Brown-Forman Corporation (BF.B) has seen its shares dive 30.4% in the past six months compared with the industry’s decline of 20.8%. This versatile global spirits company has also trailed the broader Zacks Consumer Staples sector’s decline of 8% and the S&P 500’s growth of 4.6%. Closing the trading session at $33.80 yesterday, the stock hovers close to its 52-week low of $33.40.
This significant decline in Brown-Forman's stock price can be attributed to several factors that have weighed on the company’s performance.
BF.B Stock's Past Six Months Performance
Zacks Investment Research
Image Source: Zacks Investment Research
Factors Affecting Brown-Forman’s Performance
BF.B is struggling with soft performance attributed to lower volumes across brands and regions, which has negatively impacted its top line. This was evident in the company’s second-quarter 2025 results, where the top line declined by 1% year over year.
The sales drop was primarily driven by reduced sales of Jack Daniel’s Tennessee Whiskey and the divestiture of Finlandia and Sonoma-Cutrer. The company experienced weaker sales trends across all geographic regions due to more favorable shipment timings in the previous year, which were linked to inventory replenishment and the implementation of its pricing strategy.
While Whiskey sales were impacted by lower volumes of super-premium brands, Tequila sales faced pressures from weaker demand in key markets like the United States and Mexico. The ready-to-drink category showed mixed results, with some organic growth offset by reported declines. The broader portfolio was also affected by divestitures and softer volumes of Korbel California Champagnes.
Brown-Forman experienced a decline in gross profit in second-quarter 2025 due to input cost fluctuations, high inventory levels, and the impact of transition service agreements following the divestitures of Finlandia and Sonoma-Cutrer. These agreements, less profitable than product sales, weighed on margins, leading to a contraction in gross margin and a slight decline in reported gross profit.
Can Growth Strategies Turn the Tide for BF.B?
Brown-Forman is strategically positioned to capitalize on premiumization trends by focusing on high-quality, upscale brands that align with evolving consumer preferences. The company’s emphasis on premium and super-premium offerings, including iconic brands like Jack Daniel’s and Woodford Reserve, has driven growth.
In the first half of fiscal 2025, Woodford Reserve, Diplomatico Rum and Old Forester were key contributors to organic net sales growth. Woodford Reserve continues to outperform the U.S. whiskey category, gaining market share, while Diplomatico achieved strong growth across multiple markets, including the United States and Europe. Old Forester also posted double-digit growth, supported by single-barrel expressions and special releases like the King Ranch Edition.
Brown-Forman expects to return to growth in fiscal 2025, with management confident in accelerating performance in the year’s second half. This optimism is driven by a robust strategy, a diverse portfolio and broad geographic reach. The company anticipates organic net sales and operating income growth of 2-4%, supported by strong performance in international markets and the normalization of inventory trends. Additionally, pricing strategies and global portfolio expansion are expected to bolster results.
BF.B’s Strategic Moves to Drive Growth
Recently, the company made plans to reduce its global workforce by 12% to enhance operational efficiency while supporting departing employees with transition benefits. The company has reorganized its executive leadership, streamlining its structure for greater agility and efficiency. These changes aim to streamline Brown-Forman’s structure, enhancing agility and efficiency while enabling reinvestment in capabilities, technologies, brands and talent to drive future growth.
Brown-Forman plans to close its Louisville-based Brown-Forman Cooperage by April 2025, transitioning to an external barrel supplier to maintain quality and cost efficiency. This move, part of a broader workforce reduction, is expected to generate $70-$80 million in annual savings, with a portion reinvested to support growth. The company also anticipates over $30 million in proceeds from the cooperage asset sale, positioning it for enhanced operational efficiency and future investment opportunities.
How Should Investors Play BF.B Stock?
Brown-Forman is navigating a challenging phase marked by significant stock declines, heightened competition and macroeconomic pressures, as reflected in its soft performance in the second quarter of fiscal 2025. The company’s premiumization strategy, with strong performances from brands like Woodford Reserve, Diplomatico Rum and Old Forester, offers a clear path for growth.
For existing shareholders, retaining the stock appears prudent, given the company’s long-term growth potential. BF.B presently carries a Zacks Rank #3 (Hold).
Three Picks You Can't Miss
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Freshpet, Inc. FRPT, Vita Coco Company COCO and The Boston Beer Company SAM.
Freshpet, together with its subsidiaries, manufactures, distributes and markets natural fresh meals and treats for dogs and cats, currently sporting a Zacks Rank of #1 (Strong Buy). FRPT delivered an earnings surprise of 144.5% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current fiscal year’s sales and earnings implies growth of 27.2% and 228.6%, respectively, from the year-ago reported number.
Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank of 2 (Buy). COCO has a trailing four-quarter earnings surprise of 17.6%, on average.
The Zacks Consensus Estimate for COCO’s current financial-year sales and earnings suggests growth of 3.8% and 29.7%, respectively, from the year-ago reported figures.
Boston Beer is one of the largest craft brewers in the United States. The company produces beer, malt beverages and cider products at company-owned breweries and under contract. Boston Beer currently has a Zacks Rank #2.
The Zacks Consensus Estimate for the company’s 2025 earnings implies growth of 35.3% from the previous year’s reported number. SAM has a trailing four-quarter average earnings surprise of 154.6%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
