Brown-Forman Defends Strategy After Rejecting Sazerac Takeover, Reported Family Dispute

(Photo: Brown-Forman)

Brown-Forman, the Louisville-based parent company of significant liquor brands like Jack Daniel’s, Old Forester, Woodford Reserve, Herradura and el Jimador, is defending its strategy and plans to remain independent after a year that has included takeover interest, internal family criticism and a decline in revenue.

The company reported $911 million in fiscal first-quarter net sales, down slightly from the prior year, while earnings per share rose 6% to 38 cents. Brown-Forman beat Wall Street expectations and reaffirmed its fiscal 2027 outlook for roughly flat organic net sales and a 3%-5% decline in organic operating income, according to Louisville Business First.

Outgoing CEO Lawson Whiting used the company’s earnings call to address the recent takeover discussions and criticism from members of the Brown family, which controls a majority of the company’s voting power through the Wolf Pen Branch shareholder group.

Whiting said Brown-Forman’s merger discussions with Pernod Ricard ended because the companies could not agree on terms. He said the board and its advisers also determined that a proposal from Louisville-based Sazerac Co. was not actionable given the position of the controlling shareholders.

“We feel more confident about our business today, and we’re going to continue to grow and do it on our own,” Whiting said, according to Louisville Business First.

Whiting announced in July that he plans to retire once Brown-Forman names his successor.

Family Members Criticize Strategy

The comments came after reports of a letter from Brown family members W.L. Lyons Brown III and Stuart Brown criticizing Brown-Forman’s leadership, business strategy and stock performance.

The letter reportedly questioned the company’s expansion into flavored Jack Daniel’s products, with the family members comparing the brand’s approach to Baskin-Robbins, according to Louisville Business First.

Brown-Forman executives offered a different assessment during the earnings call, pointing to product innovation as an important source of growth.

Jack Daniel’s Tennessee Blackberry, which debuted in August 2025, has been a success, expanding into more than 30 international markets and contributing more than two percentage points of U.S. value growth, based on Nielsen data cited by the company.

Brown-Forman’s ready-to-drink portfolio contributed about one percentage point of U.S. value growth. New Mix, the company’s tequila-based RTD currently sold in nine states, has become the eighth-largest contributor to RTD category growth in the Nielsen data cited by Whiting.

“Innovation is creating meaningful growth opportunities across our portfolio,” Whiting said.

The results also offered some signs of stabilization in Brown-Forman’s domestic business. Whiting said the U.S. business appears to have reached a bottom around December or January and has been improving gradually. Organic net sales in the U.S. were flat for the quarter.

International performance was mixed. Developed international markets declined 8%, while emerging international markets grew 9%.

Tequila remained a weak spot, with sales of Herradura and el Jimador landing in the low teens. Management said el Jimador’s position is improving as consumers increasingly shift toward less expensive tequila.

One of Brown-Forman’s biggest challenges is beyond its core branded spirits business: Sales of used barrels have fallen dramatically, declining from more than $100 million annually two years ago to roughly $30 million last year. Whiting said the drop has created more than an $80 million reduction in profitability from barrel sales over two years.

“You are talking $80-plus million in less profitability from barrel sales in two years,” Whiting said, according to Louisville Business First.

Despite that pressure, Brown-Forman generated $173 million in operating cash flow during the quarter, an increase of $13 million. Free cash flow rose $32 million to $161 million.

The company also reported a 60.2% gross margin, up 40 basis points from the same period a year earlier. Organic operating income increased 4%, although reported operating income fell 3%.

Chief Financial Officer Jim Peters said Brown-Forman has increased confidence that fiscal 2027 organic operating income will land toward the more favorable end of its projected decline range.

The company’s shares were trading around $27.53, nearly 5% higher during the session at the time of Louisville Business First’s publication.

For now, Brown-Forman’s leadership appears focused on improving the existing portfolio rather than pursuing a sale, with management pointing to innovation, a recovering U.S. business and cash generation as reasons to remain independent.