Is Brown-Forman Really in Crisis with a No-Plan Management 'Enriching' Itself?

The Wall Street Journal had an interesting story Monday (8/24) detailing a family feud involving the clan that controls more than 70% of Brown-Forman voting stock.

Two cousins sent a "a scathing seven-page letter to more than 130 of their relatives. Their company was in crisis and management had enriched itself despite a failing strategy," they wrote. The Journal went on to quote from the letter:

“The numbers are stark and undeniable,” said the July 10 letter, which was reviewed by The Wall Street Journal. “Brown-Forman’s stock price has fallen from the mid-$70s per share to the mid-$20s per share over the past three years, eliminating billions of dollars of generational wealth for the Brown family and all other shareholders.”

Even worse, W.L. Lyons Brown III and his brother Stuart R. Brown. said, “The board is rewarding failure, and doing so lavishly and publicly.”

Brown-Forman shareholders have a right to be unhappy about the company's stock price. But then, so do all shareholders in all other alcohol beverage firms. (Full disclosure: We own five shares of Class A stock. Those are the only shares that matter when it comes to voting.)

So, we decided to find out. We asked ChatGPT to run the numbers for us. We looked at the top five spirits companies in the U.S. market – Diageo, Pernod Ricard, Brown-Forman, Davide Campari-Milkano, and Remy Cointreau – over the past five years.

We wanted to understand the change in their sales, net profit, and stock price over the past five years. We also wanted to understand how the different markets into which the companies are selling affected their results. We also wanted to see the results as reported in the currency of the producer's home country, so results are based of British pounds for Diageo; Euros for Pernod Ricard, Campari and Rémy Cointreau; and Dollars for Brown-Forman.

What We Learned

Looking at the percentage change from the company's 2021 to 2025 fiscal year, Diageo's sales rose 22.4%, Pernod Ricard's 24.2%, Brown-Forman's 14.9%, Campari's 40.4% and Remy Cointreau fell 2.5%. Over the five years, the average annual rate of inflation was 4.42% a year, a cumulative price increase of 18.9%.

Next, we looked at the change in each company's net income from 2021-2025. Diageo's net profit fell 31.8%, Pernod Ricard's rose 24.6%, Brown-Forman's fell 3.8%, Campari's rose 17.7% and Remy's fell 16.1%.

Finally, we looked at the stock price. Diageo's stock price fell 44.4% and its earnings fell 31.8% in five years. That makes, maybe, some sense. Earnings took a dive, new CEO comes and says he'll turn things around and the market says, "Show me. Talk is cheap."

What makes no sense is Pernod Ricard. It posts a 24,5% gain in earnings, far outpacing inflation, and its management and investors are rewarded with a 52.2% drop in their stock price.

Proportionally, the 67.2% drop in Brown-Forman's stock makes no sense at all. It posts just a 3.8% loss over five years – about 2/3 of a point a year – but its stock price was sliced to just a third of what it was five years earlier.

Campari, like Pernod Ricard, is inexplicable. It's profits rise 17.7% in five years and its stock is slashed 41.8%.

And finally, there's Remy. Three-quarters of its value is washed away when it posts a 16% drop in net profit. Yes, you read that right – – 30 more points were slashed off Remy's earnings than off Diageo's even though Diageo lost two points of profit for every point Remy lost.

The American Difference

In several earnings calls, executives have noted that their business is doing just fine everywhere but the United States. If you're going to question the busienss judgment of Brown-Forman's management, this is where you've got the greatest chance of being correct.

And sure enough, Brown-Forman leads the pack in terms of sales in the U.S. --44.4% of sales occurred in the U.S. in 2025, Brown-Forman is relatively late to the export game. It launched its first focused, consolidated effort to sell in foreign markets in 1994, just 30 years ago.

To be sure, the company had sent an unofficial "U.S. Whiskey Cartel" to Europe during the Great Depression and it bought the Canadian Mist distillery in 1994.

But doesn't the current near-collapse in the U.S. market "prove" Brown-Forman's management should have moved more rapidly to grow overseas markets? Maybe. But apparently its competition doesn't think so. Diageo has 39.4% of its sales in its North American region. Pernod Ricard wanted to acquire Brown-Forman only six months ago; It has said sales to the U.S. represent 28.9% of global business.

We'll take a look at the charge that “The board is rewarding failure, and doing so lavishly and publicly” tomorrow.