Tequila hampers Brown-Forman in challenging 2025
Brown-Forman posted flat organic revenue for its fiscal 2026 year with another 12 months of decline for its Tequila brands.
The owner of brands such as Jack Daniel’s and Herradura Tequila registered net sales of US$3.9 billion for the 12 months to 30 April 2026, which was down by 1% on a reported basis and flat organically.
For the fourth quarter of its fiscal 2026 year, the company’s sales rose organically by 2% after reaching US$912 million.
Organic operating income for the full-year fell by 10% to US$1bn on a reported basis, and by 2% organically.
The company’s CEO and president, Lawson Whiting, said: “We finished the fiscal year ahead of our expectations, driven by strong execution in our innovation portfolio, the early benefits of our US route-to-market transformation, and strategic cost-restructuring initiatives.
“Our ability to grow cash flows from operations and free cash flow by more than US$400 million in a declining market speaks to the strength of our business and our commitment to a robust capital allocation strategy.”
Tequila struggles
As it did for the year ended 30 April 2025, Brown-Forman’s Tequila portfolio struggled once again in fiscal 2026.
For the full-year, its leading Tequila brand Herradura dropped by 10% organically, while El Jimador was down by 2%.
Herradura’s decline was put down to lower volumes in the US, while El Jimador’s result was attributed to declines in the US and Mexico, though this was partially offset by higher volumes in Colombia.
Brown Forman’s New Mix brand, which is made with El Jimador, highlighted growth in the ready-to-drink space.
Brown-Forman’s RTD portfolio was up by 7% as a whole, but New Mix soared by 33%, supported by the product’s launch in the US last November.
In contrast, the Jack Daniel’s RTD range dropped by 5% due to declines in the US and Canada’s removal of US products from its shelves in most provinces.
Brown-Forman’s whiskey division was slightly up – by 1% – which the company noted was helped by the Jack Daniel’s Tennessee Blackberry launch last August.
Across the Jack Daniel’s portfolio, Tennessee Whiskey and Honey both fell by 4% and 5% respectively. Tennessee Apple, however, was up by 10%. Gentleman Jack, however, dropped by 2%. Tennessee Blackberry’s growth was not listed.
Outside of Jack Daniel’s, premium Bourbon provided a bright spot with Woodford Reserve and Old Forester both seeing growth, by 4% and 5% respectively.
Diplomático Rum and Gin Mare also saw double-digit rises of 11% and 30% in the full-year.
Promise in emerging markets
Net sales in the US were down by 7% on a reported basis and flat organically.
Brown-Forman said this was driven by the lower volumes of the core Jack Daniel’s range, the end of its partnership in the market with Korbel Champagne, and absence of Sonoma-Cutrer, which it sold to The Duckhorn Portfolio in April 2024.
In spite of this, Brown-Forman highlighted the launch of Jack Daniel’s Tennessee Blackberry, Woodford Reserve’s growth and the change in its distribution network for positive impact in the US.
The company saw its biggest success in emerging markets where sales were up 12% organically. Mexico led the performance with a 13% rise and ‘strong double-digit growth’ for New Mix.
Elsewhere, Brazil (12%), Turkey (19%) and Poland (2%) each posted growth, while ‘rest of emerging’ was up by 15%.
Brown-Forman also found success in travel retail where net sales increased by 5%, helped by an increase in traveller numbers.
In Europe, the company felt declines across the board. Germany (7%), the UK (9%), France (7%) and Spain (4%) were all in decline. The company’s net sales in Australia were flat.
For the rest of its developed markets, which includes Canada where US-made products are still unavailable on many retail shelves, net sales dropped by 4%.
Flat results expected for the year ahead
Looking ahead, Whiting added that “while we expect continued market volatility and a challenging cost cycle, our performance this year proves we have the right people, brands and strategy to navigate these challenges effectively”.
So far this year, the company has been the subject of a merger battle with Sazerac alongside Pernod Ricard, though both potential deals have fallen through.
Brown-Forman expects flat organic sales for fiscal 2027 and its operating income to be in decline between 3%-5%.
“We anticipate the operating environment for fiscal 2027 to remain challenging, as macroeconomic pressures and geopolitical instability continue to negatively impact consumer behavior and beverage alcohol consumption, particularly within developed markets,” Brown-Forman added in an outlook statement.
“We remain committed to building our business for the long term while focusing intensely on the variables within our control.”
Earlier in the week, Brown-Forman announced it was halting whiskey production at Irish distillery Slane.
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