The company continued to refine its portfolio by divesting Finlandia vodka and Sonoma-Cutrer wine businesses in fiscal 2024, and announced the end of the Korbel distribution relationship in fiscal 2025. Concurrently, strategic acquisitions like Gin Mare (2022) and Diplomático (2023) have positioned the company in super-premium gin and rum categories, aligning with its growth strategy.

Brown-Forman's strategy includes investing in existing businesses, with $395 million in capital expenditures during fiscal 2024 and 2025 focused on expanding whiskey, tequila, and rum making capacities. Product innovations like Jack Daniel's 14 Year Old and Woodford Reserve Double Double Oaked were launched in fiscal 2025 to attract new consumers and premiumize the portfolio.

The company continues to expand its owned-distribution model, launching an owned distribution company in Italy effective May 1, 2025. This strategic shift, following similar transitions in Japan, aims to increase competitiveness and foster a more direct connection with customers and consumers outside the United States.

In fiscal 2025, the Board of Directors approved a restructuring initiative to reduce the structural cost base and realign resources, including a 12% workforce reduction and the closure of the Louisville-based Brown-Forman Cooperage. This resulted in $63 million in charges, demonstrating management's decisive action to improve future efficiency.

Selling, General, and Administrative (SG&A) expenses decreased by 10% in fiscal 2025, driven by lower compensation-and-benefit-related expenses and the absence of prior-year charitable contributions and transaction-related expenses from recent divestitures. This indicates effective cost management in non-manufacturing functions.

The company acknowledges inherent uncertainty in supply/demand forecasting for aged products like whiskeys and tequilas, which require years of maturation. Additionally, cost of sales was negatively impacted by higher input costs and unfavorable fixed cost absorption, indicating ongoing challenges in operational cost management and supply chain efficiency.

The operating environment in fiscal 2025 was challenging due to ongoing macroeconomic and geopolitical uncertainties, which negatively impacted consumer confidence and discretionary spending. The fiscal 2026 outlook anticipates continued low visibility due to these factors, along with potential new tariffs.

New tariffs and retaliatory measures, such as Canadian provinces removing American beverage alcohol due to a 25% U.S. tariff on Canadian goods in March 2025, pose a significant risk. These changes could increase product costs, reduce gross profit and margins, and limit product availability in affected markets.

The company's business performance substantially relies on the continued growth and brand equity of the Jack Daniel’s family of brands. Shifts in consumer preferences, including a move away from brown spirits or towards smaller distilleries, and the legalization of cannabis, could negatively affect demand for core products.

Brown-Forman maintains a strong competitive position as one of the largest global suppliers of premium spirits, with Jack Daniel’s Tennessee Whiskey being the #1 selling American whiskey worldwide. The portfolio includes over 40 spirit, RTD cocktail, and wine brands, with premium bourbons like Woodford Reserve and Old Forester receiving industry awards in 2025.

The industry remains highly competitive, with major global spirits companies controlling over 20% of total spirits volume and new craft spirit brands entering the market. Consolidation among producers, distributors, and retailers could lead to reduced attention on Brown-Forman brands and increased pricing pressure, potentially hindering market share gains.

The company's vision is to be the best brand-builder, investing in platforms that create enduring connections with consumers through creative, responsible marketing programs. Success is attributed to brand recognition, provenance, quality, and timely new product introductions, which are key factors influencing consumer choice in a competitive landscape.

In fiscal 2025, Brown-Forman initiated a restructuring plan, including a 12% reduction in its worldwide headcount and the closure of the Louisville-based Brown-Forman Cooperage. This move aims to reduce the structural cost base and realign resources, incurring $63 million in charges in fiscal 2025, with full implementation expected by fiscal 2026.

While reported cost of sales decreased by 1% in fiscal 2025, the cost/mix component increased by 6%. This was driven by higher input costs for raw materials and unfavorable fixed cost absorption due to decreased production levels of the full-strength portfolio, indicating challenges in maintaining cost efficiency amid market changes.

The company faces risks from the unavailability or higher costs of key raw materials like agave, barley, and glass, as well as labor. The inherent uncertainty in supply/demand forecasting for aged products, which require years of production in advance, could lead to inability to meet demand or inventory write-downs, impacting operational stability.

Product innovation continues to be a meaningful contributor to performance, with new Jack Daniel’s expressions like the 14 Year Old (launched in FY25 in the US) and premium bourbons such as Woodford Reserve Double Double Oaked (launched in FY25 across the US) expanding the portfolio and attracting new consumers.

The company is increasing its emphasis on inclusive, digital, and integrated marketing and growing its e-commerce capabilities. This strategic focus aims to better connect and engage with consumers where they are, leveraging technology for enhanced brand building and market reach.

Brown-Forman employs a comprehensive cybersecurity risk management strategy led by a Chief Information Security Officer, utilizing the NIST Cybersecurity Framework and Zero-Trust principles. Annual security awareness training for employees and regular assessments by third-party assessors and internal audit teams demonstrate a proactive approach to technology risk.

Capital deployment initiatives in fiscal 2024 and 2025 totaled $395 million, primarily focused on investing in existing businesses. This included a $125 million expansion of bourbon making capacity in Kentucky and constructing additional barrel warehouses for key whiskey, tequila, and rum brands, demonstrating a commitment to future production needs.

The company returned a total of $1.2 billion to stockholders during fiscal 2024 and 2025, comprising $824 million in regular dividends and $400 million in share repurchases. The quarterly cash dividend was increased by 4% in November 2024 to $0.2265 per share, signaling confidence in future cash flow generation.

Return on average invested capital decreased to 14.4% in fiscal 2025 from 17.3% in fiscal 2024. This decline was primarily driven by lower operating income and higher invested capital, partially offset by the gain on the sale of the Duckhorn investment and a lower effective tax rate, indicating a less efficient use of capital in the current period.

In fiscal 2025, Brown-Forman revised its 2030 Sustainability Strategy to align with industry best practices and current climate science, broadening its focus beyond business operations to include its supply chain, where the majority of its environmental footprint resides. This demonstrates a commitment to long-term environmental health.

The company is making concrete investments in environmental initiatives, including the installation of a rooftop solar system at its Newbridge bottling plant in fiscal 2024 and continued construction of an anaerobic digester at the Jack Daniel Distillery in fiscal 2025. Efforts to improve water measurement and efficiency at Casa Herradura also continued in fiscal 2025.

Brown-Forman upholds high standards of self-regulation in marketing and promotes alcohol responsibility through initiatives like the 'Pause' campaign and its 2030 Alcohol Responsibility strategy. The Brown-Forman Foundation's $50 million, 10-year commitment to West Louisville demonstrates significant community investment.

Fiscal 2025 was marked by a challenging operating environment due to ongoing macroeconomic and geopolitical uncertainties, which negatively impacted consumer confidence and reduced discretionary spending in many top markets. This is expected to continue into fiscal 2026, with organic net sales and operating income projected to decline in the low-single digit range.

While total net sales declined across most geographic aggregations, emerging markets demonstrated strong organic net sales growth of 9% in fiscal 2025. This was led by Brazil (19% organic growth) and Türkiye (43% organic growth), indicating resilience and growth opportunities in these regions despite global headwinds.

The beverage alcohol industry faces extensive regulation, with risks of increased excise taxes and new labeling requirements (e.g., Ireland's Public Health (Alcohol) regulation effective 2026). These regulatory changes could increase operating costs, reduce product affordability, and limit market opportunities, as observed in several markets in fiscal 2025.