Brown-Forman wins £51m lawsuit against Bacardi
A tribunal has ruled that Bacardi must pay its former distribution partner Brown-Forman a sum of more than £51 million (US$67.6m).
The ruling, handed down on 8 December, is another chapter in the cost-sharing dispute between the spirits giants, who first established their joint distribution operation, Bacardi Brown-Forman Brands, in the UK in 2002.
That alliance was officially severed in April 2020, and the next month, American firm Brown-Forman formed its own UK distribution company.
Brown-Forman, owner of Jack Daniel’s, told The Spirits Business that it first notified Bacardi of its intention not to renew the terms of the companies’ UK cost-sharing agreement on 30 May 2019. Through the agreement, Bacardi delivered certain services for Brown-Forman, including warehousing, logistics, sales, reporting, treasury, tax and more, and the companies split the overhead for those services.
However, Bacardi refused to pay more than £50m owed to Brown-Forman after the relationship was terminated, the Jack Daniel’s owner said.
To claim the funds, the US firm lodged a lawsuit against Bacardi in August 2020. Soon after, Bacardi struck back by seeking arbitration to retain the sum as damages for the termination of the agreement.
In May 2021, the commercial court ruled that Bacardi did not have to pay the £51m, pending the outcome of the arbitration.
“The ruling demonstrates we have acted properly and with integrity. Doing the right thing is not always easy but its importance to Bacardi cannot be overstated,” a Bacardi spokesperson commented at the time.
This month’s arbitration decision reverses that ruling, and Bacardi has been ordered to return £51m plus interest to Brown-Forman.
“We are very pleased that the tribunal ruled in favour of Brown-Forman,” said Jeremy Shepherd, Brown-Forman, managing director, UK and Ireland.
“Most importantly, this decision allows Brown-Forman United Kingdom to focus our attention, energy, and resources on continuing to grow our business in the world’s fourth-largest market for American whiskey.”
Bacardi did not respond to multiple requests for comment.
In July this year, the two companies ended their Austrian distribution partnership.