Brown-Forman Nixes Pernod Path, Touts Record Cash Flow Amid CEO Transition

Key Points

• Brown-Forman shareholders re-elected the board, approved executive pay, and ratified Ernst & Young as auditor, while the company also said final voting results will be filed later.
• Chairman Marshall Farrer said the board explored a potential combination with Pernod Ricard but ultimately decided it was not the right path, reinforcing Brown-Forman’s focus on its own brands and culture.
• CEO Lawson Whiting said fiscal 2026 was challenging, but the company still delivered record operating cash flow of $1 billion and nearly $900 million in free cash flow, helped by innovation and prior capacity investments.

Brown Forman NYSE: BF.A shareholders re-elected the company’s board and approved executive compensation and the auditor appointment at the spirits maker’s 2026 Annual Meeting of Stockholders, held at Churchill Downs in Louisville, Kentucky.

Mike Carr, executive vice president, general counsel and secretary, said approximately 96% of Class A stockholders were present or represented by proxy, establishing a quorum. According to preliminary results, each of the 11 director nominees received at least 92% of Class A votes cast. The company said it would issue a press release and file an 8-K with final voting results.

Stockholders also approved, on an advisory basis, compensation for the company’s named executive officers, with more than 85% of Class A shares present and entitled to vote supporting the proposal. The ratification of Ernst & Young as Brown-Forman’s independent registered public accounting firm for fiscal 2027 passed with more than 99% support.

Chairman Highlights Stewardship, Pernod Ricard Discussions

Marshall Farrer, chairman of the board, used his first full-year remarks as chairman to emphasize Brown-Forman’s long-term stewardship and its history of making major decisions amid uncertainty. He pointed to the acquisition of Jack Daniel’s nearly 70 years ago, the creation of Woodford Reserve and the company’s expansion into emerging markets as examples of decisions that shaped the business.

Farrer also addressed the company’s exploration of a potential combination with Pernod Ricard. “It is no secret that we explored a potential combination with Pernod Ricard,” he said, adding that decisions of that magnitude required serious consideration. “Ultimately, we concluded it was not the right path.”

Farrer said the process reinforced the board’s view that Brown-Forman’s brands, people, culture and values remain central to the company’s future.

CEO Retirement and Transition

Farrer also acknowledged last week’s announcement that Lawson Whiting plans to retire as president and chief executive officer once a successor is appointed. He thanked Whiting for nearly three decades of leadership and said the transition reflected the company’s focus on preparing Brown-Forman for future leadership.

Whiting told shareholders the decision was personal but said he has confidence in the company’s people, brands and board. “Until we do find a successor, I’m in the seat,” Whiting said. “Know that I’m still focused on running the business and will continue to do that.”

Fiscal 2026 Results and Cash Flow

Whiting described the current operating environment as difficult, citing cost pressures, shifting consumer behavior, distributor changes and the leadership transition. He said organic net sales were flat in fiscal 2026, while organic operating income declined 2%. Whiting said the company essentially delivered against the guidance it had provided a year earlier, though he added that Brown-Forman aspires to better long-term results.

The CEO said innovation helped the company navigate the year. He cited Jack Daniel’s Blackberry as a “home run” and said Jack Daniel’s Heritage Barrel, a $70 bottle in the Single Barrel Collection, sold out. He also mentioned King of Kentucky and New Mix as products with strong performance.

Whiting highlighted cash generation as a strength. He said operating cash flow reached $1 billion in fiscal 2026 for the first time in company history, while free cash flow was nearly $900 million. He attributed part of the improvement to the completion of significant capacity investments made in recent years at Jack Daniel’s, Woodford Reserve, tequila facilities and other operations.

Addressing market speculation about the dividend, Whiting said, “It’s not true. Don’t believe that story.” He said the company returned $827 million to shareholders last year, roughly half through the regular dividend and half through share repurchases.

Headwinds: U.S. Demand, Costs and Canada

Whiting said the U.S. spirits market has weakened after a long period of steady growth and a pandemic-era spike. He said U.S. distilled spirits demand fell to negative 2% in 2025 and noted that the figure was supported by ready-to-drink products, or RTDs. Excluding spirit-based RTDs, he said the numbers were worse.

He also pointed to higher production costs now flowing through the business. Because whiskey bottled today was often produced in 2021 and 2022, Whiting said elevated costs from that period are now being recognized. He cited increases in barrels, natural gas, corn and wages during that timeframe.

Whiting said Canada remains challenging because the company’s American-made products are not on shelves there. He also discussed major distributor changes in the U.S., saying Brown-Forman had changed partners in about half of the country and “got ahead” of broader disruption affecting the spirits industry.

Tailwinds: Innovation and International Growth

Despite the challenges, Whiting said Brown-Forman sees tailwinds in innovation and emerging markets. He said Jack Daniel’s Blackberry, first launched in the U.S., is being expanded into Western Europe and other global markets over time. He also cited demand for flavor and convenience as a lasting trend supporting RTDs.

Whiting highlighted new RTD products including Tennessee Blackberry and Lemonade, an El Jimador spritz product and New Mix, which he said has been a major success in Mexico and recently began entering the U.S. market.

International growth remains a major focus. Whiting said Brown-Forman has shifted from being roughly 60% U.S. and 40% international in 2006 to about 40% U.S. and 60% international today. He said more than half of the company’s employees now live outside the United States.

Looking ahead, Whiting said a strategic priority will be expanding brands beyond Jack Daniel’s internationally, including Woodford Reserve, the company’s tequilas, Gin Mare and Diplomático.

Whiting closed by thanking employees, shareholders and the Brown family, saying the company remains focused on growth despite a difficult environment. “We continue to grow forward, we continue to make this company bigger, we continue to make it more global,” he said.

About Brown Forman (NYSE:BF.A)

Brown-Forman Corporation manufactures, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs. The company offers its products primarily under the Jack Daniel's, Woodford Reserve, Canadian Mist, GlenDronach, BenRiach, Glenglassaugh, Old Forester, Early Times, Slane Irish Whiskey, Coopers' Craft, el Jimador, Herradura, New Mix, Pepe Lopez, Antiguo, Finlandia, Korbel Champagne, and Sonoma-Cutrer brands.

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