Brown Forman NYSE: BF.A said its first-quarter fiscal 2027 results were largely in line with expectations, as growth from ready-to-drink products and Jack Daniel’s Tennessee Blackberry helped offset pressure in used barrel sales, tequila and several developed international markets.
President and Chief Executive Officer Lawson Whiting said innovation remains a key growth engine for the company amid selective consumer spending and continued softness in the broader spirits market. Brown-Forman reaffirmed its full-year outlook, including expectations for approximately flat organic net sales and a 3% to 5% decline in organic operating income.
“Innovation is creating meaningful growth opportunities across our portfolio,” Whiting said, pointing to New Mix, the company’s RTD portfolio and Jack Daniel’s Tennessee Blackberry as major contributors during the quarter.
RTDs and Blackberry Support Sales
New Mix delivered strong double-digit organic net sales growth in Mexico, where it has benefited from consumer interest in flavor, convenience and affordability. The product’s U.S. demand has exceeded Brown-Forman’s expectations since launch, according to Whiting, and the company is expanding into additional markets while adding flavors and package options.
New Mix is currently available in nine U.S. states, particularly areas with substantial Mexican American populations, Whiting said during the question-and-answer session. Despite its limited distribution, it has become the eighth-largest contributor to the RTD category in Nielsen data, he said.
Brown-Forman’s el Jimador Spritz also had a strong U.S. start. Based on recent Nielsen data, the company’s RTD portfolio contributed about one point of value growth to its overall U.S. performance.
Jack Daniel’s Tennessee Blackberry, meanwhile, contributed more than two points of U.S. value growth based on Nielsen takeaway trends. The flavor is now available in more than 30 international markets, with strong growth in Brazil, France and the United Arab Emirates. Brown-Forman is supporting the launch with broader distribution and additional pack sizes, while also extending the product into an RTD Jack Daniel’s Tennessee Blackberry & Lemonade offering.
Whiting said the Tennessee Blackberry rollout was designed as a two-year launch. The first year centered largely on the U.S. 750-milliliter format, while the current phase includes international expansion and additional U.S. sizes.
Barrel Sales, Tequila and International Markets Remain Pressured
Growth initiatives were partly offset by a more than 60% decline in organic net sales for Brown-Forman’s non-branded and bulk business, primarily used barrel sales. Whiting said used barrel sales have fallen from more than $100 million two years ago to about $30 million, as demand from Scotch and Irish whiskey producers has remained below prior elevated levels.
The company expects used barrel sales to remain under pressure, though management expects the year-over-year dollar impact on net sales to moderate through the rest of fiscal 2027.
Brown-Forman’s full-strength tequila portfolio, including Herradura and el Jimador, posted a low-teens organic net sales decline. Whiting said the company is working to improve performance through marketing, clearer brand positioning and commercial execution.
Management cited improving U.S. takeaway trends for el Jimador, which has gained standing within the $15 to $30 tequila price range. Herradura faces a more difficult backdrop in higher-priced tequila segments, although Whiting said Brown-Forman plans to introduce new initiatives for the brand.
Emerging international markets generated 9% organic net sales growth, led by Mexico and the UAE. The UAE benefited from shipment timing, while Brazil faced a difficult comparison following prior-year supply chain disruptions and continued to run below last year despite recovering trends.
Developed international markets declined 8% organically. Australia grew 4%, helped by ordering patterns for Jack Daniel’s Tennessee Whiskey and RTD innovation, including the Australia-exclusive Jack Daniel’s Tennessee Serve whiskey-and-cola RTD. However, consumer demand remained weak across Germany, France and the U.K. In Canada, U.S.-produced spirits remained off shelves in most provinces, and Brown-Forman assumes the restrictions will continue for the rest of the fiscal year.
Profitability and Cash Flow
Gross margin expanded 40 basis points to 60.2%, primarily due to lower costs related to timing and favorable portfolio changes. The improvement was partly offset by foreign exchange, including the stronger Mexican peso, and product mix pressure from fast-growing RTDs.
Chief Financial Officer Jim Peters said the first-quarter margin level could represent the high point for the year. The company expects higher-cost whiskey inventory produced during a period of elevated inflation to increasingly affect results, along with higher input costs and the impact of lower production volumes.
Organic advertising expense declined 4%, primarily due to timing, while organic selling, general and administrative expenses increased 5%, largely reflecting organizational changes aimed at reducing complexity and accelerating decision-making.
- Reported operating income declined 3%.
- Organic operating income increased 4%.
- Earnings per share rose 6% to $0.38.
- Cash flow from operations increased $13 million to $173 million.
- Free cash flow increased $32 million to $161 million.
The company repaid €300 million of 1.2% senior notes that matured July 7, 2026. Brown-Forman continues to expect fiscal 2027 capital expenditures of $60 million to $70 million and an effective tax rate of roughly 20% to 22%.
Leadership Transition and Outlook
Whiting reiterated that he plans to retire after a successor is named, following nearly 30 years with Brown-Forman. The board’s Corporate Governance and Nominating Committee is considering internal and external candidates, and the company has not provided a timeline. Whiting expects to support the transition in an advisory capacity after a successor is appointed.
Management said it remains encouraged by U.S. trends, though Whiting characterized the improvement as gradual. The company expects depletions to exceed shipments for the full fiscal year as shipment timing benefits from the prior-year distributor transition and Tennessee Blackberry launch normalize.
“We feel good about our business,” Whiting said. “We feel more confident about our business today, and we’re going to continue to grow and do it on our own and create the most value that we can.”
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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