Brown-Forman Completes Sale of Sonoma-Cutrer Vineyards

Rhea-AI Summary

Brown-Forman (NYSE: BFA, BFB) completed the sale of Sonoma-Cutrer Vineyards to The Duckhorn Portfolio, Inc. for $50 million USD and 21.5% ownership in April 2024. Brown-Forman executives Marshall Farrer and Tim Nall join The Duckhorn Portfolio's Board of Directors.

Positive

• Brown-Forman successfully completed the sale of Sonoma-Cutrer Vineyards, generating $50 million USD in proceeds.

• Brown-Forman secured a 21.5% ownership stake in The Duckhorn Portfolio, Inc. as part of the deal.

• The agreement includes two Brown-Forman executives joining The Duckhorn Portfolio's Board of Directors, enhancing collaboration between the companies.

Negative

• The sale of Sonoma-Cutrer Vineyards could potentially impact Brown-Forman's wine portfolio and future business strategy negatively.

• Brown-Forman relinquished control over the Sonoma-Cutrer brand trademarks, facilities, and six vineyards, which may limit its presence in the luxury wine market.

Insights

Financial Analyst

The completed sale of Sonoma-Cutrer Vineyards is a notable transaction that reflects Brown-Forman's strategic decision to realign its brand portfolio. The obtainment of a 21.5% stake in a premier wine group like The Duckhorn Portfolio signifies a shift toward collaboration and influence within the wine industry, rather than direct ownership. The financial injection of $50 million USD is capital that can be redeployed into core business areas or used to pay down debt, potentially improving Brown-Forman's balance sheet. Investors should monitor how this capital is utilized and the performance of Duckhorn Portfolio shares moving forward, as it could impact Brown-Forman's earnings.

Market Research Analyst

Duckhorn Portfolio's acquisition of the Sonoma-Cutrer brand can leverage synergies with its existing luxury wine brands. For retail investors, the key takeaway is the potential for market share growth through expanded distribution networks and brand recognition. Brown-Forman’s strategic placement of two executives on Duckhorn's Board offers insight into a more integrated partnership approach, possibly influencing Duckhorn’s strategic decisions benefiting both entities. The outcome of this integration will be critical to observe, as it may set a precedent for similar deals in the beverages industry.

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Brown-Forman (NYSE: BFA, BFB) announced today that it completed the sale of Sonoma-Cutrer Vineyards and related brand trademarks to The Duckhorn Portfolio, Inc. (NYSE: NAPA), a premier wine group, on April 30, 2024. In November 2023, Brown-Forman disclosed it had reached an agreement to sell the brand in exchange for an ownership percentage of approximately 21.5% in The Duckhorn Portfolio and $50 million USD.

As part of the agreement, The Duckhorn Portfolio has named two Brown-Forman executives to its Board of Directors, Marshall Farrer, Chief Strategic Growth Officer, and Tim Nall, Chief Global Supply Chain and Technology Officer.

Under the terms of the agreement, the Sonoma-Cutrer brand trademarks, facilities, and six vineyards in two appellations will join The Duckhorn Portfolio’s luxury wine brands.

About Brown-Forman

For more than 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel's Tennessee Whiskey, Jack Daniel's Ready-to-Drinks, Jack Daniel's Tennessee Honey, Jack Daniel's Tennessee Fire, Jack Daniel's Tennessee Apple, Gentleman Jack, Jack Daniel's Single Barrel, Woodford Reserve, Old Forester, Coopers’ Craft, The GlenDronach, Benriach, Glenglassaugh, Slane, Herradura, el Jimador, New Mix, Korbel, Chambord, Fords Gin, Gin Mare, and Diplomático Rum. Brown-Forman’s brands are supported by approximately 5,600 employees globally and sold in more than 170 countries worldwide. For more information about the company, please visit brown-forman.com.

Important Information on Forward-Looking Statements:

This press release contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws, including statements regarding the Company’s anticipated divestiture of Sonoma Cutrer and investment in The Duckhorn Portfolio, Inc. Words such as “aim,” “anticipate,” “aspire,” “believe,” “can,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “would,” and similar words indicate forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include, but are not limited to:

• Our substantial dependence upon the continued growth of the Jack Daniel's family of brands
• Substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks
• Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs
• Disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers
• Changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation
• Production facility, aging warehouse, or supply chain disruption
• Imprecision in supply/demand forecasting
• Higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor
• Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value
• Impact of health epidemics and pandemics, and the risk of the resulting negative economic impacts and related governmental actions
• Unfavorable global or regional economic conditions and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations
• Product recalls or other product liability claims, product tampering, contamination, or quality issues
• Negative publicity related to our company, products, brands, marketing, executive leadership, employees, Board of Directors, family stockholders, operations, business performance, or prospects
• Failure to attract or retain key executive or employee talent
• Risks associated with being a U.S.-based company with a global business, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including additional retaliatory tariffs on American whiskeys and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism, kidnapping, extortion, or other types of violence; and health pandemics
• Failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations
• Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
• Changes in laws, regulatory measures, or governmental policies, especially those affecting production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products
• Tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur
• Decline in the social acceptability of beverage alcohol in significant markets
• Significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products
• Counterfeiting and inadequate protection of our intellectual property rights
• Significant legal disputes and proceedings, or government investigations
• Cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or direct and indirect business partners, or failure to comply with personal data protection laws
• Our status as a family “controlled company” under New York Stock Exchange rules, and our dual-class share structure

For further information on these and other risks, please refer to our public filings, including the “Risk Factors” section of our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240430325408/en/

Elizabeth Conway

Director

Corporate Communications

elizabeth_conway@b-f.com



Sue Perram

VP, Director

Investor Relations

sue_perram@b-f.com

Source: Brown-Forman

FAQ

<p>When did Brown-Forman complete the sale of Sonoma-Cutrer Vineyards?</p>

Brown-Forman completed the sale of Sonoma-Cutrer Vineyards on April 30, 2024.

<p>What was the sale price of Sonoma-Cutrer Vineyards?</p>

The sale price of Sonoma-Cutrer Vineyards was $50 million USD.

<p>What percentage ownership did Brown-Forman secure in The Duckhorn Portfolio, Inc.?</p>

Brown-Forman secured approximately 21.5% ownership in The Duckhorn Portfolio, Inc.

<p>Who from Brown-Forman joined The Duckhorn Portfolio's Board of Directors?</p>

Marshall Farrer, Chief Strategic Growth Officer, and Tim Nall, Chief Global Supply Chain and Technology Officer, joined The Duckhorn Portfolio's Board of Directors.