In particular, a significant
deterioration in economic conditions, including economic slowdowns or recessions, increased unemployment levels,
inflationary pressures, or disruptions to credit and capital markets could lead to decreased consumer confidence in certain
countries and consumer spending more generally, thus reducing consumer demand for our products. For example, since 2021,
the United States and the European Union have experienced a rapid increase in inflation levels. Such heightened inflationary
levels may negatively impact consumer disposable income and discretionary spending and, in turn, reduce consumer demand
for our premium products and increase our costs. Unfavorable economic conditions could also cause governments to increase
taxes on beverage alcohol to attempt to raise revenue, reducing consumers' willingness to make discretionary purchases of
beverage alcohol products or pay for premium brands such as ours.
Unfavorable economic conditions could also adversely affect our suppliers, distributors, customers, and retailers, who in
turn could experience cash flow challenges, more costly or unavailable financing, credit defaults, and other financial hardships.
Such financial hardships could lead to distributor or retailer destocking, disruption in raw material supply, increase in bad debt
expense, or increased levels of unsecured credit that we may need to provide to customers. Other potential negative
consequences to our business from unfavorable economic conditions include higher interest rates, an increase in the rate of
inflation, deflation, exchange rate fluctuations, credit or capital market instability, or lower returns on pension assets or lower
discount rates for pension obligations (possibly requiring higher contributions to our pension plans).
Product recalls or other product liability claims could materially and adversely affect our sales.
The success of our brands depends on the positive image that consumers have of them. We could decide to or be required
to recall products due to suspected or confirmed product contamination, product tampering, spoilage, regulatory non-
compliance, food safety issues, or other quality issues. Any of these events could adversely affect our financial results. Actual
contamination, whether deliberate or accidental, could lead to inferior product quality and even illness, injury, or death of
consumers, potential liability claims, and material loss. Should a product recall become necessary, or we voluntarily recall a
product in the event of contamination, damage, or other quality issue, sales of the affected product or our broader portfolio of
brands could be adversely affected. A significant product liability judgment or widespread product recall may negatively impact
sales and our business and financial results. Even if a product liability claim is unsuccessful or is not fully pursued, resulting
negative publicity could adversely affect our reputation with existing and potential customers and our corporate and brand
image.
Negative publicity could affect our business performance.
Unfavorable publicity, whether accurate or not, related to our industry or to us or our products, brands, marketing,
executive leadership, employees, Board of Directors, family stockholders, operations, current or anticipated business
performance, or environmental or social efforts could negatively affect our corporate reputation, stock price, ability to attract
and retain high-quality talent, or the performance of our brands and business. Adverse publicity or negative commentary on
social media, whether accurate or not, particularly any that go “viral,” could cause consumers or other stakeholders to react by
disparaging or avoiding our brands or company, which could materially negatively affect our financial results. Additionally,
investor advocacy groups, institutional investors, other market participants, stockholders, employees, consumers, customers,
influencers, and policymakers have focused increasingly on the environmental, social, and governance or “sustainability”
19
positions and practices of companies. If our positions or practices do not meet investor or other stakeholder expectations and
standards, which continue to evolve, our corporate reputation, stock price, ability to attract and retain high-quality talent, and
the performance of our brands and business may be negatively affected. Stakeholders and others who disagree with our
company's actions, positions, or statements may speak negatively or advocate against the company, with the potential to harm
our reputation or business through negative publicity, adverse government treatment, or other means.
Our failure to attract or retain key talent could adversely affect our business.
Our success depends on the efforts and abilities of our senior management team, other key employees, and our high-
quality employee base, as well as our ability to attract, motivate, reward, develop, and retain them. Difficulties in hiring or
retaining key executive or other employee talent, or the unexpected loss of experienced employees resulting in the depletion of
our institutional knowledge base, could have an adverse impact on our business performance, reputation, financial condition, or
results of operations. Given changing demographics, immigration laws and policies, remote working trends, and demand for
talent globally, we may not be able to find the people with the right skills, at the right time, and in the right location, to achieve
our business objectives.
Risks Related to Our Global Operations
Our global business is subject to commercial, political, and financial risks.
Our products are sold in more than 170 countries; accordingly, we are subject to risks associated with doing business
globally, including commercial, political, and financial risks. In addition, we are subject to potential business disruption caused
by military conflicts; potentially unstable governments or legal systems; social, racial, civil, or political upheaval or unrest;
local labor policies and conditions, including labor strikes and work stoppages; possible expropriation, nationalization, or
confiscation of assets; problems with repatriation of foreign earnings; economic or trade sanctions; closure of markets to
imports; anti-American sentiment; terrorism, kidnapping, extortion, or other types of violence in or outside the United States;
and health crises. Violent crime is increasing in markets around the globe, including the United States. If a violent event should
occur at one of our sites, it could disrupt business operations, impair brand reputation, increase insurance and security expenses,
and adversely affect the price of our stock.
Additionally, we may be subject to tariffs imposed on our products by other countries, such as the tariffs imposed in 2018
following the United States tariffs on steel and aluminum. In response to these U.S. tariffs, a number of countries imposed
retaliatory tariffs on U.S. imports, including on American whiskey products, which negatively affected our business until they
were removed or suspended in late fiscal 2022 and early fiscal 2023. The imposition of tariffs, custom duties, or other
restrictions or barriers on imports and exports, or the deterioration of economic relations between the United States and other
countries, could increase the cost of our products and, to the extent that we absorb the costs of tariffs, result in higher cost of
goods sold and lower gross profit and margins. They could also limit the availability of our products and prompt consumers to
seek alternative products. Our success will depend, in part, on our ability to overcome the challenges we encounter with respect
to these risks and other factors affecting U.S. export companies with a global business.
A failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations may have a
material adverse effect on our business and financial results.
Some of the countries where we do business have a higher risk of corruption than others. While we are committed to
doing business in accordance with all applicable laws, including anti-corruption laws and global trade restrictions, we remain
subject to the risk that an employee, or one of our many direct or indirect business partners, may take action determined to be in
violation of international trade, money laundering, anti-corruption, or other laws, sanctions, or regulations, including the U.S.
Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010, or equivalent local laws. Any determination that our
operations or activities are not in compliance with applicable laws or regulations, particularly those related to anti-corruption
and international economic or trade sanctions, could result in investigations, interruption of business, loss of business partner
relationships, suspension or termination of credit agreements, licenses, and permits (our own or those of our partners),
imposition of fines, legal or equitable sanctions, negative publicity, and management distraction or departure. Further, our
obligation to comply with applicable anti-corruption, economic and trade sanctions, or other laws or regulations, our Code of
Conduct, Code of Ethics for Senior Financial Officers, and our other policies could result in higher operating costs, delays, or
even competitive disadvantages as compared to competitors based in different parts of the world.
Fluctuations in foreign currency exchange rates relative to the U.S. dollar could have a material adverse effect on our
financial results.
The global scope of our business means that foreign currency exchange rate fluctuations relative to the U.S. dollar
influence our financial results. In many markets outside the United States, we sell our products and pay for some goods,
20
services, and labor costs primarily in local currencies. Because our foreign currency revenues exceed our foreign currency
expense, we have a net exposure to changes in the value of the U.S. dollar relative to those currencies. Over time, our reported
financial results will be negatively impacted by a stronger U.S. dollar and will be benefited by a weaker one. We hedge some of
our foreign currency exposure through the use of foreign currency derivatives or other means. However, even in those cases, we
do not fully eliminate our foreign currency exposure. For details on how foreign exchange affects our business, see “Item 7A.
Quantitative and Qualitative Disclosures about Market Risk - Foreign currency exchange rate risk.”
Legal and Regulatory Risks
National and local governments may adopt regulations or undertake investigations that could limit our business activities or
increase our costs.
Our business is subject to extensive regulatory requirements regarding production, exportation, importation, marketing
and promotion, labeling, distribution, pricing, and trade practices, among others. Changes in laws, regulatory measures, or
governmental policies, or the manner in which current ones are interpreted, could subject us to governmental investigations,
cause us to incur material additional costs or liabilities, and jeopardize the growth of our business in the affected market.
Specifically, governments could prohibit, impose, or increase limitations on advertising and promotional activities, or times or
locations where beverage alcohol may be sold or consumed, or adopt other measures that could limit our opportunities to reach
consumers or sell our products. Some countries historically have banned all television, newspaper, magazine, and digital
commerce/advertising for beverage alcohol products. Additional regulation of this nature could substantially reduce consumer
awareness of our products in the affected markets and make the introduction of new products more challenging.
Additional regulation in the United States and other countries addressing the risks and impacts of climate change, use of
water, and other environmental and social issues could increase our operating costs. Increasing regulation of greenhouse gas
emissions could increase the cost of energy, including fuel, required to operate our facilities or transport and distribute our
products, thereby substantially increasing the production, distribution, and supply chain costs associated with our products.
Tax increases and changes in tax rules could adversely affect our financial results.
Our business is sensitive to changes in both direct and indirect taxes. New tax rules, accounting standards or
pronouncements, and changes in interpretation of existing rules, standards, or pronouncements could have a material adverse
effect on our business and financial results. As a multinational company based in the United States, we are more exposed to the
impact of changes in U.S. tax legislation and regulations than most of our major competitors, especially changes that affect the
effective corporate income tax rate. For example, in August 2022, the U.S. enacted the Inflation Reduction Act of 2022 which,
among other provisions, implemented a 15% minimum tax on book income of certain large corporations. Additional tax
proposals sponsored by the current U.S. presidential administration could lead to U.S. tax changes, including significant
increases to the U.S. corporate income tax rate and the minimum tax rate on certain earnings of foreign subsidiaries. While we
are unable to predict whether any of these changes will ultimately be enacted, if these or similar proposals are enacted into law,
they could negatively impact our effective tax rate and reduce net earnings.
At the global level, potential changes in tax rules or the interpretation of tax rules arising out of the Base Erosion and
Profit Shifting project initiated by the Organization for Economic Co-operation and Development (OECD) include increased
residual profit allocations to market jurisdictions and the implementation of a global minimum tax rate. In December 2021, the
OECD issued Pillar Two model rules which would establish a global per-country minimum tax of 15%, and the European
Union has approved a directive requiring member states to incorporate similar provisions into their respective domestic laws.
The directive requires the rules to initially become effective for fiscal years starting on or after December 31, 2023. While it is
uncertain whether the United States will enact legislation to adopt Pillar Two, numerous countries have enacted legislation, or
have indicated their intent to adopt legislation, to implement certain aspects of Pillar Two effective January 1, 2024, with
general implementation of the remaining global minimum tax rules by January 1, 2025. The OECD and implementing countries
are expected to continue to revise their legislation and release additional guidance. We continue to evaluate the potential impact
of the developments on our consolidated financial statements and related disclosures and based on our preliminary calculations,
we do not expect the impact to be material. The adoption of these or other proposals could have a material adverse impact on
our net income and cash flows in the future. Furthermore, changes in the earnings mix or applicable foreign tax laws could also
negatively impact our net income and tax flows.
Our business operations are also subject to numerous duties or taxes not based on income, sometimes referred to as
“indirect taxes.” These indirect taxes include excise taxes, sales or value-added taxes, property taxes, payroll taxes, import and
export duties, and tariffs. Increases in or the imposition of new indirect taxes on our operations or products would increase the
cost of our products or materials used to produce our products or, to the extent levied directly on consumers, make our products
less affordable, which could negatively affect our financial results by reducing purchases of our products and encouraging
consumers to switch to lower-priced or lower-taxed product categories. As governmental entities look for increased sources of
21
revenue, they may increase taxes on beverage alcohol products. In fiscal 2024, we have observed excise tax increases in
markets that include France, Portugal, Romania and Türkiye. Additionally in fiscal 2024, Australia has continued to make an
annual increase in excise taxes based on the consumer price index.
Our ability to market and sell our products depends heavily on societal attitudes toward drinking and governmental policies
that both flow from and affect those attitudes.
Increased social and political attention has been directed at the beverage alcohol industry. For example, there remains
continued attention focused largely on public health concerns related to alcohol abuse, including drunk driving, underage
drinking, and the negative health impacts of the abuse and misuse of beverage alcohol. While most people who drink alcoholic
beverages do so in moderation, it is commonly known and well reported that excessive levels or inappropriate patterns of
drinking can lead to increased risk of a range of health conditions and, for certain people, can result in alcohol dependence.
Some academics, public health officials, and critics of the alcohol industry in the United States, Europe, and other parts of the
world continue to seek governmental measures to make beverage alcohol more expensive, less available, or more difficult to
advertise and promote. If future scientific research indicates more widespread serious health risks associated with alcohol
consumption – particularly with moderate consumption – or if for any reason the social acceptability of beverage alcohol
declines significantly, sales of our products could be adversely affected.
Significant additional labeling or warning requirements or limitations on the availability of our products could inhibit sales
of affected products.
Various jurisdictions have adopted or may seek to adopt significant additional product labeling or warning requirements
or impose limitations on the availability of our products relating to the content or perceived adverse health consequences of
some of our products. Several such labeling regulations or laws require warnings on any product with substances that the
jurisdiction lists as potentially associated with cancer or birth defects. Our products already raise health and safety concerns for
some regulators, and heightened requirements could be imposed. For example, in February 2021, the European Union published
its Europe Beating Cancer Plan. The European Union is ultimately expected to issue a proposal for mandatory health warnings
on beverage alcohol product labels. Such campaigns could result in additional governmental regulations concerning the
production, marketing, labeling, or availability of our products, any of which could damage our reputation, make our premium
brands unrecognizable, or reduce demand for our products, which could adversely affect our profitability. If additional or more
severe requirements of this type are imposed on one or more of our major products under current or future health,
environmental, or other laws or regulations, they could inhibit sales of such products. Further, we cannot predict whether our
products will become subject to increased rules and regulations, which, if enacted, could increase our costs or adversely impact
sales.
Counterfeiting or inadequate protection of our intellectual property rights could adversely affect our business prospects.
Our brand names, trademarks, and related intellectual property rights are critical assets, and our business depends on
protecting them online and in the countries where we do business. We may not succeed in protecting our intellectual property
rights in a given market or in challenging those who infringe our rights or imitate or counterfeit our products. Although we
believe that our intellectual property rights are legally protected in the markets where we do business, the ability to register and
enforce intellectual property rights varies from country to country. In some countries, for example, it may be more difficult to
successfully stop counterfeiting or look-alike products, either because the law is inadequate or, even though satisfactory legal
options may exist, it may be difficult to obtain and enforce sanctions against counterfeiters. We may not be able to register our
trademarks in every country where we want to sell a particular product, and we may not obtain favorable decisions by courts or
trademark offices.
Many global spirits brands, including some of our brands, experience problems with product counterfeiting and other
forms of trademark infringement. We combat counterfeiting by working with other companies in the spirits industry through
our membership in the Alliance Against Counterfeit Spirits (AACS) and with brand owners in other industries via our
membership in React, an anti-counterfeiting network organization. While we believe AACS and React are effective
organizations, they are not active in every market, and their efforts are subject to obtaining the cooperation of local authorities
and courts in the markets where they are active. Despite the efforts of AACS, React, and our own teams, lower-quality and
counterfeit products that could be harmful to consumers could reach the market and adversely affect our intellectual property
rights, brand equity, corporate reputation, and financial results. In addition, the industry as a whole could suffer negative effects
related to the manufacture, sale, and consumption of illegally produced beverage alcohol.
Litigation and legal disputes could expose our business to financial and reputational risk.
Major private or governmental litigation challenging the production, marketing, promotion, distribution, or sale of
beverage alcohol or specific brands could affect our ability to sell our products. Because litigation and other legal proceedings
22
can be costly to defend, even actions that are ultimately decided in our favor could have a negative impact on our business
reputation or financial results. Lawsuits have been brought against beverage alcohol companies alleging problems related to
alcohol abuse, negative health consequences from drinking, problems from alleged marketing or sales practices, and underage
drinking. While these lawsuits have been largely unsuccessful in the past, others may succeed in the future. We could also
experience employment-related or cybersecurity-related class actions, environmental claims, commercial disputes, product
liability actions stemming from a beverage or container production defect, a whistleblower suit, or other major litigation that
could adversely affect our business results, particularly if there is negative publicity.
As discussed throughout these risk factors, governmental actions around the world are a continuing compliance risk for
global companies such as ours. In addition, as a U.S. public company, we are exposed to the risk of securities-related class
action suits, particularly following a precipitous drop in the share price of our stock. Adverse developments in major lawsuits
concerning these or other matters could result in management distraction and have a material adverse effect on our business.
Risks Related to Cybersecurity and Data Privacy
We rely on information technology (IT) systems to manage our business operations. A cyber breach, a failure or corruption
of one or more of our key information technology systems, networks, processes, associated sites, or service providers, or a
failure to comply with personal data protection laws could have a material adverse impact on our business.
As a company with complex IT systems, we have been a target of cyberattacks and other hacking activities in the past,
and we expect to continue to be a target in the future. While past cyberattacks and hacking activities have not materially
impacted our business or disrupted our operations, increased IT security threats and more sophisticated cybercrimes and
cyberattacks, including computer viruses and other malicious codes, ransomware, unauthorized access attempts, denial-of-
service attacks, phishing, social engineering, hacking, and other types of attacks, pose a risk to the security and availability of
our IT systems, networks, and services, including those that are managed, hosted, provided, or used by third parties, as well as
the confidentiality, availability, and integrity of our data and the data of our customers, partners, consumers, employees,
stockholders, suppliers, and others. As a result, we may experience material disruptions or suffer material adverse effects in the
future from cyberattacks or other hacking activities. Furthermore, our increasingly mobile, hybrid, and global workforce further
increases our attack surface.
In the ordinary course of our business, we receive, process, transmit, and store information relating to identifiable
individuals (personal data), primarily employees and former employees, beneficiaries of employees or former employees,
customers, and consumers. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating
to personal data. Such laws and regulations include the California Consumer Protection Act, the California Privacy Rights Act,
data protection and AI regulations in the European Union, and other similar regulations that may change or be added to
frequently.
Unauthorized access to our IT network, or that of our service providers, suppliers, customers, or other direct or indirect
business partners, could result in failure of our IT systems, networks, or services to function properly. This could lead to the
loss or unauthorized disclosure of our business strategy or other confidential information; disruptions to our business
operations; misappropriation of personal data; and reputational, competitive, or business harm. Each of these events may
adversely affect our business operations or financial results, or may cause financial and reputational damage, undermine
consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us,
which could result in loss of revenue, increased costs, liability for monetary damages, fines, or criminal prosecution.
Risks Related to Our Ownership and Corporate Governance Structure
The Brown family has the ability to control the outcome of matters submitted for stockholder approval.
We are a “controlled company” under New York Stock Exchange rules. Controlled companies are exempt from New
York Stock Exchange listing standards that require a board composed of a majority of independent directors, a fully
independent nominating/corporate governance committee, and a fully independent compensation committee. We may avail
ourselves of the exemption from having a board composed of a majority of independent directors, and we utilize the exemption
from having a fully independent nominating/corporate governance committee. Notwithstanding the available exemption, our
Compensation Committee is composed exclusively of independent directors. As a result of our use of some “controlled
company” exemptions, our corporate governance practices differ from those of non-controlled companies, which are subject to
all of the New York Stock Exchange corporate governance requirements.
We have two classes of common stock. Our Class A common stock is entitled to full voting powers, including in the
elections of directors, while our Class B common stock may not vote except as provided by the laws of Delaware. We have had
two classes of common stock since 1959, when our stockholders approved the issuance of two shares of Class B non-voting
23
common stock to every holder of our voting common stock. Dual-class share structures have come under the scrutiny of major
indices, institutional investors, and proxy advisory firms, with some calling for the reclassification of non-voting common
stock.
A majority of our voting stock is controlled by members of the Brown family, and, collectively, they have the ability to
control the outcome of stockholder votes, including the election of all of our directors and the approval or rejection of any
merger, change of control, or other significant corporate transactions. We believe that having a long-term-focused, committed,
and engaged stockholder base provides us with a distinct strategic advantage, particularly in a business with aged products and
multi-generational brands. This advantage could be eroded or lost, however, should Brown family members cease, collectively,
to be controlling stockholders of the Company.
We believe that it is in the interests of all stockholders that we remain independent and family-controlled, and we believe
the Brown family stockholders share these interests. Thus, our common stock dual-class share structure, as it has existed since
1959, is perpetual, and we do not have a sunset provision in our Restated Certificate of Incorporation or By-laws that provides
for the eventual reclassification of the non-voting common stock to voting common stock. However, the Brown family's
interests may not always be aligned with other stockholders' interests. By exercising their control, the Brown family could cause
the Company to take actions that are at odds with the investment goals or interests of institutional, short-term, non-voting, or
other non-controlling investors, or that have a negative effect on our stock price. Further, because the Brown family controls the
majority of our voting stock, Brown-Forman might be a less attractive takeover target, which could adversely affect the market
price of both our voting and our non-voting common stock. And the difference in voting rights for our common stock could also
adversely and disproportionately affect the value of our Class B non-voting common stock to the extent that investors view, or
any potential future purchaser of our Company views, the superior voting rights and control represented by the Class A
common stock to have value.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity Risk Management Strategy and Processes
Our Chief Information Security Officer (CISO) leads our Global Information Security team, reports to the Chief
Information Officer (CIO), and meets regularly with other members of senior management. Our CISO holds advanced degrees
in Computer Science and Business Administration, in addition to relevant IT and cybersecurity certifications from organizations
such as the EC Council, ISACA, and CSA. She has served in various IT roles for over 20 years, including leading the IT
Security function.
Our Global Information Security Team is responsible for the information security strategy, policy, security engineering,
operations, and cyber threat detection and response. Our Global Information Security Team, which includes a security
operations center, seeks to protect the company against reasonably foreseeable cyber threats and risks. The cybersecurity team
members have the qualifications and certifications for their roles. They also have relevant industry experience in selecting,
deploying, and operating cybersecurity technologies, initiatives, and processes globally. We also rely on threat intelligence as
well as other information obtained from governmental, public, or private sources, including external consultants that we engage.
We have made significant investments in people, processes, and technology to protect the confidentiality, integrity, and
availability of our IT systems. As part of that effort, we utilize the National Institute of Standards and Technology
Cybersecurity Framework as a guide for our security controls. We are also continuing to advance towards an architecture based
on “Zero-Trust” principles, where we continuously validate the identity and security posture of every user, device, application,
or network component trying to leverage our IT resources. In addition, our employees undergo annual security awareness
training to improve their understanding of cybersecurity threats, and their ability to identify and escalate potential threats.
In the event of an incident, we leverage a multi-layered set of plans that include, Endpoint Detection and Response
software, Security Information and Event Management tools for detection, and a Cybersecurity Incident Response Plan and
Disaster Recovery Response Plan for recovery. The recovery plans outline the steps to be followed from incident detection to
mitigation, recovery, and notification, including notifying designated functional leadership teams, the Disclosure Committee,
the General Counsel, other senior leadership, and the Board of Directors, as appropriate. These designated leaders assess
various factors, including operational, financial, legal, regulatory, reputational impacts on the Company to determine the
materiality of the incident and the appropriate response..
24
We have established a tiered risk management strategy that helps us to evaluate our ability to protect assets (data and
systems) by identifying, assessing, and prioritizing associated risk through, among other tools, the use of a non-affiliated third
party assessor, audits by our internal audit team, tabletop exercises, penetration and vulnerability testing, and simulations. We
report the results of these assessments to the Audit Committee of the Board of Directors.
We rely on third party service providers to deliver our products and services to our customers, including many of our
technology initiatives. A cybersecurity incident at a supplier, subcontractor, or joint venture partner could materially adversely
impact us. We evaluate third party providers from a cybersecurity risk perspective, which may include an assessment of that
service provider’s cybersecurity posture through a questionnaire and include security and privacy addenda to our contracts
where applicable. However, we rely on the third parties we use to implement security programs commensurate with their risk,
and we cannot ensure in all circumstances that their efforts will be successful.
Our systems periodically experience directed attacks intended to lead to interruptions and delays in our service and
operations as well as loss, misuse, or theft of personal information (of third parties, employees and their beneficiaries, and
customers) and other data. These incidents have not had a material impact on our services, system, or business during the past
reporting period. However, despite our capabilities, processes, and other security measures we employ, we may not be aware of
all vulnerabilities or might not accurately assess the risk of an incident. Additional information on cybersecurity risks we face
can be found in Item 1A. Risk Factors, which should be read in conjunction with the foregoing information.
Cybersecurity Governance
The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity
risks, to help align our risk exposure with our strategic objectives. The Board of Directors has delegated oversight of risks
related to cybersecurity to the Audit Committee. The Audit Committee regularly reports on its activities and findings with
respect to risks from cybersecurity threats to the full Board of Directors.
The Audit Committee oversees our cybersecurity posture to assess key strategic, operational, and compliance risks. Our
CIO and CISO update the Audit Committee on a quarterly basis regarding cyber risks, the threat landscape, reports on our
security roadmap, risk mitigation and governance, and any cybersecurity incidents.
The Company’s Information Technology, Enterprise Security, Internal Audit, as well as the Legal and Privacy teams work
closely to identify issues and incidents in a timely manner, and report them to senior leadership, the Board of Directors, and
appropriate regulatory bodies, as appropriate. Assessing, identifying, and managing cybersecurity risks are integrated into our
overall enterprise risk management (ERM) framework that provides risk quantification, scenario analysis to determine the
potential impact on the enterprise, and processes to manage risk within the parameters of the organization's risk appetite.
Additionally, ERM provides support to the decision making process to enable cybersecurity risk owners to accomplish the
desired level of asset protection and alignment consistent with the organization's strategy. The ERM work is presented annually
to the Audit Committee and Board of Directors, including the management of top risks and the review of emerging risks.
25
Item 2. Properties
Our Company-owned production facilities include distilleries, a winery1, bottling plants, an RTD canning plant,
warehousing operations, a cooperage, visitors' centers, and retail shops. We also have agreements with other parties for contract
production in Australia, Belgium, China, Ireland, Latvia, Mexico, the Netherlands, New Zealand, South Africa, Spain, the
United Kingdom, the United States, and Venezuela.
In addition to our Company-owned production locations and our corporate offices in Louisville, Kentucky, we lease office
space for use in our sales, marketing, and administrative operations in the United States and in over 50 other locations around
the world. The lease terms expire at various dates and are generally renewable. We believe that our facilities are in good
condition and are adequate for our business.
Principal Properties
Location
Principal Activities
Notes
United States:
Louisville, Kentucky
Corporate offices
Includes several renovated historic structures
Distilling, bottling, warehousing
Home of Old Forester
Visitors' center
Cooperage
Brown-Forman Cooperage
Lynchburg, Tennessee
Distilling, bottling, warehousing
Home of Jack Daniel's
Visitors' center
Woodford County, Kentucky
Distilling, bottling, warehousing
Home of Woodford Reserve
Visitors' center
Windsor, California
Vineyards, winery, bottling,
warehousing
Home of Sonoma-Cutrer1
Visitors' center
Trinity, Alabama
Cooperage
Jack Daniel Cooperage2
International:
Cour-Cheverny, France
Distilling, bottling, warehousing
Home of Chambord
Amatitán, Mexico
Distilling, bottling, warehousing, RTD
canning
Home of Herradura and el Jimador
Visitors' center
Slane, Ireland
Distilling
Home of Slane Irish Whiskey
Visitors' center
Aberdeenshire, Scotland
Distilling, warehousing
Home of The Glendronach
Visitors' center
Morayshire, Scotland
Distilling, warehousing
Home of Benriach
Visitors' center
Newbridge, Scotland
Bottling
Portsoy, Scotland
Distilling, warehousing
Home of Glenglassaugh
Visitors' center
Provincia de Panamá, Panamá Warehousing, bottling
Home of Diplomático
1Sonoma-Cutrer California Wines and related assets were divested on April 30, 2024.
2The Jack Daniel Cooperage was divested on May 1, 2024.
26
Item 3. Legal Proceedings
We operate in a litigious environment and we are sued in the normal course of business. We do not anticipate that any
pending suits will have, individually or in the aggregate, a material adverse effect on our financial position, results of
operations, or liquidity.
Item 4. Mine Safety Disclosures
Not applicable.
27
PART II
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity
Securities
Our Class A and Class B common stock is traded on the New York Stock Exchange under the symbols “BFA” and
“BFB,” respectively. As of May 31, 2024, we had 2,334 holders of record of Class A common stock and 4,382 holders of
record of Class B common stock. Because of overlapping ownership between classes, as of May 31, 2024, we had only 4,732
distinct common stockholders of record.
Stock Performance Graph
The graph below compares the cumulative total shareholder return of our Class B common stock for the last five fiscal
years with the total return of the Standard & Poor's (S&P) 500 Index and S&P 500 Consumer Staples Index. The information
presented assumes an initial investment of $100 on April 30, 2019, and that all dividends were reinvested. The graph shows the
value that each of these investments would have had on April 30 in the years since 2019.
Five-Year Cumulative Total Shareholder Return
Assumes Initial Investment of $100
(as of April 30, 2024; dividends reinvested)
Brown-Forman Corporation
S&P 500 Index
S&P 500 Consumer Staples Index
2019
2020
2021
2022
2023
2024
$0
$50
$100
$150
$200
2019
2020
2021
2022
2023
2024
Brown-Forman Corporation
$100
$118
$146
$132
$129
$96
S&P 500 Index
$100
$101
$147
$148
$151
$186
S&P 500 Consumer Staples Index
$100
$104
$127
$148
$152
$155
Item 6. [Reserved]
28
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to
help the reader better understand Brown-Forman, our operations, our financial results, and our current business environment.
Please read this MD&A in conjunction with our Consolidated Financial Statements and the accompanying Notes contained in
“Item 8. Financial Statements and Supplementary Data” (Consolidated Financial Statements).
Our MD&A is organized as follows:
Table of Contents
Page
Presentation basis
29
Significant developments
34
Executive summary
36
Results of operations
38
Liquidity and capital resources
44
Critical accounting policies and estimates
47
Presentation Basis
Non-GAAP Financial Measures
We use some financial measures in this report that are not measures of financial performance under U.S. generally
accepted accounting principles (GAAP). These non-GAAP measures, defined below, should be viewed as supplements to (not
substitutes for) our results of operations and other measures reported under GAAP. Other companies may not define or
calculate these non-GAAP measures in the same way.
“Organic change” in measures of statements of operations. We present changes in certain measures, or line items, of the
statements of operations that are adjusted to an “organic” basis. We use “organic change” for the following measures of the
statements of operations: (a) organic net sales; (b) organic cost of sales; (c) organic gross profit; (d) organic advertising
expenses; (e) organic selling, general, and administrative (SG&A) expenses; (f) organic other expense (income) net; (g) organic
operating expenses1; and (h) organic operating income. To calculate these measures, we adjust, as applicable, for (1)
acquisitions and divestitures, (2) impairment charges, (3) other items, and (4) foreign exchange. We explain these adjustments
below.
•
“Acquisitions and divestitures.” This adjustment removes (a) the gain or loss recognized on sale of divested brands, (b)
any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs or
income), and (c) the effects of operating activity related to acquired and divested brands for periods not comparable year
over year (non-comparable periods). Excluding non-comparable periods allows us to include the effects of acquired and
divested brands only to the extent that results are comparable year over year.
During the third quarter of fiscal 2023, we acquired Gin Mare Brand, S.L.U. and Mareliquid Vantguard, S.L.U., which
owned the Gin Mare brand (Gin Mare). This adjustment removes (a) the transaction, transition, and integration costs
related to the acquisition, (b) operating activity for the non-comparable periods, which is activity in the first and second
quarters of fiscal 2024, and (c) fair value adjustments to Gin Mare’s earn-out contingent consideration liability that is
payable in cash no earlier than July 2024 and no later than July 2027.
During the third quarter of fiscal 2023, we acquired (a) International Rum and Spirits Distributors Unipessoal, Lda., (b)
Diplomático Branding Unipessoal Lda., (c) International Bottling Services, S.A., (d) International Rum & Spirits
Marketing Solutions, S.L., and (e) certain assets of Destilerias Unidas Corp., which collectively own the Diplomático Rum
brand and related assets (Diplomático). This adjustment removes (a) the transaction, transition, and integration costs related
to the acquisition, and (b) operating activity for the non-comparable periods, which is primarily activity in the first three
quarters of fiscal 2024.
During the third quarter of fiscal 2024, we sold the Finlandia vodka business, which resulted in a pre-tax gain of $92
million, and entered into a related transition services agreement (TSA) for this business. This adjustment removes the (a)
transaction costs related to the divestiture, (b) the gain on sale of the Finlandia vodka business, (c) operating activity for the
29
1 Operating expenses include advertising expense, SG&A expense, and other expense (income), net.
non-comparable period, which is activity in the third and fourth quarters of fiscal 2023, and (d) net sales, cost of sales, and
operating expenses recognized pursuant to the TSA related to distribution services in certain markets.
During the fourth quarter of fiscal 2024, we sold the Sonoma-Cutrer wine business in exchange for an ownership
percentage of 21.4% in The Duckhorn Portfolio Inc. (Duckhorn) along with $50 million cash and entered into a related
TSA for this business. This transaction resulted in a pre-tax gain of $175 million. This adjustment removes the transaction
costs related to the divestiture and the gain on sale of the Sonoma-Cutrer wine business.
During the second quarter of fiscal 2024, we recognized a gain of $7 million on the sale of certain fixed assets. This
adjustment removes the gain from our other expense (income), net and operating income.
We believe that these adjustments allow for us to better understand our organic results on a comparable basis.
See Notes 13 and 14 to the Consolidated Financial Statements for more information.
•
“Impairment Charges.” This adjustment removes the impact of impairment charges from our results of operations.
During the third quarter of fiscal 2023, we recognized a non-cash impairment charge of $96 million for the Finlandia brand
name. During the fourth quarter of fiscal 2024, we recognized a non-cash impairment charge of $7 million for an
immaterial discontinued brand name. We believe that these adjustments allow for us to understand our organic results on a
comparable basis.
•
“Other Items.” Other Items include the additional items outlined below.
“Foundation.” During the fourth quarter of fiscal 2024, we committed $23 million to the Brown-Forman Foundation
and Dendrifund (the Foundation and Dendrifund) to support the communities where our employees live and work.
This adjustment removes the commitment to the Foundation from our organic SG&A expenses and organic operating
income to present our organic results on a comparable basis.
“Jack Daniel’s Country Cocktails business model change (JDCC).” In fiscal 2021, we entered into a partnership with
the Pabst Brewing Company for the supply, sales, and distribution of Jack Daniel's Country Cocktails in the United
States while Brown-Forman continued to produce certain products. During fiscal 2024, this production fully
transitioned to Pabst Brewing Company for the Jack Daniel’s Country Cocktails products. This adjustment removes
the non-comparable operating activity related to the sales of Brown-Forman-produced Jack Daniel’s Country Cocktails
products during the fourth quarter of fiscal 2023 and fiscal 2024.
•
“Foreign exchange.” We calculate the percentage change in certain line items of the statements of operations in
accordance with GAAP and adjust to exclude the cost or benefit of currency fluctuations. Adjusting for foreign exchange
allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the organic
trend both positively and negatively. (In this report, “dollar” always means the U.S. dollar unless stated otherwise.) To
eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at
prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year
periods.
We use the non-GAAP measure “organic change”, along with other metrics, to: (a) understand our performance from period to
period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management
incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the Board of Directors,
stockholders, and investment community. We provide reconciliations of the “organic change” in certain line items of the
statements of operations to their nearest GAAP measures in the tables under “Results of Operations - Fiscal 2024 Highlights”
and “Results of Operations - Year-Over-Year Comparisons.” We have consistently applied the adjustments within our
reconciliations in arriving at each non-GAAP measure. We believe these non-GAAP measures are useful to readers and
investors because they enhance the understanding of our historical financial performance and comparability between periods.
When we provide guidance for organic change in certain measures of the statements of operations we do not provide guidance
for the corresponding GAAP change, as the GAAP measure will include items that are difficult to quantify or predict with
reasonable certainty, such as foreign exchange, which could have a significant impact to our GAAP income statement
measures.
“Return on average invested capital.” This measure refers to the sum of net income and after-tax interest expense, divided by
average invested capital. Average invested capital equals assets less liabilities, excluding interest-bearing debt, and is calculated
using the average of the most recent five quarter-end balances. After-tax interest expense equals interest expense multiplied by
one minus our effective tax rate. We use this non-GAAP measure because we consider it to be a meaningful indicator of how
effectively and efficiently we invest capital in our business.
30
In fiscal 2023, we changed the methodology used to determine average invested capital. Previously, average invested capital
was computed using the average of the most recent 13 month-end balances. Average invested capital is now calculated using
the average of the most recent five quarter-end balances, which are disclosed in the relevant quarterly reports on Form 10-Q and
Annual Reports on Form 10-K. Return on average invested capital computed using the new methodology does not materially
differ from the result computed using the previous methodology for fiscal 2023. The new methodology was consistently applied
to return on average invested capital for each period presented.
Definitions
Aggregations.
From time to time, to explain our results of operations or to highlight trends and uncertainties affecting our business, we
aggregate markets according to stage of economic development as defined by the International Monetary Fund (IMF), and we
aggregate brands by beverage alcohol category. Below, we define the geographic and brand aggregations used in this report.
Geographic Aggregations.
In “Results of Operations - Fiscal 2024 Market Highlights,” we provide supplemental information for our top markets
ranked by percentage of reported net sales. In addition to markets listed by country name, we include the following
aggregations:
•
“Developed International” markets are “advanced economies” as defined by the IMF, excluding the United States. Our top
developed international markets were Germany, Australia, the United Kingdom, France, Canada, and Spain. This
aggregation represents our net sales of branded products to these markets.
•
“Spain” includes Spain and certain other surrounding territories.
•
“Emerging” markets are “emerging and developing economies” as defined by the IMF. Our top emerging markets were
Mexico, Poland, and Brazil. This aggregation represents our net sales of branded products to these markets.
•
“Brazil” includes Brazil, Uruguay, Paraguay, and certain other surrounding territories.
•
“Travel Retail” represents our net sales of branded products to global duty-free customers, other travel retail customers,
and the U.S. military, regardless of customer location.
•
“Non-branded and bulk” includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey and
wine, regardless of customer location.
Brand Aggregations.
In “Results of Operations - Fiscal 2024 Brand Highlights,” we provide supplemental information for our top brands
ranked by percentage of reported net sales. In addition to brands listed by name, we include the aggregations outlined below.
In fiscal 2023, we began presenting “Ready-to-Drink” products as a separate aggregation due to its more significant
contribution to our growth in recent years and industry-wide category growth trends. “Whiskey” no longer contains Jack
Daniel’s ready-to-drink (RTD) and ready-to-pour (RTP), and “Tequila” no longer includes New Mix. These brands are now
included in the “Ready-to-Drink” brand aggregation.
•
“Whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs. The brands included in this category are the
Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products defined below), the Woodford Reserve family of
brands (Woodford Reserve), the Old Forester family of brands (Old Forester), The Glendronach, Glenglassaugh, Benriach,
Slane Irish Whiskey, and Coopers’ Craft.
•
“American whiskey” includes the Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products defined
below) and premium bourbons (defined below).
•
“Premium bourbons” includes Woodford Reserve, Old Forester, and Coopers’ Craft.
•
“Super-premium American whiskey” includes Woodford Reserve, Gentleman Jack, and other super-premium Jack
Daniel's expressions.
•
“Ready-to-Drink” includes all ready-to-drink (RTD) and ready-to-pour (RTP) products. The brands included in this
category are Jack Daniel’s RTD and RTP products (JD RTD/RTP), New Mix, and other RTD/RTP products.
31
•
“Jack Daniel’s RTD/RTP” products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Cola,
Jack Daniel’s & Coca-Cola RTD, Jack Daniel’s Country Cocktails, Jack Daniel’s Double Jack, and other malt- and
spirit-based Jack Daniel’s RTDs, along with Jack Daniel’s Winter Jack RTP.
•
“Jack Daniel’s & Coca-Cola RTD” includes all Jack Daniel’s and Coca-Cola RTD products and Jack Daniel’s
bulk whiskey shipments for the production of this product.
•
“Tequila” includes el Jimador, the Herradura family of brands (Herradura), and other tequilas.
•
“Wine” includes Korbel California Champagnes and Sonoma-Cutrer wines (which was divested on April 30, 2024). See
Note 14 to the Condensed Consolidated Financial Statements for details.
•
“Vodka” includes Finlandia, which was divested on November 1, 2023. See Note 14 to the Condensed Consolidated
Financial Statements for details.
•
“Rest of Portfolio” includes Diplomático, Chambord, Gin Mare, Korbel Brandy, and Fords Gin.
•
“Non-branded and bulk” includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey and
wine.
•
“Jack Daniel’s family of brands” includes Jack Daniel’s Tennessee Whiskey (JDTW), JD RTD/RTP, Jack Daniel’s
Tennessee Honey (JDTH), Gentleman Jack, Jack Daniel’s Tennessee Apple (JDTA), Jack Daniel’s Tennessee Fire (JDTF),
Jack Daniel’s Single Barrel Collection (JDSB), Jack Daniel’s Bonded Tennessee Whiskey, Jack Daniel’s Sinatra Select,
Jack Daniel’s Tennessee Rye Whiskey (JDTR), Jack Daniel’s Triple Mash Blended Straight Whiskey, Jack Daniel’s
Bottled-in-Bond, Jack Daniel’s American Single Malt, Jack Daniel’s 12 Year Old, Jack Daniel’s 10 Year Old, and other
Jack Daniel’s expressions.
Other Metrics.
•
“Shipments.” We generally record revenues when we ship or deliver our products to our customers. In this report, unless
otherwise specified, we refer to shipments when discussing volume.
•
“Depletions.” This is a term commonly used in the beverage alcohol industry to describe volume. Depending on the
context, depletions usually means either (a) where Brown-Forman is the distributor, shipments directly to retail or
wholesale customers or (b) where Brown-Forman is not the distributor, shipments from distributor customers to retailers
and wholesalers. We believe that depletions measure volume in a way that more closely reflects consumer demand than our
shipments to distributor customers do.
•
“Consumer takeaway.” When discussing trends in the market, we refer to consumer takeaway, a term commonly used in
the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets, including products
purchased through e-commerce channels, as measured by volume or retail sales value. This information is provided by
third parties, such as Nielsen and the National Alcohol Beverage Control Association (NABCA). Our estimates of market
share or changes in market share are derived from consumer takeaway data using the retail sales value metric. We believe
consumer takeaway is a leading indicator of consumer demand trends.
•
“Estimated net change in distributor inventories.” We generally recognize revenue when our products are shipped or
delivered to customers. In the United States and certain other markets, our customers are distributors that sell downstream
to retailers and consumers. We believe that our distributors’ downstream sales more closely reflect actual consumer
demand than do our shipments to distributors. Our shipments increase distributors’ inventories, while distributors’
depletions (as described above) reduce their inventories. Therefore, it is possible that our shipments do not coincide with
distributors’ downstream depletions and merely reflect changes in distributors’ inventories. Because changes in
distributors’ inventories could affect our trends, we believe it is useful for investors to understand those changes in the
context of our operating results.
We perform the following calculation to determine the “estimated net change in distributor inventories”:
•
For both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by
(a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a
shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion
volumes. We subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year
percentage change of the organic amount to calculate the “estimated net change in distributor inventories.”
32
•
A positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends
could decrease as distributors reduce inventories; whereas, a negative difference is interpreted as a net decrease in
distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories.
33
Significant Developments
Below, we discuss the significant developments in our business during fiscal 2023 and fiscal 2024. These developments
relate to acquisitions and divestitures, Finlandia brand name impairment, tariffs, supply chain disruptions, innovation, and
capital deployment.
Acquisitions and Divestitures
During the third quarter of fiscal 2023, we acquired the Gin Mare brand and the Diplomático brand and related assets for a
combined purchase price of $1.2 billion. In fiscal 2023, these brands positively contributed to our reported net sales growth and
negatively impacted our reported operating income growth. The negative effect on fiscal 2023 reported operating income was
largely driven by transaction expenses of $44 million related to the termination of certain distribution contracts (certain post-
closing costs and expenses). In fiscal 2024, these brands positively contributed to our reported net sales growth and reported
operating income.
During the third quarter of fiscal 2024, we sold the Finlandia vodka business for $196 million cash and entered into a
related TSA for this business. This transaction resulted in a pre-tax gain of $92 million. The TSA negatively impacted our
reported gross margin during fiscal 2024.
During the fourth quarter of fiscal 2024, we sold the Sonoma-Cutrer wine business in exchange for an ownership
percentage of 21.4% in Duckhorn along with $50 million cash and entered into a related TSA for this business. This transaction
resulted in a pre-tax gain of $175 million.
Finlandia Impairment
During the third quarter of fiscal 2023, we recognized a non-cash impairment charge of $96 million for the Finlandia
brand name, largely due to macroeconomic conditions including rising interest rates and increasing costs.
Tariffs
The removal of the European Union and United Kingdom tariffs on American whiskey (tariffs) positively affected our
results during fiscal 2023. Tariffs include the combined effect of tariff-related costs, whether arising as a reduction of reported
net sales or as an increase in reported cost of sales. For fiscal 2023, we estimated that lower costs associated with tariffs (a)
reduced our reported cost of sales growth by approximately four percentage points, and (b) increased gross margin by
approximately one and a half percentage points.
Supply Chain Disruptions
Supply chain disruptions negatively impacted our business during fiscal 2023 due to global logistics and transportation
challenges that constrained product movement and increased transportation costs.
We further discuss the effects of these developments on our results where relevant below.
Innovation
•
Jack Daniel’s family of brands. Innovation within the Jack Daniel’s family of brands has contributed to our growth in the
last two fiscal years as described below.
◦
In fiscal 2023, we announced our global relationship with The Coca-Cola Company to introduce the Jack Daniel's &
Coca-Cola RTD to select markets around the world. We discuss the impact of the continued product launch on our
fiscal 2024 results where relevant below.
◦
In fiscal 2023, we launched Jack Daniel’s Bonded Tennessee Whiskey and Jack Daniel’s Triple Mash Blended
Straight Whiskey in the United States and certain developed international and emerging markets.
◦
In fiscal 2023, we launched Jack Daniel’s 12 Year Old in the United States.
◦
In fiscal 2023, we launched Jack Daniel's Tennessee Travelers Whiskey in Travel Retail.
◦
In fiscal 2023 and fiscal 2024, we continued the international launch of Jack Daniel’s Tennessee Apple, expanding to
certain developed international and emerging markets.
◦
In fiscal 2024, we launched Jack Daniel’s Bonded Rye and Jack Daniel’s Single Barrel Rye Barrel Proof in the United
States.
34
◦
In fiscal 2024, we launched Jack Daniel’s American Single Malt in Travel Retail.
◦
In fiscal 2024, we introduced the Glenglassaugh old and rare cask program.
Capital Deployment
We have focused our capital deployment initiatives on (a) investing fully in our existing business, (b) continuing our
acquisitions and divestitures strategy, and (c) returning cash to our stockholders.
•
Investments. During fiscal 2023 and fiscal 2024, our capital expenditures totaled $411 million and focused on enabling the
growth of our premium whiskey, tequila, and rum brands:
◦
During fiscal 2021, our Board of Directors approved a $125 million capital investment to expand our bourbon-making
capacity in Kentucky. We completed this project in fiscal 2024. We also built two additional barrel warehouses at our
Woodford Reserve distillery during fiscal 2024 to support the continued growth of Woodford Reserve.
◦
During fiscal 2022, our Board of Directors approved a $50 million capital investment to expand our scotch-making
capacity in Scotland. We expect to complete this project in fiscal 2026. We also built an additional barrel warehouse at
our The Glendronach distillery during fiscal 2023 and two additional barrel warehouses at our Glenglassaugh distillery
during fiscal 2024 to support the continued growth of those brands.
◦
During fiscal 2023, our Board of Directors approved an $85 million capital investment to expand our JDTW capacity
in Tennessee. We also built four additional barrel warehouses at our Jack Daniel’s distillery during fiscal 2023 and
fiscal 2024 to support the continued growth of JDTW.
◦
During fiscal 2023, our Board of Directors approved a $200 million capital investment to expand our tequila-making
capacity in Mexico.
◦
During fiscal 2024, we built an additional barrel warehouse in Panamá to support the continued growth of Diplomático
rum.
•
Acquisitions and divestitures. During fiscal 2023, we acquired the Gin Mare brand and the Diplomático brand and related
assets. During fiscal 2024, we sold the Finlandia vodka business and Sonoma-Cutrer wine business. See Notes 13 and 14 to
the Consolidated Financial Statements for more information.
•
Cash returned to stockholders. During fiscal 2023 and fiscal 2024, we returned a total of $1.2 billion to our stockholders
through $782 million in regular dividends and $400 million in share repurchases.
35
Executive Summary
Fiscal 2024 Highlights
•
We delivered reported net sales of $4.2 billion, a decrease of 1% compared to fiscal 2023. The decline in reported net sales
was driven by lower volumes, largely offset by favorable price/mix and the positive effect of acquisitions and divestitures.
An estimated net decrease in distributor inventories negatively impacted reported net sales.
◦
From a brand perspective, the decline in reported net sales was driven by JDTW, partially offset by growth from our
recently acquired brands, Diplomático and Gin Mare.
◦
From a geographic perspective, the decline in reported net sales was driven by the United States and Japan, partially
offset by growth in Mexico and Germany.
•
We delivered reported gross profit of $2.5 billion, an increase of 1% compared to fiscal 2023. Gross margin increased to
60.5% in fiscal 2024, up 1.5 percentage points from 59.0% in fiscal 2023. The increase in gross margin was primarily
driven by favorable price/mix and lower supply chain disruption related costs, partially offset by higher input costs and the
negative effect of foreign exchange.
•
We delivered reported operating income of $1.4 billion, an increase of 25% compared to fiscal 2023, driven primarily by
the positive effect of acquisitions and divestitures (the gains on sale of the Finlandia vodka business and the Sonoma-
Cutrer wine business), favorable price/mix, the absence of the prior year period Finlandia non-cash impairment, and lower
supply chain disruption related costs, partially offset by operating expense growth, the negative effect of foreign exchange,
and the $23 million commitment to the Foundation and Dendrifund.
•
We delivered diluted earnings per share of $2.14, an increase of 32% compared to fiscal 2023, driven primarily by the
increase in reported operating income.
•
Our return on average invested capital increased to 17.3% in fiscal 2024, compared to 15.3% in fiscal 2023. This increase
was driven by higher reported operating income and the benefit of a lower effective tax rate, partially offset by higher
invested capital.
36
Summary of Operating Performance Fiscal 2023 and Fiscal 2024
2023 vs. 2024
Fiscal year ended April 30
2023
2024
Reported
Change
Organic
Change1
Net sales
$
4,228
$
4,178
(1%)
(1%)
Cost of sales
$
1,734
$
1,652
(5%)
(7%)
Gross profit
$
2,494
$
2,526
1%
2%
Advertising
$
506
$
529
4%
2%
SG&A
$
742
$
826
11%
7%
Gain on business divestitures
$
—
$
(267)
nm4
nm4
Other expense (income), net
$
119
$
24
nm4
nm4
Operating income
$
1,127
$
1,414
25%
(2%)
Total operating expenses2
$
1,367
$
1,379
1%
7%
As a percentage of net sales3
Gross profit
59.0 %
60.5 %
1.5pp
Operating income
26.7 %
33.8 %
7.2pp
Interest expense, net
$
81
$
113
40%
Effective tax rate
23.0 %
21.2 %
(1.8pp)
Diluted earnings per share
$
1.63
$
2.14
32%
Return on average invested capital1
15.3 %
17.3 %
2.0pp
Note: Results may differ due to rounding
1See “Non-GAAP Financial Measures” above for details on our use of “organic change” and “return on average invested capital,” including
how we calculate these measures and why we think this information is useful to readers.
2Operating expenses include advertising expense, SG&A expense, and other expense (income), net.
3Year-over-year changes in percentages are reported in percentage points (pp).
4Percentage change is not meaningful.
37
Results of Operations
Fiscal 2024 Market Highlights
The following table shows net sales results for our top markets, summarized by geographic area, for fiscal 2024 compared
to fiscal 2023. We discuss results of the markets most affecting our performance below the table.
Top Markets
Net Sales % Change vs. 2023
Geographic area1
% of Fiscal
2024 Net
Sales
Reported
Acquisitions
and
Divestitures
JDCC2
Foreign
Exchange
Organic3
United States
45%
(4%)
—%
—%
—%
(4%)
Developed International
28%
(2%)
(2%)
—%
—%
(5%)
Germany
6%
10%
(1%)
—%
(2%)
7%
Australia
5%
(8%)
—%
—%
2%
(6%)
United Kingdom
4%
(11%)
(1%)
—%
(2%)
(14%)
France
3%
—%
(2%)
—%
(1%)
(3%)
Canada
1%
2%
(1%)
—%
1%
2%
Spain
1%
2%
(1%)
—%
(2%)
(1%)
Rest of Developed International
7%
(4%)
(6%)
—%
—%
(9%)
Emerging
21%
5%
1%
—%
2%
8%
Mexico
7%
19%
—%
—%
(13%)
6%
Poland
3%
15%
3%
—%
(6%)
11%
Brazil
2%
5%
—%
—%
(2%)
3%
Rest of Emerging
9%
(6%)
2%
—%
14%
10%
Travel Retail
4%
8%
(1%)
—%
—%
6%
Non-branded and bulk
2%
(2%)
—%
—%
—%
(2%)
Total
100%
(1%)
(1%)
—%
—%
(1%)
Note: Results may differ due to rounding
1See “Definitions” above for definitions of market aggregations presented here.
2"JDCC” is included in the Other Items Non-GAAP Financial Measure. See Presentation Basis above for additional details.
3See “Non-GAAP Financial Measures” above for details on our use of “organic change” in net sales, including how we calculate this measure and why we
believe this information is useful to readers.
The United States’ reported net sales declined 4%, driven by lower volumes largely reflecting an estimated net decrease in
distributor inventories. The decline was partially offset by higher prices across our portfolio, led by el Jimador and Woodford
Reserve, and the growth of our super-premium Jack Daniel’s expressions.
Developed International
•
Germany’s reported net sales increased 10%, led by the launch of the Jack Daniel’s & Coca-Cola RTD, the positive effect
of foreign exchange, and the acquisitions of Diplomático and Gin Mare, partially offset by lower volumes of Jack Daniel’s
& Cola.
•
Australia’s reported net sales declined 8%, led by lower volumes of JD RTDs and the negative effect of foreign exchange,
partially offset by higher prices for JD RTDs.
•
The United Kingdom’s reported net sales declined 11%, driven by lower volumes of Jack Daniel’s & Cola, which we
previously distributed, due to the introduction of the Jack Daniel’s & Coca-Cola RTD that we do not distribute in this
market, as well as lower JDTW volumes. The decline was partially offset by the positive effect of foreign exchange.
•
France’s reported net sales were flat due to JDTW declines, offset by the acquisition of Diplomático and the positive effect
of foreign exchange.
38
•
Reported net sales in the Rest of Developed International declined 4%, primarily driven by lower volumes across our
portfolio in Japan due to an estimated net decrease in distributor inventories in preparation for the transition to owned
distribution beginning April 1, 2024. This decline was partially offset by the acquisitions of Gin Mare and Diplomático.
Emerging
•
Mexico’s reported net sales increased 19%, driven by the positive effect of foreign exchange and higher prices of New
Mix.
•
Poland’s reported net sales increased 15%, led by favorable price/mix and higher volumes of JDTW, as well as the
positive effect of foreign exchange.
•
Brazil’s reported net sales increased 5%, driven by higher volumes of JDTA along with the positive effect of foreign
exchange. These gains were partially offset by lower volumes of JDTW, reflecting an estimated net decrease in distributor
inventories, and JD RTD declines.
•
Reported net sales in the Rest of Emerging declined 6%, driven by the negative effect of foreign exchange, reflecting the
strengthening of the dollar primarily against the Turkish lira, and lower JDTW volumes in the United Arab Emirates due to
a net decrease in distributor inventories. These declines were partially offset by JDTW growth in Türkiye.
Travel Retail’s reported net sales increased 8%, driven by growth of our super-premium American whiskey portfolio and the
acquisitions of Gin Mare and Diplomático. An estimated net increase in distributor inventories positively impacted reported net
sales.
39
Fiscal 2024 Brand Highlights
The following table highlights the global results of our top brands for fiscal 2024 compared to fiscal 2023. We discuss
results of the brands most affecting our performance below the table.
Top Brands
Net Sales % Change vs. 2023
Product category / brand family /
brand1
Reported
Acquisitions
&
Divestitures
JDCC2
Foreign
Exchange
Organic3
Whiskey
(3%)
—%
—%
1%
(2%)
JDTW
(6%)
—%
—%
2%
(5%)
JDTH
(8%)
—%
—%
—%
(8%)
Gentleman Jack
(10%)
—%
—%
2%
(9%)
JDTA
32%
—%
—%
1%
33%
JDTF
(11%)
—%
—%
—%
(11%)
Woodford Reserve
2%
—%
—%
—%
3%
Old Forester
11%
—%
—%
—%
11%
Rest of Whiskey
15%
—%
—%
1%
16%
Ready-to-Drink
2%
—%
1%
(4%)
—%
JD RTD/RTP
(6%)
—%
1%
—%
(5%)
New Mix
32%
—%
—%
(15%)
17%
Tequila
(4%)
—%
—%
(3%)
(7%)
el Jimador
—%
—%
—%
(1%)
(1%)
Herradura
(10%)
—%
—%
(3%)
(13%)
Wine
—%
—%
—%
—%
—%
Vodka (Finlandia)
(16%)
19%
—%
1%
3%
Rest of Portfolio
61%
(49%)
—%
3%
15%
Non-branded and bulk
(2%)
—%
—%
—%
(2%)
Note: Results may differ due to rounding
1See “Definitions” above for definitions of brand aggregations presented here.
2"JDCC” is included in the Other Items Non-GAAP Financial Measure. See Presentation Basis above for additional details.
3See “Non-GAAP Financial Measures” above for details on our use of “organic change” in net sales, including how we calculate this measure and why we
believe this information is useful to readers.
Whiskey
•
Reported net sales for JDTW decreased 6%, led by declines in Japan, the United States, the United Arab Emirates, and
Sub-Saharan Africa, along with the negative effect of foreign exchange, primarily reflecting the strengthening of the dollar
against the Turkish lira. These declines were partially offset by higher prices and volumes in Türkiye. An estimated net
decrease in distributor inventories negatively impacted reported net sales.
•
Reported net sales for JDTH declined 8%, driven by lower volumes in the United States largely reflecting an estimated net
decrease in distributor inventories.
•
Reported net sales for Gentleman Jack declined 10%, driven by lower volumes in the United States, largely due to an
estimated net decrease in distributor inventories, and the negative effect of foreign exchange. The decline was partially
offset by higher prices in Türkiye.
•
Reported net sales for JDTA increased 32%, led by higher volumes in Brazil and the continued product launch in South
Korea.
•
Reported net sales for JDTF declined 11%, driven by lower volumes in the United States largely reflecting an estimated
net decrease in distributor inventories.
40
•
Woodford Reserve reported net sales increased 2%, driven by favorable price/mix, partially offset by lower volumes in
the United States reflecting an estimated net decrease in distributor inventories.
•
Old Forester reported net sales increased 11%, driven by favorable price/mix and higher volumes in the United States.
An estimated net decrease in distributor inventories negatively impacted reported net sales.
•
Reported net sales for Rest of Whiskey increased 15%, led by the growth of our other super-premium Jack Daniel's
expressions and Glenglassaugh old and rare cask sales.
Ready-to-Drink
•
The JD RTD/RTP brands reported net sales declined 6%, led by lower volumes of Jack Daniel’s & Cola RTD, partially
offset by the continued launch of the Jack Daniel’s & Coca-Cola RTD. An estimated net decrease in distributor inventories
in the United States negatively impacted reported net sales.
•
New Mix grew reported net sales 32%, driven by the positive effect of foreign exchange and higher prices in Mexico.
Tequila
•
el Jimador’s reported net sales were flat, driven by lower volumes in Mexico and the United States, offset by higher prices
led by the United States and the positive effect of foreign exchange.
•
Herradura reported net sales declined 10%, driven by lower volumes in the United States and Mexico, partially offset by
the positive effect of foreign exchange. An estimated net decrease in distributor inventories negatively impacted reported
net sales.
Wine reported net sales were flat as Korbel California Champagne declines in the United States were offset by higher volumes
of Sonoma-Cutrer. An estimated net increase in distributor inventories positively impacted reported net sales. During the fourth
quarter of fiscal 2024, we sold our Sonoma-Cutrer wine business. See Note 14 to the Condensed Consolidated Financial
Statements and Non-GAAP Financial Measures above for details.
Vodka (Finlandia) reported net sales declined 16%, due to lower volumes. During the third quarter of fiscal 2024, we sold our
Finlandia vodka business. See Note 14 to the Condensed Consolidated Financial Statements and Non-GAAP Financial
Measures above for details.
Rest of Portfolio reported net sales increased 61%, largely driven by the acquisitions of Diplomático and Gin Mare.
41
Year-Over-Year Comparisons
Commentary below compares fiscal 2024 to fiscal 2023 results. A comparison of fiscal 2023 to fiscal 2022 results may be
found in “Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations” of our
Annual Report on Form 10-K for the fiscal year ended April 30, 2023 (2023 Form 10-K).
Net Sales
2024
Percentage change versus the prior fiscal year ended April 30
Volume
Price/mix
Total
Change in reported net sales
(9%)
8%
(1%)
Acquisitions and divestitures
—%
(1%)
(1%)
JDCC1
1%
(1%)
—%
Foreign exchange
—%
—%
—%
Change in organic net sales
(8%)
6%
(1%)
Note: Results may differ due to rounding
1“JDCC” is included in the Other Items Non-GAAP Financial Measure. See Presentation Basis above for additional details.
Reported net sales of $4.2 billion decreased 1%, or $50 million, in fiscal 2024 compared to fiscal 2023, driven by lower
volumes, largely offset by favorable price/mix and the positive effect of acquisitions and divestitures. Lower volumes were led
by Jack Daniel’s & Cola, due to the introduction of the Jack Daniel’s & Coca-Cola RTD, and JDTW, reflecting an estimated
net decrease in distributor inventories. Price/mix largely reflects higher prices across much of our portfolio, led by JDTW, most
notably in Türkiye in response to high inflation and currency devaluation. See “Results of Operations - Fiscal 2024 Market
Highlights” and “Results of Operations - Fiscal 2024 Brand Highlights” above for details on the factors contributing to the
change in reported net sales for fiscal 2024.
Cost of Sales
2024
Percentage change versus the prior fiscal year ended April 30
Volume
Cost/mix
Total
Change in reported cost of sales
(9%)
4%
(5%)
Acquisitions and divestitures
—%
(1%)
(1%)
JDCC1
1%
—%
—%
Foreign exchange
—%
(2%)
(2%)
Change in organic cost of sales
(8%)
1%
(7%)
Note: Results may differ due to rounding
1“JDCC” is included in the Other Items Non-GAAP Financial Measure. See Presentation Basis above for additional details.
Reported cost of sales of $1.7 billion decreased $82 million, or 5%, in fiscal 2024 compared to fiscal 2023, driven by
lower volumes partially offset by cost/mix. Lower volumes were led by Jack Daniel’s & Cola, due to the introduction of the
Jack Daniel’s & Coca-Cola RTD, and JDTW, reflecting an estimated net decrease in distributor inventories. Cost/mix reflects
(a) higher input costs, (b) the negative effect of foreign exchange, and (c) the negative effect of acquisitions and divestitures,
partially offset by the absence of the significant prior year supply chain disruption related costs.
42
Gross Profit
Percentage change versus the prior fiscal year ended April 30
2024
Change in reported gross profit
1%
Acquisitions and divestitures
—%
JDCC1
—%
Foreign exchange
2%
Change in organic gross profit
2%
Note: Results may differ due to rounding
1“JDCC” is included in the Other Items Non-GAAP Financial Measure. See Presentation Basis above for additional details.
Gross Margin
Fiscal year ended April 30
2024
Prior year gross margin
59.0%
Price/mix
2.8%
Cost (excluding tariffs)
(0.5%)
Foreign exchange
(0.8%)
Other1
0.1%
Change in gross margin
1.5%
Current year gross margin
60.5%
Note: Results may differ due to rounding
1“Other” comprises the impact of acquisitions and divestitures, tariffs, and JDCC, which is included in the Other Items Non-GAAP Financial Measure (see
Presentation Basis above for additional details).
Reported gross profit of $2.5 billion increased $32 million, or 1%, in fiscal 2024 compared to fiscal 2023. Gross margin
increased to 60.5% in fiscal 2024, up 1.5 percentage points from 59.0% in fiscal 2023. The increase in gross margin was
primarily driven by favorable price/mix and lower supply chain disruption related costs, partially offset by higher input costs
and the negative effect of foreign exchange.
Operating Expenses
Percentage change versus the prior fiscal year ended April 30
2024
Reported
Acquisitions &
Divestitures
Impairment
Foundation1
Foreign
Exchange
Organic
Advertising
4%
(2%)
—%
—%
(1%)
2%
SG&A
11%
—%
—%
(3%)
(1%)
7%
Total operating expenses2
1%
2%
8%
(2%)
(1%)
7%
Note: Results may differ due to rounding
1“Foundation” is included in the Other Items Non-GAAP Financial Measure. See Presentation Basis above for additional details.
2Operating expenses include advertising expense, SG&A expense, and other expense (income), net.
Reported operating expenses totaled $1.4 billion, an increase of $12 million, or 1%, in fiscal 2024 compared to fiscal
2023. The increase in reported operating expenses was driven by elevated SG&A expense, advertising expense growth, and the
negative effect of foreign exchange. The increase was largely offset by the absence of a non-cash impairment charge for the
Finlandia brand name in the prior year, as well as the absence of post-closing costs and expenses in connection with the
acquisitions of Diplomático and Gin Mare in the prior year.
•
Reported advertising expenses increased 4% in fiscal 2024, driven by increased investment in JDTW, advertising
expense for the recently acquired Gin Mare and Diplomático brands, and advertising expense associated with the
launch of Jack Daniel’s & Coca-Cola RTD.
•
Reported SG&A expenses increased 11% in fiscal 2024, led by higher compensation and benefit-related expenses and
the commitment to the Foundation and Dendrifund.
43
Operating Income
Percentage change versus the prior fiscal year ended April 30
2024
Change in reported operating income
25%
Acquisitions and divestitures
(27%)
Impairment charges
(7%)
Other items1
2%
Foreign exchange
4%
Change in organic operating income
(2%)
Note: Results may differ due to rounding
1Other Items include “JDCC” and “Foundation”. See “Non-GAAP Financial Measures” above for additional details.
Reported operating income was $1.4 billion in fiscal 2024, an increase of $287 million, or 25%, compared to fiscal
2023. Operating margin increased 7.2 percentage points to 33.8% in fiscal 2024 from 26.7% in fiscal 2023, driven primarily by
the positive effect of acquisitions and divestitures (gains on sale of the Finlandia vodka business and the Sonoma-Cutrer wine
business), favorable price/mix, the absence of the prior year period Finlandia non-cash impairment, and lower supply chain
disruption related costs, partially offset by operating expense growth, the negative effect of foreign exchange, and the
commitment to the Foundation and Dendrifund.
Interest expense (net) increased $32 million, or 40%, in fiscal 2024 compared to fiscal 2023, due to a higher average
debt balances and higher average interest rates on borrowings..
Our effective tax rate for fiscal 2024 was 21.2% compared to 23.0% in fiscal 2023. The decrease in our effective tax rate
was driven primarily by the decreased impact of foreign operations and state taxes and the beneficial impact of tax rate
differences on the sale of the Finlandia vodka business, which was partially offset by the absence of the net benefit from the
reversal of the valuation allowances and the impact of the prior fiscal year tax true-ups in fiscal 2024. See Note 12 to the
Consolidated Financial Statements for details.
Diluted earnings per share were $2.14 in fiscal 2024, an increase of 32% compared to fiscal 2023, driven primarily by
the increase in reported operating income.
Fiscal 2025 Outlook
Below we discuss our outlook for fiscal 2025, which reflects the trends, developments, and uncertainties (including those
described above) that we expect to affect our business.
We anticipate a return to growth for organic net sales and organic operating income in fiscal 2025 driven by gains in
international markets and the benefit of normalizing inventory trends. This outlook is tempered by our belief that global
macroeconomic and geopolitical uncertainties will continue to create a challenging operating environment. Accordingly, we
expect the following in fiscal 2025:
•
Organic net sales growth in the 2% to 4% range.
•
Organic operating income growth in the 2% to 4% range.
•
Our effective tax rate to be in the range of approximately 21% to 23%.
•
Capital expenditures planned to be in the range of $195 to $205 million.
Liquidity and Capital Resources
We generate strong cash flows from operations, which enable us to meet current obligations, fund capital expenditures,
and return cash to our stockholders through regular dividends and, from time to time, through share repurchases and special
dividends. We believe our investment-grade credit ratings (A1 by Moody's and A- by S&P) provide us with financial flexibility
when accessing global debt capital markets and allow us to reserve adequate debt capacity for investment opportunities and
unforeseen events.
Our operating cash flows are supplemented by cash and cash equivalent balances, as well as access to other liquidity
sources. Cash and cash equivalents were $374 million at April 30, 2023, and $446 million at April 30, 2024. As of April 30,
2024, approximately 50% of our cash and cash equivalents were held by our foreign subsidiaries whose earnings we expect to
44
reinvest indefinitely outside of the United States. We continue to evaluate our future cash deployment and may decide to
repatriate additional cash held by our foreign subsidiaries. This may require us to provide for and pay additional taxes.
We have a $900 million commercial paper program that we use, together with our cash flow from operations, to fund our
short-term operational needs. See Note 7 to the Consolidated Financial Statements for outstanding commercial paper balances,
interest rates, and days to maturity at April 30, 2023 and April 30, 2024. The average balances, interest rates, and original
maturities during 2023 and 2024 are presented below.
(Dollars in millions)
2023
2024
Average commercial paper
$
158
$
475
Average interest rate
4.69 %
5.46 %
Average days to maturity at issuance
41
32
Our commercial paper program is supported by available commitments under our undrawn $900 million bank credit
facility that expires on May 26, 2028. Although unlikely, under extreme market conditions, one or more participating banks
may not be able to fund its commitments under our credit facility. To manage this counterparty credit risk, we partner with
banks that have investment grade credit ratings, limit the amount of exposure we have with each bank, and monitor each bank’s
financial conditions.
Our most significant short-term cash requirements relate primarily to funding our operations (such as expenditures for raw
materials, production and distribution, advertising and promotion, and current taxes), dividend payments, and capital
investments. Our most significant longer-term cash requirements primarily include payments related to our long-term debt,
employee benefit obligations, and deferred tax liabilities (see Notes 7, 10, and 12 to the Consolidated Financial Statements).
While we expect to meet our planned short-term liquidity needs largely through cash generated from operations and
borrowings under our commercial paper program, a sustained market deterioration resulting in declines in net sales and profit
could require us to evaluate alternative sources of liquidity. If we have additional liquidity needs, we believe that we could
access financing in the debt capital markets.
We believe our current liquidity position, supplemented by our ability to generate positive cash flows from operations in
the future, and our ample debt capacity enabled by our strong short-term and long-term credit ratings, will be sufficient to meet
all of our future financial commitments.
45
Cash Flow Summary
The following table summarizes our cash flows for each of the last two fiscal years:
(Dollars in millions)
2023
2024
Cash flows from operating activities
$
640 $
647
Investing activities:
Proceeds from business divestitures
$
— $
246
Business acquisitions
(1,195)
—
Additions to property, plant, and equipment
(183)
(228)
Other
23
31
Net cash flows from investing activities
$
(1,355) $
49
Financing activities:
Net change in short-term borrowings
$
234 $
192
Net proceeds from long-term debt
398
—
Acquisition of treasury stock
(400)
Dividends paid
(378)
(404)
Other
(15)
(6)
Net cash flows from financing activities
$
239 $
(618)
Cash provided by operations of $647 million during fiscal 2024 increased $7 million from fiscal 2023, primarily reflecting
a smaller increase in cash used for working capital compared to the prior fiscal year.
Cash provided by investing activities was $49 million during fiscal 2024, compared to $1,355 million used for investing
activities during fiscal 2023. The $1,404 million change largely reflects $1,195 million in cash used to acquire Gin Mare and
Diplomático during fiscal 2023 and proceeds of $246 million received from the divestitures of Finlandia and Sonoma-Cutrer
during fiscal 2024. The change also reflects a $45 million increase in capital expenditures, due largely to additional capital
spending on projects to expand the capacity of our whiskey and tequila production facilities during fiscal 2024.
Cash used for financing activities was $618 million during fiscal 2024, compared to $239 million in cash provided by
financing activities during fiscal 2023. The $857 million change largely reflects a $400 million increase in share repurchases, a
$398 million decrease in net proceeds from long-term debt, a $42 million decrease in net proceeds from short-term borrowings,
and a $26 million increase in dividend payments.
A discussion of our cash flows for fiscal 2023 compared to fiscal 2022 may be found in “Part II, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations,” of our 2023 Form 10-K.
Dividends
In November 2023, our Board of Directors approved a 6% increase in the quarterly cash dividend on our Class A and
Class B common stock from $0.2055 per share to $0.2178 per share, effective with the regular quarterly dividend paid on
January 2, 2024. As a result, the indicated annual cash dividend increased from $0.8220 per share to $0.8712 per share.
On May 23, 2024, our Board of Directors declared a regular quarterly cash dividend on our Class A and Class B common
stock of $0.2178 per share. The dividend is payable on July 1, 2024, to stockholders of record on June 7, 2024.
Share Repurchases
In October 2023, our Board of Directors authorized the repurchase of up to $400 million (excluding brokerage fees and
excise taxes) of outstanding shares of Class A and Class B common stock from October 2, 2023, through October 1, 2024 (the
Repurchase Program), subject to market and other conditions.
Under the Repurchase Program, we repurchased 175,632 Class A shares at an average price of $59.35 per share and
6,736,658 Class B shares at an average price of $57.83 per share, for a total cost of $400 million. The program was completed
in December 2023.
46
Critical Accounting Policies and Estimates
Our financial statements reflect some estimates involved in applying the following critical accounting policies that entail
uncertainties and subjectivity. Using different estimates or policies could have a material effect on our operating results and
financial condition.
Brand Names and Trademarks
When we acquire a business, we allocate the purchase price to the assets and liabilities of the acquired business, including
intangible brand names and trademarks (“brand names”), based on estimated fair value. We do not amortize our brand names,
all of which we consider to have indefinite lives.
We assess our brand names for impairment at least annually, or more frequently if circumstances indicate the carrying
amount may be impaired. A brand name is impaired when its carrying amount exceeds its estimated fair value, in which case
we write down the brand name to its estimated fair value. We estimate the fair value of a brand name using the relief-from-
royalty method. We also consider market values for similar assets when available. Considerable management judgment is
necessary to estimate fair value, including making assumptions about future cash flows, net sales, discount rates, and royalty
rates.
We have the option, before quantifying the fair value of a brand name, to evaluate qualitative factors to assess whether it
is more likely than not that the brand name is impaired. If we determine that is not the case, then we are not required to quantify
the fair value. That assessment also takes considerable management judgment.
Based on our assumptions, we believe none of our brand names are impaired as of April 30, 2024. The carrying amounts
of the recently-acquired Gin Mare and Diplomático brand names approximate their fair values, based on the relief-from-royalty
method, using current assumptions. Reasonably possible changes in those assumptions could result in future impairment of
either of those brand names. For example, we estimate that, all else equal, a 15% decline in projected net sales would result in
an impairment charge of $25 million for the Gin Mare brand name and $35 million for the Diplomático brand name. We also
estimate that, all else equal, a 1 percentage point increase in the discount rate would result in an impairment charge of $29
million for the Gin Mare brand name and $44 million for the Diplomático brand name.
We estimate that the fair values of our other brand names substantially exceed their carrying amounts.
Pension and Other Postretirement Benefits
We sponsor various defined benefit pension plans and postretirement plans providing retiree health care and retiree life
insurance benefits. Benefits are based on factors such as years of service and compensation level during employment. We
expense the benefits expected to be paid over employees' expected service. This requires us to make assumptions to determine
the net benefit costs and obligations, such as discount rates, return on plan assets, the rate of salary increases, expected service,
and health care cost trend rates. We review these assumptions annually and modify them based on current rates and trends when
appropriate. The assumptions also reflect our historical experience and management's best judgment regarding future
expectations. We believe the discount rates and expected return on plan assets are the most significant assumptions.
The discount rate used to measure the benefit obligations is determined at the beginning of each fiscal year using a yield
curve based on the interest rates of high-quality debt securities with maturities corresponding to the expected timing of our
benefit payments. The service cost and interest cost components are measured by applying the specific spot rates along that
yield curve. The expected return on pension plan assets reflects expected capital market returns for each asset class that are
based on historical returns, adjusted for the expected effects of diversification.
The following table compares the assumed discount rates and expected return on assets used in determining net periodic
benefit cost for fiscal 2024 to those to be used in determining that cost for fiscal 2025.
Pension Benefits
Medical and Life
Insurance Benefits
2024
2025
2024
2025
Discount rate for service cost
4.98 %
5.75 %
5.02 %
5.77 %
Discount rate for interest cost
4.79 %
5.59 %
4.78 %
5.58 %
Expected return on plan assets
6.50 %
6.50 %
n/a
n/a
Using these assumptions, we estimate our pension and other postretirement benefit cost for fiscal 2025 will be
approximately $18 million, compared to $21 million for fiscal 2024. Decreasing the assumed discount rates by 50 basis points
would increase the total fiscal 2025 cost by approximately $4 million. Increasing the assumed discount rates by 50 basis points
47
would decrease the total fiscal 2025 cost by approximately $2 million. Decreasing/increasing the assumed return on plan assets
by 50 basis points would increase/decrease the total fiscal 2025 cost by approximately $3 million.
Income Taxes
Significant judgment is required in evaluating our tax positions. We establish liabilities when some positions are likely to
be challenged and may not succeed, despite our belief that our tax return positions are fully supportable. We adjust these
liabilities in light of changing circumstances, such as the progress of a tax audit. We believe current liabilities are appropriate
for all known contingencies, but this situation could change.
Years can elapse before we can resolve a particular matter for which we may have established a tax liability. Although
predicting the final outcome or the timing of resolution of any particular tax matter can be difficult, we believe our liabilities
reflect the likely outcome of known tax contingencies. Unfavorable settlement of any particular issue could require use of our
cash and increase our effective tax rate. Conversely, a favorable resolution could result in reduced cash tax payments, the
reversal of previously established liabilities, or some combination of these results, which could reduce our effective tax rate.
48
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risks
Our enterprise risk management process is intended to ensure that we take risks knowingly and thoughtfully and that we
balance potential risks and rewards. Our integrated enterprise risk management framework is designed to identify, evaluate,
communicate, and appropriately mitigate risks across our operations.
We face market risks arising from changes in foreign currency exchange rates, commodity prices, and interest rates. We
manage market risks through procurement strategies as well as the use of derivative and other financial instruments. Our risk
management program is governed by policies that authorize and control the nature and scope of transactions that we use to
mitigate market risks. Our policy permits the use of derivative financial instruments to mitigate market risks but prohibits their
use for speculative purposes.
Foreign currency exchange rate risk. Foreign currency fluctuations affect our net investments in foreign subsidiaries
and foreign currency-denominated cash flows. In general, we expect our cash flows to be negatively affected by a stronger
dollar and positively affected by a weaker dollar. Our most significant foreign currency exposures include the euro, the British
pound, and the Australian dollar. We manage our foreign currency exposures through derivative financial instruments,
principally foreign currency forward contracts, and debt denominated in foreign currency. We had outstanding currency
derivatives with notional amounts totaling $747 million and $566 million at April 30, 2023 and 2024, respectively.
We estimate that a hypothetical 10% weakening of the dollar compared to exchange rates of hedged currencies as of
April 30, 2024, would decrease the fair value of our then-existing foreign currency derivative contracts by approximately $45
million. This hypothetical change in fair value does not consider the expected inverse change in the underlying foreign currency
exposures.
Commodity price risk. Commodity price changes can affect our production and supply chain costs. Our most significant
commodities exposures include wood, corn, agave, malted barley, rye, and natural gas. We manage some of these exposures
through forward purchase contracts.
Interest rate risk. Interest rate changes affect (a) the fair value of our fixed-rate debt, and (b) cash flows and earnings
related to our variable-rate debt and interest-bearing investments. In addition to currently outstanding debt, any potential future
debt offerings would be subject to interest rate risk.
As of April 30, 2024, our cash and cash equivalents ($446 million) and short-term commercial paper borrowings ($429
million) were exposed to interest rate changes. Based on the then-existing balances of our variable-rate debt and interest-
bearing investments, a hypothetical one percentage point increase in interest rates would result in a negligible change in net
interest expense.
See Notes 15 and 16 to the Consolidated Financial Statements for details on our foreign currency exchange rate risk. See
“Critical Accounting Policies and Estimates” in “Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations” for a discussion of our pension and other postretirement plans' exposure to interest rate risks. Also see
“Item 1A. Risk Factors” for details on how economic conditions affecting market risks also affect the demand for and pricing of
our products and how we are affected by exchange rate fluctuations.
49
Item 8. Financial Statements and Supplementary Data
Table of Contents
Page
Reports of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
50
Reports of Management
Management’s Responsibility for Financial Statements
Our management is responsible for preparing, presenting, and ensuring the integrity of the financial information
presented in this report. The consolidated financial statements were prepared in conformity with accounting principles generally
accepted in the United States, including amounts based on management’s best estimates and judgments. In management’s
opinion, the consolidated financial statements fairly present the Company’s financial position, results of operations, and cash
flows.
The Audit Committee of the Board of Directors, comprising only independent directors, meets regularly with our external
auditors, the independent registered public accounting firm Ernst & Young LLP (EY); with our internal auditors; and with
representatives of management to review accounting, internal control structure, and financial reporting matters. Our internal
auditors and EY have full access to the Audit Committee. As set forth in our Code of Conduct and Corporate Governance
Guidelines, we are firmly committed to adhering to the highest standards of moral and ethical behavior in our business
activities.
Management’s Report on Internal Control over Financial Reporting
Management is also responsible for establishing and maintaining adequate internal control over financial reporting, as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements.
As of the end of our fiscal year, management conducted an assessment of the effectiveness of our internal control over
financial reporting based on the framework and criteria in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that
our internal control over financial reporting was effective as of April 30, 2024. EY, which audited and reported on the
Company’s consolidated financial statements, has audited the effectiveness of our internal control over financial reporting as of
April 30, 2024, as stated in their report.
Dated:
June 14, 2024
By:
/s/ Lawson E. Whiting
Lawson E. Whiting
President and Chief Executive Officer
By:
/s/ Leanne D. Cunningham
Leanne D. Cunningham
Executive Vice President and Chief Financial Officer
51
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Brown-Forman Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Brown-Forman Corporation and Subsidiaries (the
Company) as of April 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income,
stockholders’ equity and cash flows for each of the three years in the period ended April 30, 2024, and the related notes and
financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company at April 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the
period ended April 30, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of April 30, 2024, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated June 14, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures
that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the account or disclosures to which it relates.
52
Valuation of Gin Mare and Diplomático Other Intangible Assets
Description of
the Matter
At April 30, 2024, the balance of the Company’s other intangible assets with indefinite lives
was $990 million. As discussed in Notes 1 and 4 to the consolidated financial statements,
other intangible assets with indefinite lives include intangible brand names and trademarks
(“brand names”) and are assessed for impairment at least annually, or more frequently, if
circumstances indicate the carrying amount may be impaired. The Company’s annual
impairment test did not result in an impairment of the Gin Mare and Diplomático brand names
indefinite-lived intangible assets. The Company estimated the fair value of the Gin Mare and
Diplomático brand names indefinite-lived intangible assets using the relief-from-royalty
method.
Auditing management’s estimate of the fair value of the Gin Mare and Diplomático brand
names was complex due to the significant judgment required to determine the fair value of the
brand names. The fair value estimates were sensitive to significant assumptions used in the
valuation process, such as net sales, discount rates and royalty rates.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
controls that address the risks of material misstatement over the Company’s process to
estimate the fair value of the the Gin Mare and Diplomático brand names, including controls
over management’s review of the selection of assumptions, described above, used in the
valuation models.
To test the estimated fair value of the Company’s Gin Mare and Diplomático brand names, we
performed audit procedures that included, among others, assessing methodologies used in the
valuation models and testing the significant assumptions discussed above. This included
comparing the significant assumptions used by management to observable market data,
current industry and economic trends, changes in the Company’s business model and customer
base, historical operating results, and other relevant factors that would affect the significant
assumptions. We assessed management’s historical estimates and performed sensitivity
analyses of assumptions to evaluate the changes in the fair value of the brand names that
would result from changes in the assumptions. We also involved valuation specialists to assist
in evaluating valuation methodologies and certain assumptions used in the models.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2020.
Louisville, Kentucky
June 14, 2024
53
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Brown-Forman Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Brown-Forman Corporation and Subsidiaries’ internal control over financial reporting as of April 30,
2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Brown-Forman
Corporation and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial
reporting as of April 30, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of April 30, 2024 and 2023, the related consolidated
statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period
ended April 30, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report
dated June 14, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Louisville, Kentucky
June 14, 2024
54
Brown-Forman Corporation and Subsidiaries
Consolidated Statements of Operations
(Dollars in millions, except per share amounts)
Year Ended April 30,
2022
2023
2024
Sales
$
5,081 $
5,372 $
5,328
Excise taxes
1,148
1,144
1,150
Net sales
3,933
4,228
4,178
Cost of sales
1,542
1,734
1,652
Gross profit
2,391
2,494
2,526
Advertising expenses
438
506
529
Selling, general, and administrative expenses
690
742
826
Gain on business divestitures
—
—
(267)
Other expense (income), net
59
119
24
Operating income
1,204
1,127
1,414
Non-operating postretirement expense
13
29
3
Interest income
(5)
(9)
(14)
Interest expense
82
90
127
Income before income taxes
1,114
1,017
1,298
Income taxes
276
234
274
Net income
$
838 $
783 $
1,024
Earnings per share:
Basic
$
1.75 $
1.63 $
2.15
Diluted
$
1.74 $
1.63 $
2.14
The accompanying notes are an integral part of the consolidated financial statements.
55
Brown-Forman Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Dollars in millions)
Year Ended April 30,
2022
2023
2024
Net income
$
838 $
783 $
1,024
Other comprehensive income (loss), net of tax:
Currency translation adjustments
(60)
135
(7)
Cash flow hedge adjustments
53
(27)
—
Postretirement benefits adjustments
77
9
21
Net other comprehensive income (loss)
70
117
14
Comprehensive income
$
908 $
900 $
1,038
The accompanying notes are an integral part of the consolidated financial statements.
56
Brown-Forman Corporation and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions)
April 30,
2023
2024
Assets
Cash and cash equivalents
$
374
$
446
Accounts receivable, net
855
769
Inventories:
Barreled whiskey
1,262
1,490
Finished goods
509
452
Work in process
321
396
Raw materials and supplies
191
218
Total inventories
2,283
2,556
Other current assets
289
265
Total current assets
3,801
4,036
Property, plant, and equipment, net
1,031
1,074
Goodwill
1,457
1,455
Other intangible assets
1,164
990
Equity method investments
3
270
Deferred tax assets
66
69
Other assets
255
272
Total assets
$
7,777
$
8,166
Liabilities
Accounts payable and accrued expenses
$
827
$
793
Accrued income taxes
22
38
Short-term borrowings
235
428
Current portion of long-term debt
—
300
Total current liabilities
1,084
1,559
Long-term debt
2,678
2,372
Deferred tax liabilities
323
315
Accrued pension and other postretirement benefits
171
160
Other liabilities
253
243
Total liabilities
4,509
4,649
Commitments and contingencies
Stockholders’ Equity
Common stock:
Class A, voting, $0.15 par value (170,000,000 shares authorized; 170,000,000 shares issued)
25
25
Class B, nonvoting, $0.15 par value (400,000,000 shares authorized; 314,532,000 shares issued)
47
47
Additional paid-in capital
1
13
Retained earnings
3,643
4,261
Accumulated other comprehensive income (loss), net of tax
(235)
(221)
Treasury stock, at cost (5,215,000 and 11,932,000 shares in 2023 and 2024, respectively)
(213)
(608)
Total stockholders' equity
3,268
3,517
Total liabilities and stockholders' equity
$
7,777
$
8,166
The accompanying notes are an integral part of the consolidated financial statements.
57
Brown-Forman Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in millions)
Year Ended April 30,
2022
2023
2024
Cash flows from operating activities:
Net income
$
838 $
783 $
1,024
Adjustments to reconcile net income to net cash provided by operations:
Gain on business divestitures
—
—
(267)
Asset impairment charges
61
96
7
Depreciation and amortization
79
80
87
Stock-based compensation expense
15
18
25
Deferred income tax provision (benefit)
(11)
(3)
18
Change in fair value of contingent consideration
—
—
9
Other, net
31
18
7
Changes in assets and liabilities, net of business acquisitions and
divestitures:
Accounts receivable
(77)
(21)
88
Inventories
(93)
(403)
(349)
Other current assets
15
4
23
Accounts payable and accrued expenses
37
77
(31)
Accrued income taxes
47
(57)
17
Other operating assets and liabilities
(6)
48
(11)
Cash provided by operating activities
936
640
647
Cash flows from investing activities:
Proceeds from business divestitures
—
—
246
Business acquisitions, net of cash acquired
—
(1,195)
—
Additions to property, plant, and equipment
(138)
(183)
(228)
Other, net
11
23
31
Cash provided by (used for) investing activities
(127)
(1,355)
49
Cash flows from financing activities:
Proceeds from short-term borrowings, maturities greater than 90 days
—
600
—
Repayments of short-term borrowings, maturities greater than 90 days
—
(600)
—
Net change in other short-term borrowings
(196)
234
192
Repayment of long-term debt
—
(250)
—
Proceeds from long-term debt
—
648
—
Acquisition of treasury stock
—
—
(400)
Dividends paid
(831)
(378)
(404)
Other, net
(11)
(15)
(6)
Cash provided by (used for) financing activities
(1,038)
239
(618)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(47)
(14)
(6)
Net increase (decrease) in cash, cash equivalents, and restricted cash
(276)
(490)
72
Cash, cash equivalents, and restricted cash at beginning of period
1,150
874
384
Cash, cash equivalents, and restricted cash at end of period
874
384
456
Less: Restricted cash (included in other current assets) at end of period
(6)
(10)
(10)
Cash and cash equivalents at end of period
$
868 $
374 $
446
Supplemental information:
Cash paid for interest
$
80 $
85 $
125
Cash paid for income taxes
$
226 $
278 $
242
Non-cash additions to property, plant, and equipment
$
15 $
27 $
20
The accompanying notes are an integral part of the consolidated financial statements.
58
Brown-Forman Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity
(Dollars in millions, except per share amounts)
Class A
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
AOCI
Treasury
Stock
Total
Balance at April 30, 2021
$
25
$
47
$
—
$
3,243
$
(422) $
(237) $
2,656
Net income
838
838
Net other comprehensive income (loss)
70
70
Cash dividends ($1.7360 per share)
(831)
(831)
Stock-based compensation expense
15
15
Stock issued under compensation plans
12
12
Loss on treasury stock issued under
compensation plans
(15)
(8)
(23)
Balance at April 30, 2022
25
47
—
3,242
(352)
(225)
2,737
Net income
783
783
Net other comprehensive income (loss)
117
117
Cash dividends ($0.7880 per share)
(378)
(378)
Stock-based compensation expense
18
18
Stock issued under compensation plans
12
12
Loss on treasury stock issued under
compensation plans
(17)
(4)
(21)
Balance at April 30, 2023
25
47
1
3,643
(235)
(213)
3,268
Net income
1,024
1,024
Net other comprehensive income (loss)
14
14
Cash dividends ($0.8466 per share)
(404)
(404)
Acquisition of treasury stock
(404)
(404)
Stock-based compensation expense
25
25
Stock issued under compensation plans
9
9
Loss on treasury stock issued under
compensation plans
(13)
(2)
(15)
Balance at April 30, 2024
$
25
$
47
$
13
$
4,261
$
(221) $
(608) $
3,517
The accompanying notes are an integral part of the consolidated financial statements.
59
Brown-Forman Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars and other currency amounts in millions, except per share data)
1. Accounting Policies
We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the
United States (GAAP). We also apply the following accounting policies when preparing our consolidated financial statements:
Principles of consolidation. Our consolidated financial statements include the accounts of all subsidiaries in which we
have a controlling financial interest. We use the equity method to account for investments in entities that we do not control but
over whose operating and financial policies we have the ability to exercise significant influence. We eliminate all intercompany
transactions.
Estimates. To prepare financial statements that conform with GAAP, our management must make informed estimates that
affect how we report revenues, expenses, assets, and liabilities, including contingent assets and liabilities. Actual results could
differ from these estimates.
Cash equivalents. Cash equivalents include bank demand deposits and all highly liquid investments with original
maturities of three months or less.
Accounts receivable. Accounts receivable are recorded net of an allowance for expected credit losses (allowance for
doubtful accounts). We determine the allowance using information such as customer credit history and financial condition,
historical loss experience, and macroeconomic factors. We write off account balances against the allowance when we have
exhausted our collection efforts. The allowance for doubtful accounts was $7 and $8 at April 30, 2023 and 2024, respectively.
Inventories. Inventories are valued at the lower of cost or net realizable value. Approximately 49% of our consolidated
inventories are valued using the last-in, first-out (LIFO) cost method, which we use for the majority of our U.S. inventories. We
value the remainder of our inventories primarily using the first-in, first-out (FIFO) cost method. FIFO cost approximates current
replacement cost. If we had used the FIFO method for all inventories, they would have been $429 and $512 higher than
reported at April 30, 2023 and 2024, respectively.
Because we age most of our whiskeys in barrels for three years or more, we bottle and sell only a portion of our whiskey
inventory each year. Following industry practice, we classify all barreled whiskey as a current asset. We include warehousing,
insurance, ad valorem taxes, and other carrying charges applicable to barreled whiskey in inventory costs.
We classify agave inventories, bulk tequila, barreled rum, and liquid in bottling tanks as work in process.
Property, plant, and equipment. We state property, plant, and equipment at cost less accumulated depreciation. We
calculate depreciation on a straight-line basis using our estimates of useful life, which are 20–40 years for buildings and
improvements; 3–10 years for machinery, equipment, vehicles, furniture, and fixtures; and 3–7 years for capitalized software.
We assess our property, plant, and equipment for impairment whenever events or changes in circumstances indicate that
the carrying value of those assets may not be recoverable. When we do not expect to recover the carrying value of an asset (or
asset group) through undiscounted future cash flows, we write it down to its estimated fair value. We determine fair value using
discounted estimated future cash flows, considering market values for similar assets when available.
When we retire or dispose of property, plant, and equipment, we remove its cost and accumulated depreciation from our
balance sheet and reflect any gain or loss in operating income. We expense the costs of repairing and maintaining our property,
plant, and equipment as we incur them.
Goodwill and other intangible assets. When we acquire a business, we first allocate the purchase price to identifiable
assets and liabilities, including intangible brand names and trademarks (“brand names”), based on estimated fair value. We then
record any remaining purchase price as goodwill. We do not amortize goodwill or other intangible assets with indefinite lives.
We consider all of our brand names to have indefinite lives.
We assess our goodwill and other indefinite-lived intangible assets for impairment at least annually, or more frequently if
circumstances indicate the carrying amount may be impaired. Goodwill is impaired when the carrying amount of the related
reporting unit exceeds its estimated fair value, in which case we write down the goodwill by the amount of the excess (limited
to the carrying amount of the goodwill). We estimate the reporting unit's fair value using discounted estimated future cash flows
or market information. Similarly, a brand name is impaired when its carrying amount exceeds its estimated fair value, in which
case we write down the brand name to its estimated fair value. We estimate the fair value of a brand name using the relief-from-
60
royalty method. We also consider market values for similar assets when available. Considerable management judgment is
necessary to estimate fair value, including the selection of assumptions about future cash flows, net sales, discount rates, and
royalty rates.
We have the option, before quantifying the fair value of a reporting unit or brand name, to evaluate qualitative factors to
assess whether it is more likely than not that our goodwill or brand names are impaired. If we determine that is not the case,
then we are not required to quantify the fair value. That assessment also takes considerable management judgment.
Revenue recognition. Our net sales predominantly reflect global sales of beverage alcohol consumer products. We sell
these products under contracts with different types of customers, depending on the market. The customer is most often a
distributor, wholesaler, or retailer.
Each contract typically includes a single performance obligation to transfer control of the products to the customer.
Depending on the contract, control is transferred when the products are either shipped or delivered to the customer, at which
point we recognize the transaction price for those products as net sales. The transaction price recognized at that point reflects
our estimate of the consideration to be received in exchange for the products. The actual amount may ultimately differ due to
the effect of various customer incentives and trade promotion activities. In making our estimates, we consider our historical
experience and current expectations, as applicable. Subsequent adjustments recognized for changes in estimated transaction
prices are typically not material.
Net sales exclude taxes we collect from customers that are imposed by various governments on our sales, and are reduced
by payments to customers unless made in exchange for distinct goods or services with fair values approximating the payments.
Net sales include any amounts we bill customers for shipping and handling activities related to the products. We recognize the
cost of those activities in cost of sales during the same period in which we recognize the related net sales. Sales returns, which
are permitted only in limited situations, are not material. Customer payment terms generally range from 30 to 90 days. There
are no significant amounts of contract assets or liabilities.
Cost of sales. Cost of sales includes the costs of receiving, producing, inspecting, warehousing, insuring, and shipping
goods sold during the period.
Advertising costs. We expense the production costs of advertising when the advertisements first take place. We expense
all other advertising costs during the year in which the costs are incurred.
Selling, general, and administrative expenses. Selling, general, and administrative expenses include the costs associated
with our sales force, administrative staff and facilities, and other expenses related to our non-manufacturing functions.
Stock-based compensation. We use stock-based awards as part of our incentive compensation for eligible employees and
directors. We recognize the grant-date fair value of an award as compensation expense on a straight-line basis over the requisite
service period, which typically corresponds to the vesting period for the award. Upon forfeiture of an award prior to vesting, we
reverse any previously recognized compensation expense related to that award. We classify stock-based compensation expense
within selling, general, and administrative expenses.
As we recognize compensation expense for a stock-based award, we concurrently recognize a related deferred tax asset.
The subsequent vesting or exercise of the award will generally result in an actual tax benefit that differs from the deferred tax
asset that had been recorded. The excess (deficiency) of the actual tax benefit over (under) the previously recorded tax asset is
recognized as income tax benefit (expense) on the date of vesting or exercise.
Income taxes. We base our annual provision for income taxes on the pre-tax income reflected in our consolidated
statement of operations. We establish deferred tax liabilities or assets for temporary differences between GAAP and tax
reporting bases and later adjust them to reflect changes in tax rates expected to be in effect when the temporary differences
reverse. We record a valuation allowance as necessary to reduce a deferred tax asset to the amount that we believe is more
likely than not to be realized. We do not provide deferred income taxes on undistributed earnings of foreign subsidiaries that we
expect to indefinitely reinvest. We record a deferred tax charge in prepaid taxes for the difference between GAAP and tax
reporting bases with respect to the elimination of intercompany profit in ending inventory.
We assess our uncertain income tax positions in two steps. First, we evaluate whether the tax position will more likely
than not, based on its technical merits, be sustained upon examination, including resolution of any related appeals or litigation.
For a tax position that does not meet this first criterion, we recognize no tax benefit. For a tax position that does meet the first
criterion, we recognize a tax benefit in an amount equal to the largest amount of benefit that we believe has more than a 50%
likelihood of being realized upon ultimate resolution. We record interest and penalties on uncertain tax positions as income tax
expense.
61
Foreign currency transactions and translation. We report all gains and losses from foreign currency transactions (those
denominated in a currency other than the entity's functional currency) in current income. The U.S. dollar is the functional
currency for most of our consolidated entities. The local currency is the functional currency for some of our consolidated
foreign entities. We translate the financial statements of those foreign entities into U.S. dollars, using the exchange rate in effect
at the balance sheet date to translate assets and liabilities, and using the average exchange rate for the reporting period to
translate income and expenses. We record the resulting translation adjustments in other comprehensive income (loss).
Accounting standards not yet adopted. In November 2023, the Financial Accounting Standards Board (FASB) issued an
updated accounting standard requiring additional disclosures about significant segment expenses and other segment items. The
update also requires interim disclosure of segment information that is currently required only on an annual basis. We are
required to adopt the updated standard for annual disclosures beginning in fiscal 2025, and for interim disclosures in fiscal
2026, with earlier adoption permitted. The update is to be applied retroactively.
In December 2023, FASB issued an updated accounting standard requiring additional disclosures about income taxes,
primarily related to the rate reconciliation and information about income taxes paid. We are required to adopt the new guidance
beginning in fiscal 2026, with earlier adoption permitted. The update can be applied either prospectively or retrospectively.
We are currently evaluating the impact that adopting these accounting standards updates will have on our disclosures.
2. Balance Sheet Information
Supplemental information on our year-end balance sheets is as follows:
April 30,
2023
2024
Other current assets:
Prepaid taxes
$
122 $
100
Other
167
165
$
289 $
265
Property, plant, and equipment:
Land
$
97 $
49
Buildings
717
782
Equipment
889
928
Construction in process
217
181
1,920
1,940
Less accumulated depreciation
889
866
$
1,031 $
1,074
Accounts payable and accrued expenses:
Accounts payable, trade
$
308 $
267
Accrued expenses:
Advertising, promotion, and discounts
216
200
Compensation and commissions
106
105
Excise and other non-income taxes
76
67
Other
121
154
519
526
$
827 $
793
Other liabilities:
Contingent consideration
$
63 $
69
Other
190
174
$
253 $
243
Accumulated other comprehensive income (loss), net of tax:
Currency translation adjustments
$
(104) $
(111)
Cash flow hedge adjustments
10
10
Postretirement benefits adjustments
(141)
(120)
$
(235) $
(221)
62
3. Earnings per Share
We calculate basic earnings per share by dividing net income available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted earnings per share further includes the dilutive effect of
stock-based compensation awards. We calculate that dilutive effect using the “treasury stock method” (as defined by GAAP).
The following table presents information concerning basic and diluted earnings per share:
2022
2023
2024
Net income available to common stockholders
$
838 $
783 $
1,024
Share data (in thousands):
Basic average common shares outstanding
478,879
479,155
476,394
Dilutive effect of stock-based awards
1,686
1,310
826
Diluted average common shares outstanding
480,565
480,465
477,220
Basic earnings per share
$
1.75 $
1.63 $
2.15
Diluted earnings per share
$
1.74 $
1.63 $
2.14
We excluded common stock-based awards for approximately 691,000 shares, 1,107,000 shares, and 1,689,000 shares
from the calculation of diluted earnings per share for 2022, 2023, and 2024, respectively, because they were not dilutive for
those periods under the treasury stock method.
4. Goodwill and Other Intangible Assets
The following table shows the changes in goodwill (which include no accumulated impairment losses) and other
intangible assets over the past two years:
Goodwill
Other
Intangible
Assets
Balance as of April 30, 2022
$
761 $
586
Business acquisitions (Note 13)
652
619
Foreign currency translation adjustment
44
55
Impairment
—
(96)
Balance as of April 30, 2023
1,457
1,164
Purchase accounting adjustments (Note 13)
40
(53)
Business divestitures (Note 14)
(28)
(89)
Foreign currency translation adjustment
(14)
(25)
Impairment
—
(7)
Balance as of April 30, 2024
$
1,455 $
990
Our other intangible assets consist of trademarks and brand names, all with indefinite useful lives.
During fiscal 2023, we recognized a non-cash impairment charge of $96 for the Finlandia brand name, largely reflecting
the effects of higher discount rates and input costs on its valuation. During fiscal 2024, we recorded a $7 impairment charge
related to the write-off of the carrying amount of an immaterial discontinued brand name. The impairment charges are included
in “other expense (income), net” in the accompanying consolidated statements of operations.
5. Equity Method Investments
As of April 30, 2024, our equity method investments include a 21.4% ownership of the common stock of The Duckhorn
Portfolio, Inc. (“Duckhorn”), which we obtained as partial consideration for the sale of the Sonoma-Cutrer wine business to
Duckhorn (Note 14). The $267 carrying amount of the investment reflects the fair value of the common stock, based on its
quoted market price at the April 30, 2024 closing date of the transaction. As of April 30, 2024, the difference between the
carrying amount of the investment and our proportionate share of the net assets of Duckhorn was not material.
Our other equity method investments are immaterial.
63
6. Contingencies
We operate in a litigious environment, and we are sued in the normal course of business. Sometimes plaintiffs seek
substantial damages. Significant judgment is required in predicting the outcome of these suits and claims, many of which take
years to adjudicate. We accrue estimated costs for a contingency when we believe that a loss is probable and we can make a
reasonable estimate of the loss, and then adjust the accrual as appropriate to reflect changes in facts and circumstances. We do
not believe it is reasonably possible that these existing loss contingencies, individually or in the aggregate, would have a
material adverse effect on our financial position, results of operations, or liquidity. No material accrued loss contingencies are
recorded as of April 30, 2024.
7. Debt and Credit Facilities
Our long-term debt (net of unamortized discounts and issuance costs) consisted of:
April 30,
2023
2024
3.50% senior notes, $300 principal amount, due April 15, 2025
$
299 $
300
1.20% senior notes, €300 principal amount, due July 7, 2026
330
321
2.60% senior notes, £300 principal amount, due July 7, 2028
375
375
4.75% senior notes, $650 principal amount, due April 15, 2033
642
643
4.00% senior notes, $300 principal amount, due April 15, 2038
295
295
3.75% senior notes, $250 principal amount, due January 15, 2043
248
248
4.50% senior notes, $500 principal amount, due July 15, 2045
489
490
2,678
2,672
Less current portion
—
300
$
2,678 $
2,372
Debt payments required over the next five fiscal years consist of $300 in 2025, $0 in 2026, $322 in 2027, $0 in 2028,
$377 in 2029, and $1,700 after 2029.
The senior notes contain terms, events of default, and covenants customary of these types of unsecured securities,
including limitations on the amount of secured debt we can issue.
Details of our short-term borrowings at April 30, 2023 and 2024, are presented below:
April 30,
2023
2024
Commercial paper (par amount)
$235
$429
Average interest rate
5.17%
5.49%
Average remaining days to maturity
21
12
We have a committed revolving credit agreement with various U.S. and international banks for $900 that expires in May
2028. At April 30, 2024, there were no borrowings outstanding under this facility.
8. Common Stock
The following table shows the change in outstanding common shares during each of the last three years:
(Shares in thousands)
Class A
Class B
Total
Balance at April 30, 2021
169,110
309,619
478,729
Stock issued under compensation plans
65
226
291
Balance at April 30, 2022
169,175
309,845
479,020
Stock issued under compensation plans
65
231
296
Balance at April 30, 2023
169,240
310,076
479,316
Acquisition of treasury stock
(176)
(6,736)
(6,912)
Stock issued under compensation plans
44
152
196
Balance at April 30, 2024
169,108
303,492
472,600
64
9. Net Sales
The following table shows our net sales by geography:
2022
2023
2024
United States
$
1,917 $
1,968 $
1,889
Developed International1
1,137
1,183
1,158
Emerging2
714
842
886
Travel Retail3
104
147
158
Non-branded and bulk4
61
88
87
$
3,933 $
4,228 $
4,178
1Represents net sales of branded products to “advanced economies” as defined by the International Monetary Fund (IMF), excluding the
United States. Our top developed international markets are Germany, Australia, the United Kingdom, France, Canada, and Spain.
2Represents net sales of branded products to “emerging and developing economies” as defined by the IMF. Our top emerging markets are
Mexico, Poland, and Brazil.
3Represents net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military, regardless of
customer location.
4Includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey and wine, regardless of customer location.
The following table shows our net sales by product category:
2022
2023
2024
Whiskey1
$
2,756 $
2,915 $
2,832
Ready-to-Drink2
431
509
520
Tequila3
290
320
306
Wine4
219
206
205
Vodka5
109
99
82
Non-branded and bulk6
61
88
87
Rest of portfolio7
67
91
146
$
3,933 $
4,228 $
4,178
1Includes all whiskey spirits and whiskey-based flavored liqueurs. The brands included in this category are the Jack Daniel’s family of brands
(excluding the “ready-to-drink” products outlined below), the Woodford Reserve family of brands, the Old Forester family of brands, The
Glendronach, Glenglassaugh, Benriach, Slane Irish Whiskey, and Coopers’ Craft.
2Includes the Jack Daniel’s ready-to-drink (RTD) and ready-to-pour (RTP) products, New Mix, and other RTD/RTP products.
3Includes el Jimador, the Herradura family of brands, and other tequilas.
4Includes Korbel California Champagne and Sonoma-Cutrer wines (which was divested on April 30, 2024).
5Includes Finlandia Vodka (which was divested on November 1, 2023). Net sales for the second half of fiscal 2024 were recognized pursuant
to the transition services agreement related to distribution services in certain markets.
6Includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey and wine.
7Includes Diplomático, Chambord, Gin Mare, Korbel Brandy, and Fords Gin.
65
10. Pension and Other Postretirement Benefits
We sponsor various defined benefit pension plans as well as postretirement plans providing retiree health care and retiree
life insurance benefits. Below, we discuss our obligations related to these plans, the assets dedicated to meeting the obligations,
and the amounts we recognized in our financial statements as a result of sponsoring these plans.
Obligations. We provide eligible employees with pension and other postretirement benefits based on factors such as years
of service and compensation level during employment. The pension obligation shown below (“projected benefit obligation”)
consists of: (a) benefits earned by employees to date based on current salary levels (“accumulated benefit obligation”); and
(b) benefits to be received by employees as a result of expected future salary increases. (The obligation for medical and life
insurance benefits is not affected by future salary increases.) The following table shows how the present value of our projected
benefit obligations changed during each of the last two years.
Pension Benefits
Medical and Life
Insurance Benefits
2023
2024
2023
2024
Obligation at beginning of year
$
846 $
731 $
43 $
40
Service cost
20
18
1
—
Interest cost
32
34
1
2
Net actuarial loss (gain)1
(21)
(61)
(2)
(3)
Retiree contributions
—
—
2
3
Benefits paid
(146)
(44)
(5)
(6)
Obligation at end of year
$
731 $
679 $
40 $
36
1 The net actuarial loss (gain) during each year was primarily attributable to changes in discount rates.
Service cost represents the present value of the benefits attributed to service rendered by employees during the year.
Interest cost is the increase in the present value of the obligation due to the passage of time. Net actuarial loss (gain) is the
change in value of the obligation resulting from experience different from that assumed or from a change in an actuarial
assumption. (We discuss actuarial assumptions used at the end of this note.) Plan amendments can also change the value of the
obligation.
As shown in the previous table, the change in the value of our pension and other postretirement benefit obligations also
includes the effect of benefit payments and retiree contributions. Expected benefit payments (net of retiree contributions) over
the next 10 years are as follows:
Pension Benefits
Medical and Life
Insurance Benefits
2025
$
54 $
3
2026
54
3
2027
55
3
2028
56
3
2029
57
3
2030 – 2034
286
14
Assets. We invest in specific assets to fund our pension benefit obligations. Our investment goal is to earn a total return
that, over time, will grow assets sufficiently to fund our plans' liabilities, after providing appropriate levels of contributions and
accepting prudent levels of investment risk. To achieve this goal, plan assets are invested primarily in funds or portfolios of
funds managed by outside managers. Investment risk is managed by company policies that require diversification of asset
classes, manager styles, and individual holdings. We measure and monitor investment risk through quarterly and annual
performance reviews, and through periodic asset/liability studies.
Asset allocation is the most important method for achieving our investment goals and is based on our assessment of the
plans' long-term return objectives and the appropriate balances needed for liquidity, stability, and diversification. As of
April 30, 2024, our target asset allocation is a mix of 26% public equity investments, 59% fixed income investments, and 15%
alternative investments.
66
The following table shows the fair value of pension plan assets by category as of the end of the last two years. (Fair value
levels are defined in Note 16.)
Level 1
Level 2
Level 3
Total
April 30, 2023
Equity securities
$
35 $
— $
— $
35
Cash and temporary investments
2
—
—
2
Limited partnership interest1
—
—
1
1
$
37 $
— $
1
38
Investments measured at net asset value:
Commingled trust funds2:
Equity funds
138
Fixed income funds
330
Real estate fund
59
Short-term investments
2
Limited partnership interests3
39
Total
$
606
April 30, 2024
Equity securities
$
31 $
— $
— $
31
Fixed income investments
—
278
—
278
Limited partnership interest1
—
—
1
1
Pending transactions
(3)
—
—
(3)
$
28 $
278 $
1
307
Investments measured at net asset value:
Commingled trust funds2:
Equity funds
118
Fixed income funds
53
Real estate fund
49
Short-term investments
11
Limited partnership interests3
38
Total
$
576
1 This limited partnership interest was initially valued at cost and has been adjusted to fair value as determined in good faith by management
of the partnership using various factors, and does not meet the requirements for reporting at the net asset value (NAV). The valuation requires
significant judgment due to the absence of quoted market prices and the inherent lack of liquidity. This limited partnership has a term expiring
in September 2024.
2 Commingled trust fund valuations are based on the NAV of the funds as determined by the fund administrators and reviewed by us. NAV
represents the underlying assets owned by the fund, minus liabilities and divided by the number of shares or units outstanding. Generally, for
commingled trust funds other than real estate, redemptions are permitted daily with no notice period. The real estate fund is redeemable
quarterly with 110 days' notice.
3 These limited partnership interests were initially valued at cost and have been adjusted using NAV per audited financial statements.
Investments are generally not eligible for immediate redemption and have original terms averaging 10 to 13 years, although those periods may
be extended.
67
The following table shows how the fair value of the Level 3 assets changed during each of the last two years. There were
no transfers of assets between Level 3 and either of the other two levels.
Level 3
Balance as of April 30, 2022
$
2
Return on assets held at end of year
(1)
Balance as of April 30, 2023
1
Return on assets held at end of year
—
Balance as of April 30, 2024
$
1
The following table shows how the total fair value of all pension plan assets changed during each of the last two years.
(We do not have assets set aside for postretirement medical or life insurance benefits.)
Pension Benefits
Medical and Life
Insurance Benefits
2023
2024
2023
2024
Assets at beginning of year
$
741 $
606 $
— $
—
Actual return on assets
(7)
(2)
—
—
Retiree contributions
—
—
2
3
Company contributions
18
16
3
3
Benefits paid
(146)
(44)
(5)
(6)
Assets at end of year
$
606 $
576 $
— $
—
We currently expect to contribute $16 to our pension plans and $3 to our postretirement medical and life insurance benefit
plans during 2025.
Funded status. The funded status of a plan refers to the difference between its assets and its obligations. The following
table shows the funded status of our plans.
Pension Benefits
Medical and Life
Insurance Benefits
April 30,
2023
2024
2023
2024
Assets
$
606 $
576 $
— $
—
Obligations
(731)
(679)
(40)
(36)
Funded status
$
(125) $
(103) $
(40) $
(36)
The funded status is recorded on the accompanying consolidated balance sheets as follows:
Pension Benefits
Medical and Life
Insurance Benefits
April 30,
2023
2024
2023
2024
Other assets
$
17 $
32 $
— $
—
Accounts payable and accrued expenses
(8)
(8)
(3)
(3)
Accrued pension and other postretirement benefits
(134)
(127)
(37)
(33)
Net liability
$
(125) $
(103) $
(40) $
(36)
Accumulated other comprehensive income (loss),
before tax:
Net actuarial gain (loss)
$
(192) $
(166) $
(1) $
2
Prior service credit (cost)
(4)
(4)
2
1
$
(196) $
(170) $
1 $
3
68
The following table compares our pension plans whose accumulated benefit obligations exceed their assets with our
pension plans whose assets exceed their accumulated benefit obligations.
Accumulated
Benefit Obligation
Plan Assets
April 30,
2023
2024
2023
2024
Plans with accumulated benefit obligation
in excess of assets
$
(131) $
(124) $
— $
—
Plans with assets in excess of accumulated
benefit obligation
(524)
(487)
606
576
Total
$
(655) $
(611) $
606 $
576
The following table compares our pension plans whose projected benefit obligations exceed their assets with our pension
plans whose assets exceed their projected benefit obligations.
Projected
Benefit Obligation
Plan Assets
April 30,
2023
2024
2023
2024
Plans with projected benefit obligation in
excess of assets
$
(190) $
(135) $
48 $
—
Plans with assets in excess of projected
benefit obligation
(541)
(544)
558
576
Total
$
(731) $
(679) $
606 $
576
As noted above, we have no assets set aside for the postretirement medical or life insurance benefit plans.
Pension cost. The following table shows the components of the pension cost recognized during each of the last three
years. The amount for each year includes amortization of the prior service cost/credit and net actuarial loss/gain included in
accumulated other comprehensive loss as of the beginning of the year.
Pension Benefits
2022
2023
2024
Service cost
$
26 $
20 $
18
Interest cost
22
32
34
Expected return on assets
(45)
(43)
(40)
Amortization of:
Prior service cost (credit)
1
1
1
Net actuarial loss (gain)
23
9
6
Settlement charge
12
29
—
Net cost
$
39 $
48 $
19
We determine the expected return on plan assets by applying our long-term rate of return assumption to the market-related
value of plan assets, adjusted by earnings on contributions and benefit payments expected to be made during the year. We
calculate the market-related value of plan assets by amortizing actual versus expected returns over five years.
We amortize prior service costs and net actuarial gains or losses on straight-line basis over the average remaining service
period of the employees expected to receive benefits under the plan. However, for net actuarial gains or losses, we use a
corridor approach that amortizes them only to the extent the gain or loss exceeds 10% of the greater of the projected benefit
obligation or market-related value of plan assets.
The settlement charges recognized during 2022 and 2023 were triggered by fiscal year-to-date lump-sum payments under
certain pension plans surpassing total annual service and interest cost for those plans.
69
Other postretirement benefits cost. The following table shows the components of the postretirement medical and life
insurance benefits cost that we recognized during each of the last three years.
Medical and Life Insurance Benefits
2022
2023
2024
Service cost
$
1 $
1 $
—
Interest cost
1
1
2
Amortization of:
Prior service cost (credit)
(2)
—
—
Net actuarial loss (gain)
1
—
—
Net cost
$
1 $
2 $
2
We amortize prior service costs and net actuarial gains or losses on straight-line basis over the average remaining service
period of the employees expected to receive benefits under the plan.
Other comprehensive income (loss). We recognize prior service cost/credit and net actuarial loss/gain in other
comprehensive income or loss (OCI) during the period in which they arise. These amounts are later amortized from
accumulated OCI into pension and other postretirement benefit cost over future periods as described above. The following table
shows the pre-tax effect of these amounts on OCI during each of the last three years.
Pension Benefits
Medical and Life
Insurance Benefits
2022
2023
2024
2022
2023
2024
Net actuarial gain (loss)
$
62 $
(29) $
20 $
5 $
2 $
3
Amortization reclassified to earnings:
Prior service cost (credit)
1
1
1
(2)
—
—
Net actuarial loss (gain)
35
38
6
1
—
—
Net amount recognized in OCI
$
98 $
10 $
26 $
4 $
2 $
3
Assumptions and sensitivity. We use various assumptions to determine the obligations and cost related to our pension and
other postretirement benefit plans. The weighted-average assumptions used in computing benefit plan obligations as of the end
of the last two years were as follows:
Pension Benefits
Medical and Life
Insurance Benefits
2023
2024
2023
2024
Discount rate
4.91 %
5.70 %
4.86 %
5.66 %
Rate of salary increase
4.00 %
4.00 %
n/a
n/a
Interest crediting rate
3.69 %
4.79 %
n/a
n/a
The weighted-average assumptions used in computing benefit plan cost during each of the last three years were as
follows:
Pension Benefits
Medical and Life
Insurance Benefits
2022
2023
2024
2022
2023
2024
Discount rate for service cost
3.36 %
4.52 %
4.98 %
3.49 %
4.50 %
5.02 %
Discount rate for interest cost
2.34 %
4.12 %
4.79 %
2.27 %
3.96 %
4.78 %
Rate of salary increase
4.00 %
4.00 %
4.00 %
n/a
n/a
n/a
Interest crediting rate
3.06 %
3.06 %
3.69 %
n/a
n/a
n/a
Expected return on plan assets
6.25 %
6.25 %
6.50 %
n/a
n/a
n/a
We determine the assumed discount rates using a yield curve based on the interest rates of high-quality debt securities
with maturities corresponding to the expected timing of our benefit payments. We measure the service cost and interest cost
components by applying the specific spot rates along the yield curve used to measure the benefit obligation at the beginning of
the period.
70
The assumed rate of salary increase reflects the expected average annual increase in salaries as a result of inflation, merit
increases, and promotions over the service period of the plan participants.
The assumed interest crediting is based on the greater of the average yield on 30-year Treasury bonds or the minimum rate
specified in the applicable pension plan.
The expected return on plan assets represents the long-term rate of return that we assume will be earned over the life of
the pension assets. The assumption reflects expected capital market returns for each asset class, which are based on historical
returns, adjusted for the expected effects of diversification.
The assumed health care cost trend rates as of the end of the last two years were as follows:
Medical and Life
Insurance Benefits
2023
2024
Health care cost trend rate assumed for next year
7.23 %
7.13 %
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.50 %
4.50 %
Year that the rate reaches the ultimate trend rate
2032
2032
Savings plans. We also sponsor various defined contribution benefit plans that together cover substantially all U.S.
employees. Employees can make voluntary contributions in accordance with their respective plans, which include a 401(k) tax
deferral option. We match a percentage of each employee's contributions in accordance with plan terms. We expensed $13, $14,
and $14 for matching contributions during 2022, 2023, and 2024, respectively.
International plans. The information presented above for defined benefit plans and defined contribution benefit plans
reflects amounts for U.S. plans only. Information about similar international plans is not presented due to immateriality.
11. Stock-Based Compensation
The Brown-Forman 2022 Omnibus Compensation Plan (Plan) is our incentive compensation plan, designed to reward
participants (including eligible executive officers, other employees, and non-employee directors) for company performance.
Under the Plan, we can grant stock-based incentive awards for up to 12,412,433 shares of common stock to eligible participants
until July 28, 2032. As of April 30, 2024, awards for approximately 11,269,000 shares remain available for issuance under the
Plan. We try to limit the source of shares delivered to participants under the Plan to treasury shares that we purchase from time
to time on the open market (in connection with a publicly announced share repurchase program), in private transactions, or
otherwise.
Awards granted under the Plan include stock-settled stock appreciation rights (SSARs), performance-based restricted
stock units (PBRSUs), time-based restricted stock units (RSUs), and deferred stock units (DSUs).
SSARs. We grant SSARs at an exercise price equal to the closing market price of the underlying stock on the grant date.
SSARs become exercisable after three years from the first day of the fiscal year of grant and generally are exercisable for seven
years after that date. The following table presents information about SSARs outstanding as of April 30, 2024, and for the year
then ended.
Number of
SSARs
(in thousands)
Weighted-
Average
Exercise Price
per SSAR
Weighted-
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic Value
Outstanding at April 30, 2023
4,010 $
51.76
Granted
336
69.69
Exercised
(568)
37.85
Forfeited or expired
(28)
64.63
Outstanding at April 30, 2024
3,750 $
55.37
4.6
$
12
Exercisable at April 30, 2024
2,617 $
48.54
3.4
$
12
71
We use the Black-Scholes pricing model to calculate the grant-date fair value of a SSAR. The weighted-average grant-
date fair values and related valuation assumptions for the SSARS granted during each of the last three years were as follows:
2022
2023
2024
Grant-date fair value
$
16.61
$
20.67
$
21.69
Valuation assumptions:
Expected term (years)
7.0
7.0
7.0
Risk-free interest rate
1.0 %
2.7 %
4.1 %
Expected volatility
24.1 %
24.8 %
25.0 %
Expected dividend yield
1.0 %
1.0 %
1.2 %
The expected term is based on past exercise experience for similar awards. The risk-free interest rate is based on zero-
coupon U.S. Treasury rates as of the date of grant. Expected volatility and dividend yield are based on historical data, with
consideration of other factors when applicable.
PBRSUs. The PBRSUs vest at the end of a three-year performance period that begins on the first day of the fiscal year of
grant. For PBRSU granted in fiscal 2022 and 2023, performance is measured in full by comparing the three-year cumulative
total shareholder return (TSR) of our Class B common stock to the three-year cumulative TSR of the companies in the Standard
& Poor’s Consumer Staples Index (the peer group). Beginning with PBRSUs granted in fiscal 2024, performance is measured
based in part (50%) on our TSR compared to the TSR of the peer group and in part (50%) on our adjusted operating income
growth compared to the adjusted operating income growth of the peer group over the three-year performance period. At the end
of the performance period, the number of PBRSUs is adjusted for performance, and then adjusted upward to account for
dividends paid during the second and third years of the performance period. The resulting PBRSUs are then converted to
common shares.
The following table presents information about PBRSUs outstanding as of April 30, 2024, and for the year then ended.
Number of
PBRSUs
(in thousands)
Weighted-
Average
Fair Value at
Grant Date
Outstanding at April 30, 2023
289 $
76.33
Granted
209 $
75.70
Adjusted for performance and dividends
(38) $
73.56
Converted to common shares
(41) $
73.56
Forfeited
(6) $
77.12
Outstanding at April 30, 2024
413 $
76.53
For the portion of the PBRSUs based on adjusted operating income performance, we calculate the grant-date fair value
using the closing market price on the underlying stock at the date of grant, discounted for dividends that are not paid on the
PBRSUs during the first year of the performance period.
For the portion of the PBRSUs based on TSR, we calculate the grant-date fair value using a Monte Carlo simulation
model. The following table shows the assumptions used in the Monte Carlo simulation model to value the awards granted
during each of the last three fiscal years.
2022
2023
2024
Valuation assumptions:
Risk-free interest rate
0.3 %
2.8 %
4.6 %
Expected volatility
29.1 %
29.8 %
22.2 %
Expected dividend yield
1.0 %
1.0 %
1.2 %
Remaining performance period (years) as of grant date
2.8
2.8
2.8
RSUs. Beginning in fiscal 2024, we grant time-based restricted stock units (RSUs) to certain non-executive employees.
Each RSU represents the right to receive one share of Class B common stock. The RSUs vest in three equal amounts at the end
of each of the subsequent three fiscal years. Outstanding RSUs are credited with dividend-equivalent RSUs when dividends are
paid on our common stock. The grant-date fair value of an RSU is the closing market price of the underlying stock on the grant
date. The following table presents information about RSUs outstanding as of April 30, 2024, and for the year then ended.
72
Number of
RSUs
(in thousands)
Weighted-
Average
Fair Value at
Grant Date
Outstanding at April 30, 2023
— $
—
Granted
89 $
68.89
Additions for dividend equivalents
1 $
69.41
Forfeited
(3) $
69.17
Outstanding at April 30, 2024
87 $
68.88
DSUs. DSUs are granted to our non-employee directors. Each DSU represents the right to receive one share of common
stock based on the closing price of the shares on the date of grant. Outstanding DSUs are credited with dividend-equivalent
DSUs when dividends are paid on our common stock. Each annual grant vests after one year. DSUs are paid out in shares after
the completion of a director's tenure on the board plus a six-month waiting period. The director may elect to receive the
distribution either in a single lump sum or in ten equal annual installments. As of April 30, 2024, there were approximately
181,000 outstanding DSUs, of which approximately 159,000 were vested.
The grant-date fair value of a DSU is the closing market price of the underlying stock on the grant date. The weighted
average grant-date fair values for these awards granted during each of the last three years were as follows:
2022
2023
2024
Grant-date fair value
$
67.35 $
72.10
$
71.23
Additional information. The pre-tax stock-based compensation expense and related deferred income tax benefits
recognized during the last three fiscal years were as follows:
2022
2023
2024
Pre-tax compensation expense
$
15 $
18 $
25
Deferred tax benefit
2
3
3
As of April 30, 2024, there was $14 of total unrecognized compensation cost related to non-vested stock-based awards.
That cost is expected to be recognized over a weighted-average period of 1.6 years. Further information related to our stock-
based awards for the last three years is as follows:
2022
2023
2024
Intrinsic value of SSARs exercised
$
23 $
19 $
12
Fair value of shares vested
7
6
4
Excess tax benefit from exercise / vesting of awards
6
4
2
12. Income Taxes
We incur income taxes on the earnings of our U.S. and foreign operations. The following table, based on the locations of
the taxable entities from which sales were derived (rather than the location of customers), presents the U.S. and foreign
components of our income before income taxes:
2022
2023
2024
United States
$
954 $
841 $
917
Foreign
160
176
381
$
1,114 $
1,017 $
1,298
The income shown above was determined according to GAAP. Because those standards sometimes differ from the tax
rules used to calculate taxable income, there are differences between (a) the amount of taxable income and pretax financial
income for a year, and (b) the tax bases of assets or liabilities and their amounts as recorded in our financial statements. As a
result, we recognize a current tax liability for the estimated income tax payable on the current tax return, deferred tax liabilities
(tax on income that will be recognized on future tax returns), and deferred tax assets (tax from deductions that will be
recognized on future tax returns) for the estimated effects of the differences mentioned above.
73
Total income tax expense for a year includes the tax associated with the current tax return (current tax expense) and the
change in the net deferred tax asset or liability (deferred tax expense). Our total income tax expense for each of the last three
years was as follows:
2022
2023
2024
Current:
U.S. federal
$
205 $
157 $
150
Foreign
64
46
81
State and local
18
34
25
287
237
256
Deferred:
U.S. federal
1
(4)
16
Foreign
(9)
6
(5)
State and local
(3)
(5)
7
(11)
(3)
18
$
276 $
234 $
274
Our consolidated effective tax rate usually differs from current statutory rates due to the recognition of amounts for events
or transactions with no tax consequences. The following table reconciles our effective tax rate to the federal statutory tax rate in
the United States:
Percent of Income Before Taxes
2022
2023
2024
U.S. federal statutory rate
21.0%
21.0%
21.0 %
State taxes, net of U.S. federal tax benefit
1.0%
2.5%
1.3 %
Income taxed at other than U.S. federal statutory rate
1.3%
3.0%
0.5 %
Prior intercompany sales taxed at higher than current U.S. federal
statutory rate
2.0%
1.0%
— %
Tax benefit from foreign-derived sales
(1.8%)
(3.0%)
(1.7) %
Business divestitures
—%
—%
(0.7) %
Adjustments related to prior years
0.7%
(0.5%)
— %
Excess tax benefits from stock-based awards
(0.5%)
(0.3%)
(0.1) %
Tax rate changes
0.4%
—%
0.4 %
Valuation allowance
—%
(1.3%)
0.1 %
Other, net
0.7%
0.6%
0.4 %
Effective rate
24.8%
23.0%
21.2 %
74
Deferred tax assets and liabilities as of the end of each of the last two years were as follows:
April 30,
2023
2024
Deferred tax assets:
Postretirement and other benefits
$
75 $
65
Accrued liabilities and other
35
47
Inventories
26
26
Lease liabilities
23
27
Loss and credit carryforwards
62
65
Total deferred tax assets
221
230
Valuation allowance
(14)
(16)
Total deferred tax assets, net of valuation allowance
207
214
Deferred tax liabilities:
Intangible assets
(323)
(295)
Property, plant, and equipment
(98)
(93)
Right-of-use assets
(23)
(27)
Derivative instruments
(3)
(3)
Equity method investments
—
(37)
Other
(17)
(5)
Total deferred tax liabilities
(464)
(460)
Net deferred tax liability
$
(257) $
(246)
Details of the loss and credit carryforwards and related valuation allowances as of the end of each of the last two years are
as follows:
April 30, 2023
April 30, 2024
Gross
Amount
Deferred
Tax Asset
Valuation
Allowance
Gross
Amount
Deferred
Tax Asset
Valuation
Allowance
U.S.
$
111
$
20
$
(6)
$
110
$
38 1 $
(7)
Foreign
216
42
(8)
161
27 2
(9)
$
327
$
62
$
(14)
$
271
$
65
$
(16)
1As of April 30, 2024, the deferred tax asset amount includes credit carryforwards of $28 that do not expire and loss and credit carryforwards of $10 that expire
in varying amounts from 2025 to 2039.
2As of April 30, 2024, the deferred tax asset includes loss carryforwards of $25 that do not expire and $2 that expire in varying amounts over the next 10 years.
As of April 30, 2024, we had approximately $1,909 of undistributed earnings from our foreign subsidiaries ($1,617 at
April 30, 2023). These earnings have been previously subject to tax, primarily as a result of the 2017 Tax Cuts and Jobs Act.
Historically, we have asserted that the undistributed earnings of our foreign subsidiaries are reinvested indefinitely outside the
United States. We continue to maintain indefinite reinvestment assertions for most undistributed earnings of our foreign
subsidiaries, and no deferred taxes have been provided on the earnings. For undistributed earnings not considered permanently
reinvested, deferred tax liabilities have been provided for any applicable income taxes and withholding taxes payable in various
countries, which are not significant. We have also asserted that other outside basis differences related to our foreign subsidiaries
are reinvested indefinitely and that the determination of any unrecognized deferred tax liabilities is not practicable due to the
complexities in the calculations. The other outside basis differences relate primarily to differences between U.S. GAAP and tax
basis that arose through purchase accounting. These basis differences could reverse through sales of foreign subsidiaries or
other transactions, none of which are considered probable as of April 30, 2024.
75
At April 30, 2024, we had $14 of gross unrecognized tax benefits, $11 of which would reduce our effective income tax
rate if recognized. A reconciliation of the beginning and ending unrecognized tax benefits follows:
2022
2023
2024
Unrecognized tax benefits at beginning of year
$
12 $
14 $
21
Additions for tax positions provided in prior periods
2
8
1
Additions for tax positions provided in current period
2
3
2
Decreases for tax positions provided in prior years
—
—
(3)
Settlements of tax positions in the current period
—
—
(3)
Lapse of statutes of limitations
(2)
(4)
(4)
Unrecognized tax benefits at end of year
$
14 $
21 $
14
We file federal income tax returns in the United States and also file tax returns in various state, local and foreign
jurisdictions. The major jurisdictions where we are subject to examination by tax authorities include the United States,
Australia, Brazil, Germany, Korea, Mexico, Netherlands, and the United Kingdom. We have tax years open for examination
from 2013 and forward. Various tax examinations are currently in progress in the United States, for both federal and states, and
in certain foreign jurisdictions. In the United States, we are participating in the Internal Revenue Service's Compliance
Assurance Program for our fiscal 2024 tax year.
We believe there will be no material change in our gross unrecognized tax benefits in the next 12 months.
13. Acquisitions
On November 3, 2022, we acquired the Gin Mare and Gin Mare Capri brands through our purchase of 100% of the equity
interests of Gin Mare Brand, S.L.U., a Spanish company, and Mareliquid Vantguard, S.L.U., a Spanish company (the “Gin
Mare acquisition”). The acquisition was accounted for as a business combination. The purchase price of the Gin Mare
acquisition was $523, which consisted of $468 in cash paid at the acquisition date plus contingent consideration of $55. The
purchase price for the Gin Mare acquisition decreased by $1 as a result of certain fair value adjustments to the contingent
consideration made during the first half of fiscal 2024, which were primarily a result of changes in the discount rates used to
calculate the fair value as of the acquisition date.
We have allocated the purchase price of the Gin Mare acquisition based on management’s estimates and independent
valuations as follows:
Prior
Allocation1
Adjustments
Final
Allocation
Trademarks and brand names (indefinite-lived)
$
307 $
(24) $
283
Goodwill
289
17
306
Total assets
596
(7)
589
Deferred tax liabilities
72
(6)
66
Net assets acquired
$
524 $
(1) $
523
1As reported in Note 12 to our consolidated financial statements in our 2023 Form 10-K.
The adjustments to the prior Gin Mare purchase price allocation reflect revised valuations for the trademarks and brand
names, which were driven by an increase in the discount rates used to calculate fair values as of the acquisition date, partially
offset by higher projections of future cash flows. The Gin Mare purchase price allocation was finalized during the second
quarter of fiscal 2024.
The contingent consideration of $55 reflects the estimated fair value, at the acquisition date, of contingent future cash
payments of up to €90 to the sellers under an “earn-out” provision of the acquisition agreement. We determined the estimated
fair value of the contingent consideration using a Monte Carlo simulation, which requires the use of assumptions, such as
projected future net sales, discount rates, and volatility rates.
76
Any contingent consideration earned by the sellers will be payable in cash no earlier than July 2024 and no later than July
2027, depending on when the sellers choose to exercise the right to receive the payment. The amount payable will depend on
the achievement of net sales targets for Gin Mare for the latest fiscal year completed prior to the date of exercise by the sellers.
The possible payments range from zero to €90 (approximately $89 as of the acquisition date).
At the acquisition date, we also entered into a supply agreement with the sellers for the production and supply of Gin
Mare products to us, at market terms, for an initial period of 10 years (subject to subsequent renewal periods).
On January 5, 2023, we acquired the Diplomático and Botucal rum brands through our purchase of (i) 100% of the equity
interests of (a) International Rum and Spirits Distributors Unipessoal, Lda., a Portuguese company, (b) Diplomático Branding
Unipessoal Lda., a Portuguese company, (c) International Bottling Services, S.A., a Panamanian corporation, and (d)
International Rum & Spirits Marketing Solutions, S.L., a Spanish company; and (ii) certain assets of Destilerias Unidas Corp.
(the “Diplomático acquisition”). The acquisition was accounted for as a business combination. The purchase price of the
Diplomático acquisition consisted of cash of $723 (net of a post-closing working capital adjustment of $4).
We have allocated the purchase price of the Diplomático acquisition based on management’s estimates and independent
valuations as follows:
Prior
Allocation1
Adjustments
Final
Allocation
Accounts receivable
$
11 $
— $
11
Inventories
36
(2)
34
Other current assets
25
—
25
Property, plant, and equipment
38
—
38
Trademarks and brand names (indefinite-lived)
312
(29)
283
Goodwill
363
23
386
Other assets
2
—
2
Total assets
787
(8)
779
Accounts payable and accrued expenses
13
1
14
Deferred tax liabilities
45
(5)
40
Other liabilities
2
—
2
Total liabilities
60
(4)
56
Net assets acquired
$
727 $
(4) $
723
1As reported in Note 12 to our consolidated financial statements in our 2023 Form 10-K.
The adjustments to the prior Diplomático purchase price allocation reflect revised valuations for the trademarks and brand
names, which were driven by an increase in the discount rates used to calculate fair values as of the acquisition date, partially
offset by higher projections of future cash flows. The adjustments also reflect certain other immaterial net working capital
adjustments. The Diplomático purchase price allocation was finalized during the third quarter of fiscal 2024.
At the acquisition date, we also entered into a supply agreement with the sellers for their production and supply of rum to
us, at market terms, for an initial period of 10 years (subject to subsequent renewal periods).
The amounts allocated to trademarks and brand names for each acquisition were estimated using the relief-from-royalty
method, which requires the use of significant assumptions, such as net sales, discount rates, and royalty rates.
Goodwill is calculated as the excess of the purchase price over the fair value of the net identifiable assets acquired. The
goodwill recorded for each acquisition is primarily attributable to the value of leveraging our distribution network and brand-
building expertise to grow sales of the acquired brands. For the Gin Mare acquisition, we expect none of the goodwill of
$306 to be deductible for tax purposes. For the Diplomático acquisition, we expect $108 of the goodwill of $386 to be
deductible for tax purposes.
77
In connection with the acquisitions, we recognized transaction expenses of $55 during fiscal 2023. The following table
shows the classification of the transaction expenses in the accompanying consolidated statement of operations.
2023
Selling, general, and administrative expenses
$
11
Other expense (income), net
44
Total transaction expenses
$
55
The transaction expenses largely reflect payments made to terminate certain distribution contracts related to the acquired
brands.
14. Divestitures
On November 1, 2023, we sold the Finlandia vodka business to Coca-Cola HBC AG for $196 in cash. The net carrying
amount of the related business assets and liabilities included in the sale was $100, consisting largely of goodwill and other
intangible assets. As a result of the sale, we recognized a pre-tax gain of $92 during fiscal 2024, calculated as follows:
Cash proceeds
$
196
Net carrying amount of assets and liabilities sold
(100)
Amounts reclassified from AOCI:
Cumulative translation losses
(30)
Net investment hedge gain (Note 15)
26
Pre-tax gain on divestiture of Finlandia
$
92
On April 30, 2024, we sold the Sonoma-Cutrer wine business to The Duckhorn Portfolio, Inc.(“Duckhorn”) in exchange
for an ownership percentage of 21.4% in Duckhorn and cash of $50. The net carrying amount of the related business assets and
liabilities included in the sale was $142 and consisted of the following:
Inventories
$
56
Property, plant, and equipment
83
Goodwill
18
Other assets
1
Total assets sold
158
Accounts payable and accrued expenses
3
Deferred tax liabilities
12
Other liabilities
1
Total liabilities sold
16
Net assets sold
$
142
As a result of the sale, we recognized a pre-tax gain of $175 during the fourth quarter of fiscal 2024, calculated as follows:
Cash proceeds
$
50
Fair value of equity interest in Duckhorn
267
Total consideration received
317
Net carrying amount of assets and liabilities sold
(142)
Pre-tax gain on divestiture of Sonoma-Cutrer
$
175
We entered into transition services agreements in connection with the divestitures of both the Finlandia and Sonoma-
Cuter businesses.
78
15. Derivative Financial Instruments and Hedging Activities
We are subject to market risks, including the effect of fluctuations in foreign currency exchange rates, commodity prices,
and interest rates. We use derivatives to help manage financial exposures that occur in the normal course of business. We
formally document the purpose of each derivative contract, which includes linking the contract to the financial exposure it is
designed to mitigate. We do not hold or issue derivatives for trading or speculative purposes.
We use currency derivative contracts to limit our exposure to the foreign currency exchange risk that we cannot mitigate
internally by using netting strategies. We designate most of these contracts as cash flow hedges of forecasted transactions
(expected to occur within three years). We record all changes in the fair value of cash flow hedges in accumulated other
comprehensive income (AOCI) until the underlying hedged transaction occurs, when we reclassify that amount into earnings.
Some of our currency derivatives are not designated as hedges because we use them to partially offset the immediate
earnings impact of changes in foreign currency exchange rates on existing assets or liabilities. We immediately recognize the
change in fair value of these contracts in earnings.
We had outstanding currency derivatives, related primarily to our euro, British pound, and Australian dollar exposures,
with notional amounts for all hedged currencies totaling $747 and $566 at April 30, 2023 and 2024, respectively. The maximum
term of outstanding derivative contracts was 24 months at both April 30, 2023 and 2024.
We also use foreign currency-denominated debt to help manage our foreign currency exchange risk. We designate a
portion of those debt instruments as net investment hedges, which are intended to mitigate foreign currency exposure related to
non-U.S. dollar net investments in certain foreign subsidiaries. Any change in value of the designated portion of the hedging
instruments is recorded in AOCI, offsetting the foreign currency translation adjustment of the related net investments that is
also recorded in AOCI. The amount of foreign currency-denominated debt designated as net investment hedges was $495 and
$497 as of April 30, 2023 and 2024, respectively.
At inception, we expect each financial instrument designated as a hedge to be highly effective in offsetting the financial
exposure it is designed to mitigate, and we assess hedge-effectiveness continually. If we determine that any financial
instruments designated as hedges are no longer highly effective, we discontinue hedge accounting for those instruments.
We use forward purchase contracts with suppliers to protect against corn price volatility. We expect to take physical
delivery of the corn underlying each contract and use it for production over a reasonable period of time. Accordingly, we
account for these contracts as normal purchases rather than as derivative instruments.
During fiscal 2024, we reclassified $26 of gains on net investment hedges from AOCI to earnings in connection with the
divestiture of Finlandia (Note 14).
79
The following table presents the pre-tax impact that changes in the fair value of our derivative instruments and non-
derivative hedging instruments had on AOCI and earnings during each of the last three years:
Classification in
Statement of
Operations
2022
2023
2024
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI
n/a
$
76 $
4 $
11
Net gain (loss) reclassified from AOCI into earnings
Sales
5
37
12
Net gain (loss) reclassified from AOCI into earnings
Other income
(expense), net
2
—
—
Interest rate derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI
n/a
—
(1)
—
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earnings
Sales
12
(1)
—
Net gain (loss) recognized in earnings
Other income
(expense), net
5
16
8
Foreign currency-denominated debt designated as net
investment hedge:
Net gain (loss) recognized in AOCI
n/a
78
3
3
Net gain (loss) reclassified from AOCI to earnings
Gain on
business
divestitures
—
—
26
Total amounts presented in the accompanying consolidated statements of
operations for line items affected by the net gains (losses) shown above:
Sales
5,081
5,372
5,328
Other income (expense), net
(59)
(119)
(24)
We expect to reclassify $7 of deferred net gains on cash flow hedges recorded in AOCI as of April 30, 2024, to earnings
during fiscal 2025. This reclassification would offset the anticipated earnings impact of the underlying hedged exposures. The
actual amounts that we ultimately reclassify to earnings will depend on the exchange rates in effect when the underlying hedged
transactions occur.
The following table presents the fair values of our derivative instruments as of April 30, 2023 and 2024:
Balance Sheet
Classification
Derivative Assets
Derivative Liabilities
April 30, 2023
Designated as cash flow hedges:
Currency derivatives
Other current assets
$
20 $
(11)
Currency derivatives
Other assets
5
(1)
Currency derivatives
Accrued expenses
—
(1)
Currency derivatives
Other liabilities
—
(1)
Not designated as hedges:
Currency derivatives
Other current assets
3
—
April 30, 2024
Designated as cash flow hedges:
Currency derivatives
Other current assets
11
(2)
Currency derivatives
Other assets
1
(1)
Not designated as hedges:
Currency derivatives
Accrued expenses
—
(1)
The fair values reflected in the above table are presented on a gross basis. However, as discussed further below, the fair
values of those instruments subject to net settlement agreements are presented on a net basis in our balance sheets.
80
In our statements of cash flows, we classify cash flows related to cash flow hedges in the same category as the cash flows
from the hedged items.
Credit risk. We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk
is limited to the fair value of the contracts. To manage this risk, we contract only with major financial institutions that have
earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association
(ISDA) agreements that allow for net settlement of the derivative contracts. Also, we have established counterparty credit
guidelines that we monitor regularly. Based on our most recent assessment. we consider our counterparty credit risk to be low.
Our derivative instruments require us to maintain a specific level of creditworthiness, which we have maintained. If our
creditworthiness were to fall below that level, then the counterparties to our derivative instruments could request immediate
payment or collateralization for derivative instruments in net liability positions. The aggregate fair value of all derivatives with
creditworthiness requirements that were in a net liability position was $1 and $1 at April 30, 2023 and 2024, respectively.
Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of
derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (that is, those
with a remaining term of 12 months or less) with the same counterparty on a net basis in our balance sheets. Similarly, we
present the fair values of noncurrent derivatives with the same counterparty on a net basis. We do not net current derivatives
with noncurrent derivatives in our balance sheets.
The following table summarizes the gross and net amounts of our derivative contracts:
Gross Amounts
of Recognized
Assets
(Liabilities)
Gross Amounts
Offset in
Balance Sheet
Net Amounts
Presented in
Balance Sheet
Gross Amounts
Not Offset in
Balance Sheet
Net Amounts
April 30, 2023
Derivative assets
$
28
$
(12)
$
16
$
(1)
$
15
Derivative liabilities
(14)
12
(2)
1
(1)
April 30, 2024
Derivative assets
12
(3)
9
—
9
Derivative liabilities
(4)
3
(1)
—
(1)
No cash collateral was received or pledged related to our derivative contracts as of April 30, 2023 or 2024.
16. Fair Value Measurements
The following table summarizes the assets and liabilities measured or disclosed at fair value on a recurring basis:
2023
2024
April 30,
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Assets:
Cash and cash equivalents
$
374 $
374 $
446 $
446
Currency derivatives
16
16
9
9
Liabilities:
Currency derivatives
2
2
1
1
Contingent consideration
63
63
69
69
Short-term borrowings
235
235
428
428
Long-term debt (including current portion)
2,678
2,556
2,672
2,468
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement
date. We categorize the fair values of assets and liabilities into three levels based on the assumptions (inputs) used to determine
81
those values. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management
judgment. The three levels are:
•
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
•
Level 2 – Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, or other inputs that are
observable or can be derived from or corroborated by observable market data.
•
Level 3 – Unobservable inputs supported by little or no market activity.
We determine the fair values of our currency derivatives (forward contracts) using standard valuation models. The
significant inputs used in these models, which are readily available in public markets or can be derived from observable market
transactions, include the applicable spot exchange rates, forward exchange rates, and interest rates. These fair value
measurements are categorized as Level 2 within the valuation hierarchy.
We determine the fair value of long-term debt primarily based on the prices at which identical or similar debt has recently
traded in the market and also considering the overall market conditions on the date of valuation. These fair value measurements
are categorized as Level 2 within the valuation hierarchy.
The fair values of cash, cash equivalents, and short-term borrowings approximate the carrying amounts due to the short
maturities of these instruments.
We determine the fair value of our contingent consideration liability using a Monte Carlo simulation model, which
requires the use of Level 3 inputs, such as projected future net sales, discount rates, and volatility rates. Changes in any of these
Level 3 inputs could result in material changes to the fair value of the contingent consideration and could materially impact the
amount of non-cash expense (or income) recorded each reporting period.
The following table shows the changes in our contingent consideration liability:
Balance as of April 30, 2022
$
—
Acquisition of business (Note 13)
56
Foreign currency translation adjustment
7
Balance as of April 30, 2023
63
Purchase accounting adjustment (Note 13)
(1)
Change in fair value1
9
Foreign currency translation adjustment
(2)
Balance as of April 30, 2024
$
69
1Classified as “other expense (income), net” in the accompanying consolidated statement of operations.
See Note 13 for additional information about the contingent consideration liability.
We measure some assets and liabilities at fair value on a nonrecurring basis. That is, we do not measure them at fair value
on an ongoing basis, but we do adjust them to fair value in some circumstances (for example, when we determine that an asset
is impaired). We recognized non-cash impairment charges of $52 and $96 related to the Finlandia brand name during fiscal
2022 and 2023, respectively. The impairment charges were based on the estimated fair value of the brand name, which we
determined using the relief-from-royalty method. As discussed in Note 13, we also used the relief-from-royalty method to
determine fair values in connection with our accounting for business combinations. The fair value measurements determined
using this method are categorized as Level 3 within the valuation hierarchy. No other material nonrecurring fair value
measurements were required during the periods presented in these financial statements.
17. Leases
We enter into lease arrangements, which we use primarily for office space, vehicles, and land. Substantially all of our
leases are operating leases. Our finance leases are not material.
We record lease liabilities and right-of-use (ROU) assets on our balance sheet for leases with terms exceeding 12 months.
We do not record lease liabilities or ROU assets for short-term leases. The amounts recorded for lease liabilities and ROU
assets are based on the estimated present value, as of the lease commencement date, of the future payments to be made over the
lease term. We calculate the present value using our incremental borrowing rate that corresponds to the term of the lease. We
include the effect of an option to renew or terminate a lease in the lease term when it is reasonably certain that we will exercise
the option.
82
Some of our leases contain non-lease components (e.g., maintenance or other services) in addition to lease components.
We have elected the practical expedient not to separate the non-lease components from the lease components.
The following table shows information about our leases as of the end of the last two years:
Balance Sheet Classification
April 30,
2023
April 30,
2024
Right-of-use assets
Other assets
$
84 $
96
Lease liabilities:
Current
Accounts payable and accrued expenses
$
22 $
24
Non-current
Other liabilities
63
73
Total
$
85 $
97
Weighted-average discount rate
3.3%
4.2%
Weighted-average remaining term
5.1 years
5.1 years
The following table shows information about the effects of leases during each of the last three years:
2022
2023
2024
Total lease cost1
$
38 $
38 $
51
Cash paid for amounts included in the measurement of lease
liabilities2
25
25
29
Right-of-use assets obtained in exchange for new lease liabilities
35
29
38
1Consists primarily of operating lease cost. Other components of lease cost were not material.
2Classified within operating activities in the accompanying consolidated statements of cash flows.
The following table includes a maturity analysis of future (undiscounted) lease payments and a reconciliation of those
payments to the lease liabilities recorded on our balance sheet as of April 30, 2024:
April 30,
2024
2025
$
27
2026
23
2027
19
2028
14
2029
11
Thereafter
13
Total lease payments
107
Less: Present value discount
(10)
Lease liabilities
$
97
83
18. Other Comprehensive Income
The following table presents the components of net other comprehensive income (loss) during each of the last three years:
Year Ended April 30, 2022
Pre-Tax
Tax
Net
Currency translation adjustments:
Net gain (loss) on currency translation
$
(42) $
(18) $
(60)
Reclassification to earnings
—
—
—
Other comprehensive income (loss), net
(42)
(18)
(60)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments
76
(17)
59
Reclassification to earnings1
(7)
1
(6)
Other comprehensive income (loss), net
69
(16)
53
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost
67
(16)
51
Reclassification to earnings2
34
(8)
26
Other comprehensive income (loss), net
101
(24)
77
Total other comprehensive income (loss), net
$
128
$
(58) $
70
Year Ended April 30, 2023
Currency translation adjustments:
Net gain (loss) on currency translation
$
135
$
—
$
135
Reclassification to earnings
—
—
—
Other comprehensive income (loss), net
135
—
135
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments
3
(1)
2
Reclassification to earnings1
(37)
8
(29)
Other comprehensive income (loss), net
(34)
7
(27)
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost
(26)
6
(20)
Reclassification to earnings2
38
(9)
29
Other comprehensive income (loss), net
12
(3)
9
Total other comprehensive income (loss), net
$
113
$
4
$
117
Year Ended April 30, 2024
Currency translation adjustments:
Net gain (loss) on currency translation
$
(16) $
(1) $
(17)
Reclassification to earnings3
4
6
10
Other comprehensive income (loss), net
(12)
5
(7)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments
11
(2)
9
Reclassification to earnings1
(12)
3
(9)
Other comprehensive income (loss), net
(1)
1
—
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost
22
(5)
17
Reclassification to earnings2
6
(2)
4
Other comprehensive income (loss), net
28
(7)
21
Total other comprehensive income (loss), net
$
15
$
(1) $
14
1For 2022, $(2) of the pre-tax amount of $(7) is classified in other expense (income) in the accompanying consolidated statements of
operations. Otherwise, the pre-tax amount for each year is classified as sales.
2Pre-tax amount is classified as non-operating postretirement expense in the accompanying consolidated statements of operations.
3Pre-tax amount is classified in gain on business divestitures in the accompanying consolidated statements of operations.
84
19. Supplemental Information
The following table presents net sales by geography:
2022
2023
2024
United States
$
1,917 $
1,968 $
1,889
Mexico
178
244
290
Germany
228
239
263
Australia
219
221
204
United Kingdom
218
207
185
Other
1,173
1,349
1,348
Total net sales
$
3,933 $
4,228 $
4,178
Net sales are attributed to countries based on where customers are located. See Note 9 for additional information about net
sales, including net sales by product category.
Our two largest customers accounted for 14% and 12% of consolidated net sales in 2022; 14% and 12% of consolidated
net sales in 2023; and 13% and 11% of consolidated net sales in 2024.
The net book value of property, plant, and equipment located outside the United States was $204 and $255 as of April 30,
2023 and 2024, respectively. Other long-lived assets located outside the United States are not significant.
We have concluded that our business constitutes a single operating segment.
85
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive
Officer (CEO) and Chief Financial Officer (CFO) (our principal executive and principal financial officers), has evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) as of the end of fiscal 2023. Based on that evaluation, our CEO and CFO concluded
that our disclosure controls and procedures: (a) are effective to ensure that information required to be disclosed by the Company
in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in the SEC's rules and forms; and (b) include controls and procedures designed to ensure that information
required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management,
including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting. Except as described below, there has been no change in our
internal control over financial reporting during the quarter ended April 30, 2024, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting and Report of Independent Registered Public
Accounting Firm. Management's report on our internal control over financial reporting as of April 30, 2024, and our
independent registered public accounting firm's report on our internal control over financial reporting are set forth in “Item 8.
Financial Statements and Supplementary Data.”
Item 9B. Other Information
During the three months ended April 30, 2024, no director or officer of the Company adopted or terminated a “Rule
10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation
S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Information on our Executive Officers is included under the caption “Information about Our Executive Officers” in Part I
of this report. For the other information required by this item, see the following sections of our definitive proxy statement for
the Annual Meeting of Stockholders to be held July 25, 2024 (“2024 Proxy Statement”), which information is incorporated into
this report by reference: (a) “Proposal 1: Election of Directors” (for biographical information on directors and family
relationships); (b) “Code of Conduct and Code of Ethics for Senior Financial Officers” (for information on our code of ethics);
(c) “Selection of Directors” (for information on the procedures by which security holders may recommend nominees to the
Company's Board of Directors); (d) “Board Committees” (for information on our Audit Committee), and (e) “Hedging,
Derivatives and Short Sale Transactions Prohibited” (for information on our Insider Trading Policy).
Item 11. Executive Compensation
For the information required by this item, refer to the following sections of our 2024 Proxy Statement, which information
is incorporated into this report by reference: (a) “Compensation Discussion and Analysis”; (b) “Compensation Tables”; (c)
“Director Compensation”; (d) “Compensation Committee Interlocks and Insider Participation”; (e) “Compensation Committee
Report”; and (f) “Pay Ratio Disclosure.”
86
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table summarizes information as of April 30, 2024, about our equity compensation plans under which we
have made grants of stock options, stock appreciation rights, restricted stock, market value units, performance units, or other
equity awards.
Plan Category
Number of Securities
to Be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights1
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights2
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
Equity compensation plans approved by
Class A common stockholders
924,961
$55.38
11,269,299
1Includes 249,260 Class B common shares to be issued upon exercise of stock-settled stock appreciation rights (SSARs); 83,836 Class B
restricted stock units (RSUs); 192,999 Class B performance-based restricted stock units (PBRSUs); 217,867 Class A PBRSUs; 150,658 Class
A common deferred stock units (DSUs); and 30,341 Class B common DSUs issued under the Brown-Forman 2004, 2013 Omnibus, and 2022
Omnibus Compensation Plans. SSARs are exercisable for an amount of our common stock with a value equal to the increase in the fair
market value of the common stock from the date the SSARs were granted. The fair market value of our common stock at fiscal year-end has
been used for the purposes of reporting the number of shares to be issued upon exercise of the 3,753,996 SSARs outstanding at fiscal year-
end.
2RSUs, PBRSUs and DSUs have no exercise price because their value depends on continued employment or service over time, and are to be
settled for shares of Class B common stock. Accordingly, these have been disregarded for purposes of computing the weighted-average
exercise price.
For the other information required by this item, refer to the section entitled “Stock Ownership” of our 2024 Proxy
Statement, which information is incorporated into this report by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
For the information required by this item, refer to the following sections of our 2024 Proxy Statement, which information
is incorporated into this report by reference: (a) “Certain Relationships and Related Transactions”; and (b) “Our Independent
Directors.”
Item 14. Principal Accountant Fees and Services
For the information required by this item, refer to the following sections of our 2024 Proxy Statement, which information
is incorporated into this report by reference: (a) “Fees Paid to Independent Registered Public Accounting Firm”; and (b) “Audit
Committee Pre-Approval Policies and Procedures.”
PART IV
Item 15. Exhibits and Financial Statement Schedules
Page
(a)(1)
Financial Statements
The following documents are included in Item 8 of this report:
Report of Independent Registered Public Accounting Firm (PCAOB ID 42)
52
Consolidated Statements of Operations
55
Consolidated Statements of Comprehensive Income
56
Consolidated Balance Sheets
57
Consolidated Statements of Cash Flows
58
Consolidated Statements of Stockholders’ Equity
59
Notes to Consolidated Financial Statements
60
(a)(2)
Financial Statement Schedule:
Schedule II – Valuation and Qualifying Accounts
93
We have omitted all other schedules for which provision is made in the applicable accounting regulations of the Securities
and Exchange Commission either because they are not required under the related instructions, because the information required
is included in the consolidated financial statements and notes thereto, or because they do not apply.
87
(a)(3) Exhibits:
The following documents are filed with this report:
Exhibit Index
19
Brown-Forman Corporation Insider Trading policy.
21
Subsidiaries of Brown-Forman Corporation.
23
Consent of Ernst & Young LLP, independent registered public accounting firm.
31.1
CEO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2
CFO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32
CEO and CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (not considered to be filed).
97
Brown-Forman Corporation’s Policy on Recoupment of Incentive Compensation, applicable to executive officers,
effective as of October 2, 2023.
101
The following materials from Brown-Forman Corporation's Annual Report on Form 10-K for the fiscal year ended
April 30, 2024, in Inline XBRL (eXtensible Business Reporting Language) format: (a) Consolidated Statements of
Operations, (b) Consolidated Statements of Comprehensive Income, (c) Consolidated Balance Sheets, (d)
Consolidated Statements of Cash Flows, (e) Consolidated Statements of Stockholders’ Equity, and (f) Notes to
Consolidated Financial Statements.
104
Cover Page Interactive Data File in Inline XBRL format (included in Exhibit 101).
The following documents have been previously filed:
Exhibit Index
3.1
Restated Certificate of Incorporation of registrant, incorporated into this report by reference to Exhibit 3(i) of
Brown-Forman Corporation’s Form 10-Q for the quarter ended July 31, 2012, filed on September 5, 2012 (File No.
002-26821).
3.2
Certificate of Amendment of Restated Certificate of Incorporation of registrant, incorporated into this report by
reference to Exhibit 3.1 of Brown-Forman Corporation’s Form 8-K filed on August 9, 2016 (File No. 001-00123).
3.3
By-laws of registrant, as amended and restated effective January 23, 2024, incorporated into this report by reference
to Exhibit 3.1 of Brown-Forman Corporation’s Form 8-K filed on January 26, 2024 (File No. 001-00123).
4.1
Description of Brown-Forman Corporation’s Class A Common Stock, par value $0.15 per share, and Class B
Common Stock, par value $0.15 per share, incorporated into this report by reference to Exhibit 4.1 of Brown-
Forman Corporation’s Form 10-K for the fiscal year ended April 30, 2020, filed on June 19, 2020 (File No.
001-00123).
4.2
Description of Brown-Forman Corporation’s 1.200% Notes due 2026, incorporated into this report by reference to
Exhibit 4.2 of Brown-Forman Corporation’s Form 10-K for the fiscal year ended April 30, 2020, filed on June 19,
2020 (File No. 001-00123).
4.3
Description of Brown-Forman Corporation’s 2.600% Notes due 2028, incorporated into this report by reference to
Exhibit 4.3 of Brown-Forman Corporation’s Form 10-K for the fiscal year ended April 30, 2020, filed on June 19,
2020 (File No. 001-00123).
4.4
Indenture dated as of April 2, 2007, between Brown-Forman Corporation and U.S. Bank National Association, as
Trustee, incorporated into this report by reference to Exhibit 4.1 of Brown-Forman Corporation’s Form 8-K filed on
April 3, 2007 (File No. 002-26821).
4.5
First Supplemental Indenture dated as of December 13, 2010, between Brown-Forman Corporation and U.S. Bank
National Association, as Trustee, incorporated into this report by reference to Exhibit 4.2 of Brown-Forman
Corporation’s Form S-3ASR Registration Statement filed on December 13, 2010 (File No. 333-171126).
4.6
Second Supplemental Indenture dated as of June 24, 2015, between Brown-Forman Corporation and U.S. Bank
National Association, as Trustee, incorporated into this report by reference to Exhibit 4.3 of Brown-Forman
Corporation’s Form S-3ASR Registration Statement filed on June 24, 2015 (File No. 333-205183).
4.7
Form of 1.200% Note due 2026, incorporated into this report by reference to Exhibit 4.5 of Brown-Forman
Corporation’s Form 8-K filed on July 8, 2016 (File No. 002-26821).
4.8
Form of 2.600% Note due 2028, incorporated into this report by reference to Exhibit 4.6 of Brown-Forman
Corporation’s Form 8-K filed on July 8, 2016 (File No. 002-26821).
4.9
Form of 3.500% Note due 2025, incorporated into this report by reference to Exhibit 4.5 of Brown-Forman
Corporation’s Form 8-K filed on March 26, 2018 (File No. 001-00123).
4.10
Form of 3.75% Note due 2043, incorporated into this report by reference to Exhibit 4.6 of Brown-Forman
Corporation’s Form 8-K filed on December 12, 2012 (File No. 002-26821).
88
Exhibit Index
4.11
Form of 4.00% Note due 2038, incorporated into this report by reference to Exhibit 4.6 of Brown-Forman
Corporation’s Form 8-K filed on March 26, 2018 (File No. 001-00123).
4.12
Form of 4.500% Notes due 2045, incorporated into this report by reference to Exhibit 4.5 of Brown-Forman
Corporation’s Form 8-K filed on June 29, 2015 (File No. 002-26821).
4.13
Form of 4.750% Note due 2033, incorporated into this report by reference to Exhibit 4.5 of Brown-Forman
Corporation’s Form 8-K filed on March 23, 2023 (File No. 001-00123).
4.14
Officer’s Certificate dated December 12, 2012, pursuant to Sections 1.01, 2.02, 3.01, and 3.03 of the Indenture
dated as of April 2, 2007, as supplemented by the First Supplemental Indenture dated as of December 13, 2010,
between Brown-Forman Corporation and U.S. Bank National Association, as Trustee, setting forth the terms of the
3.75% Notes due 2043, incorporated into this report by reference to Exhibit 4.3 of Brown-Forman Corporation’s
Form 8-K filed on December 12, 2012 (File No. 002-26821).
4.15
Officer’s Certificate dated June 29, 2015, pursuant to Sections 1.02, 2.02, 3.01 and 3.03 of the Indenture dated as of
April 2, 2007, as supplemented by the First Supplemental Indenture dated as of December 13, 2010, and the Second
Supplemental Indenture dated as of June 24, 2015, between Brown-Forman Corporation and U.S. Bank National
Association, as Trustee, setting forth the terms of the 4.500% Notes due 2045, incorporated into this report by
reference to Exhibit 4.4 of Brown-Forman Corporation’s Form 8-K filed on June 29, 2015 (File No. 002-26821).
4.16
Officers’ Certificate dated July 7, 2016, pursuant to Sections 1.01, 2.02, 3.01, and 3.03 of the Indenture dated as of
April 2, 2007, as supplemented by the First Supplemental Indenture dated as of December 13, 2010, and the Second
Supplemental Indenture dated as of June 24, 2015, between Brown-Forman Corporation and U.S. Bank National
Association, as Trustee, setting forth the terms of the 1.200% Notes due 2026 and the 2.600% Notes due 2028,
incorporated into this report by reference to Exhibit 4.4 of Brown-Forman Corporation’s Form 8-K filed on July 8,
2016 (File No. 002-26821).
4.17
Officers’ Certificate dated March 26, 2018, pursuant to Sections 1.02, 2.02, 3.01, and 3.03 of the Indenture dated
April 2, 2007, as supplemented by the First Supplemental Indenture dated as of December 13, 2010, and the Second
Supplemental Indenture dated as of June 24, 2015, between Brown-Forman Corporation and U.S. Bank National
Association, as Trustee, setting forth the terms of the 3.500% Note due 2025 and the 4.000% Note due 2038,
incorporated into this report by reference to Exhibit 4.4 of Brown-Forman Corporation’s Form 8-K filed on March
26, 2018 (File No. 001-00123).
4.18
Officers’ Certificate, dated March 23, 2023, pursuant to Sections 1.01, 2.02, 3.01, and 3.03 of the Indenture dated
April 2, 2007, as supplemented by the First Supplemental Indenture, dated as of December 13, 2010, and the
Second Supplemental Indenture, dated as of June 24, 2015, between Brown-Forman Corporation and U.S. Bank
Trust Company, National Association (as successor in interest to U.S. Bank National Association), as Trustee,
setting forth the terms of the 4.750% Notes due 2033, incorporated into this report by reference to Exhibit 4.4 of
Brown-Forman Corporation’s Form 8-K filed on March 23, 2023 (File No. 001-00123).
10.1
A description of the Brown-Forman Savings Plan, incorporated into this report by reference to page 10 of Brown-
Forman Corporation’s definitive proxy statement filed on June 27, 1996, in connection with its 1996 Annual
Meeting of Stockholders (File No. 001-00123).*
10.2
Brown-Forman Corporation Nonqualified Savings Plan, incorporated into this report by reference to Exhibit 4.1 of
Brown-Forman Corporation’s Form S-8 Registration Statement filed on September 24, 2010 (File No.
333-169564).*
10.3
Brown-Forman Corporation 2004 Omnibus Compensation Plan, as amended, incorporated into this report by
reference to Exhibit A of Brown-Forman Corporation’s definitive proxy statement filed on June 26, 2009, in
connection with its 2009 Annual Meeting of Stockholders (File No. 002-26821).*
10.4
2010 Form of Non-Employee Director Stock-Settled Stock Appreciation Right Award Agreement, incorporated into
this report by reference to Exhibit 10.2 of Brown-Forman Corporation’s Form 8-K filed on July 23, 2010 (File No.
002-26821).*
10.5
Brown-Forman Corporation Amended and Restated Supplemental Executive Retirement Plan and First Amendment
thereto, incorporated into this report by reference to Exhibit 10(a) of Brown-Forman Corporation’s Form 10-K for
the year ended April 30, 2010, filed on June 25, 2010 (File No. 002-26821).*
10.6
Second Amendment to the Brown-Forman Corporation Amended and Restated Supplemental Executive Retirement
Plan, incorporated into this report by reference to Exhibit 10(a) of Brown-Forman Corporation’s Form 10-Q for the
quarter ended January 31, 2011, filed on March 9, 2011 (File No. 002-26821).*
10.7
Brown-Forman Corporation Amended and Restated Non-Employee Director Deferred Stock Unit Program,
incorporated into this report by reference to Exhibit 10.2 of Brown-Forman Corporation’s Form 8-K filed on July
26, 2013 (File No. 002-26821).*
10.8
Brown-Forman Corporation 2013 Omnibus Compensation Plan, incorporated into this report by reference to Exhibit
10.1 of Brown-Forman Corporation’s Form 8-K filed on July 26, 2013 (File No. 002-26821).*
10.9
Form of Employee Stock-Settled Stock Appreciation Right Award Agreement, incorporated into this report by
reference to Exhibit 10.3 of Brown-Forman Corporation’s Form 8-K filed on July 26, 2013 (File No. 002-26821).*
89
Exhibit Index
10.10
Form of Employee Stock-Settled Stock Appreciation Right Award Agreement, incorporated into this report by
reference to Exhibit 10.1 of Brown-Forman Corporation’s Form 8-K filed on August 1, 2016 (File No.
001-00123).*
10.11
Fiscal 2021 Form of Performance-Based Restricted Stock Unit Award Agreement (Class A), incorporated into this
report by reference to Exhibit 10.1 of Brown-Forman Corporation’s Form 10-Q for the quarter ended July 31, 2020,
filed on September 2, 2020 (File No. 001-00123).*
10.12
Fiscal 2021 Form of Performance-Based Restricted Stock Unit Award Agreement (Class B), incorporated into this
report by reference to Exhibit 10.2 of Brown-Forman Corporation’s Form 10-Q for the quarter ended July 31, 2020,
filed on September 2, 2020 (File No. 001-00123).*
10.13
First Amendment to Brown-Forman Corporation Amended and Restated Non-Employee Director Deferred Stock
Unit Program, incorporated into this report by reference to Exhibit 10.23 of Brown-Forman Corporation’s Form 10-
K for the fiscal year ended April 30, 2022, filed on June 17, 2022 (File No. 001-00123).*
10.14
Brown-Forman 2022 Omnibus Compensation Plan, incorporated into this report by reference to Appendix B of
Brown-Forman Corporation’s definitive proxy statement, filed on June 24, 2022, in connection with its 2022
Annual Meeting of Stockholders (File No. 001-00123).
10.15
Fiscal 2024 Form of Performance-Based Restricted Stock Unit Award Agreement (Class A), incorporated into this
report by reference to Exhibit 10.1 of Brown-Forman Corporation’s Form 10-Q for the quarter ended July 31, 2023,
filed on August 30, 2023.*
10.16
Fiscal 2024 Form of Performance-Based Restricted Stock Unit Award Agreement (Class B), incorporated into this
report by reference to Exhibit 10.2 of Brown-Forman Corporation’s Form 10-Q for the quarter ended July 31, 2023,
filed on August 30, 2023.*
10.17
Fiscal 2024 Form of Employee Stock-Settled Stock Appreciation Right Award Agreement, incorporated into this
report by reference to Exhibit 10.3 of Brown-Forman Corporation’s Form 10-Q for the quarter ended July 31, 2023,
filed on August 30, 2023.*
10.18
Securities and Asset Purchase Agreement among Brown-Forman Corporation, and Destillers United Group S.L.,
and Destilerias Unidas Corp., dated as of October 6, 2022, incorporated into this report by reference to Exhibit 10.1
of Brown-Forman Corporation’s Form 10-Q for the quarter ended October 31, 2022, filed on December 7, 2022
(File No. 001-00123).
10.19
Amendment No. 1 to Securities and Asset Purchase Agreement, dated as of January 4, 2023, by and among Brown-
Forman Corporation, Destillers United Group S.L., and Destilerias Unidas Corp, incorporated into this report by
reference to Exhibit 10.3 of Brown-Forman Corporation’s Form 8-K filed on January 5, 2023 (File No. 001-00123).
10.20
Second Amended and Restated Five-Year Credit Agreement, dated as of May 26, 2023, among Brown-Forman
Corporation, any borrowing subsidiaries as may become a party thereto, certain lenders party thereto, and U.S. Bank
National Association, as Administrative Agent, incorporated into this report by reference to Exhibit 10.1 of Brown-
Forman Corporation’s Form 8-K filed on May 30, 2023 (File No. 001-00123).
* Indicates management contract, compensatory plan, or arrangement.
Item 16. Form 10-K Summary
None.
90
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BROWN-FORMAN CORPORATION
(Registrant)
/s/ Lawson E. Whiting
By:
Lawson E. Whiting
President and Chief Executive Officer
Date: June 14, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities on June 14, 2024, as indicated.
Signature
Title
/s/ Campbell P. Brown
Director, Chair of the Board
Campbell P. Brown
/s/ Lawson E. Whiting
Director, President and Chief Executive Officer of the Company
Lawson E. Whiting
(Principal Executive Officer)
/s/ Elizabeth M. Brown
Director
Elizabeth M. Brown
/s/ Stuart R. Brown
Director
Stuart R. Brown
/s/ Mark A. Clouse
Director
Mark A. Clouse
/s/ Marshall B. Farrer
Director
Marshall B. Farrer
/s/ Michael J. Roney
Director
Michael J. Roney
/s/ Jan E. Singer
Director
Jan E. Singer
/s/ Tracy L. Skeans
Director
Tracy L. Skeans
91
Signature
Title
/s/ Elizabeth A. Smith
Director
Elizabeth A. Smith
/s/ Michael A. Todman
Director
Michael A. Todman
/s/ Leanne D. Cunningham
Executive Vice President and Chief Financial Officer
Leanne D. Cunningham
(Principal Financial Officer)
/s/ Kelli N. Brown
Senior Vice President and Chief Accounting Officer
Kelli N. Brown
(Principal Accounting Officer)
92
Brown-Forman Corporation and Subsidiaries
Schedule II – Valuation and Qualifying Accounts
For the Years Ended April 30, 2022, 2023, and 2024
(Expressed in millions)
Col. A
Col. B
Col. C(1)
Col. C(2)
Col. D
Col. E
Description
Balance at
Beginning
of Period
Additions
Charged to
Costs and
Expenses
Additions
Charged to
Other
Accounts
Deductions
Balance
at End
of Period
2022
Allowance for doubtful accounts
$
7
$
7
$
—
$
1 (1) $
13
Deferred tax valuation allowance
$
20
$
8
$
—
$
1
$
27
2023
Allowance for doubtful accounts
$
13
$
—
$
—
$
6 (1) $
7
Deferred tax valuation allowance
$
27
$
4
$
—
$
17
$
14
2024
Allowance for doubtful accounts
$
7
$
1
$
—
$
—
$
8
Deferred tax valuation allowance
$
14
$
2
$
2
$
2
$
16
(1)
Doubtful accounts written off, net of recoveries.
93
850 Dixie Highway
Louisville, Kentucky 40210
Brown-Forman.com