"Trying To Be Realistic"

An update on Brown-Forman (BF.B)

From “Brown-Forman: Continued Headwinds” (June 2025):

“It’s discouraging to see continued efforts to lessen their exposure [to the core whiskey brands] via acquisitions… Some figures from two recent large acquisitions - Gin Mare in 2022 and Diplomático in 2023 - help drive this point home. While this isn’t apples to apples, the ~$1.2 billion total price tag on those two deals is equal to ~10% of Brown-Forman’s market cap. By comparison, as you can see in Schedule B from the Q4 FY25 press release, these two brands accounted for just ~1% of FY25 depletions. (Gin Mare’s growth disappointed in FY25, resulting in a ~$50 million impairment charge.)”

The primary reason for my ongoing interest in Brown-Forman is confidence in their leading portfolio of American whiskey brands, specifically the Jack Daniel’s family of brands (FOB) and Woodford Reserve, which collectively account for roughly 75% of the company’s non-RTD revenues. Fittingly, the company hosted an Investor Day in October 2025 that was primarily focused on Jack Daniel’s global competitive position. Alongside last week’s Q3 FY26 results, my views on Brown-Forman’s long-term trajectory, and what needs to happen for me to invest in the company, are becoming clearer (stock price weakness doesn’t hurt either, with BF.B down >60% over the past five years).