Market Position and Sales - Jack Daniel's Tennessee Whiskey is the largest American whiskey brand globally and the fourth-largest spirits brand overall, with consistent volume growth over the past five years[7]. - The United States accounted for 47% of the company's net sales in fiscal 2019, while international markets contributed 53%[11]. - In fiscal 2019, approximately 31% of net sales occurred in the fourth calendar quarter, highlighting seasonality in sales[18]. - The company operates in over 170 countries, with significant markets including the United Kingdom, Mexico, Australia, Germany, France, Poland, Russia, Japan, and Brazil[11]. - The Jack Daniel's family of brands is the primary driver of the company's revenue and growth, with significant reliance on its brand reputation for authenticity and quality[83]. - The company expects significant contributions to growth from emerging markets including Africa, Brazil, China, and Turkey[41]. Product Innovation and Development - The company aims to grow its premium spirits portfolio organically and through innovation, while also considering acquisitions and partnerships for further growth[32]. - The company plans to introduce Jack Daniel's Tennessee Apple in the fall of 2019, continuing its product innovation strategy[34]. - Woodford Reserve is the leading super-premium American whiskey globally, with expected continued growth as bourbon interest rises[35]. - Herradura Ultra surpassed 90,000 nine-liter cases in fiscal 2019, indicating strong growth in the ultra-premium tequila segment[39]. - The company plans to continue the global growth of the Jack Daniel's family of brands, specifically aiming to grow Jack Daniel's Tennessee Honey sales and launch Jack Daniel's Tennessee Apple in the U.S. in fiscal 2020[85]. Environmental and Social Responsibility - The company aims to reduce absolute greenhouse gas emissions by 15% and water use by 30% by fiscal 2023, compared to 2012 metrics[54]. - In fiscal 2019, the company made charitable donations of 70 million in fiscal 2018, distributing $2.5 million in charitable contributions in fiscal 2019[59]. Workforce and Corporate Governance - Approximately 4,700 employees were employed worldwide as of April 30, 2019, with 15% of U.S. employees represented by a union[62]. - The company emphasizes building a strong, agile workforce with a focus on diversity and inclusion to support its growth strategy[31]. - Attracting and retaining key talent is critical for the company's success, with potential impacts from labor market dynamics[120]. - The Brown family controls a majority of the voting stock, which may lead to decisions that do not align with the interests of other shareholders[123]. Competition and Market Challenges - The company has maintained a strong competitive position in the premium spirits market despite facing competition from major global brands[20]. - The company faces significant competition from a growing number of small, local distilleries in the U.S., which could negatively impact demand for its premium and super-premium brands, including Jack Daniel's[84]. - The company is experiencing a competitive pricing environment, with competitors potentially having more flexibility to adjust to market conditions[105]. - Unfavorable economic conditions could lead to increased taxes on beverage alcohol, reducing consumer willingness to purchase premium brands[76]. Regulatory and Legal Risks - Changes in laws and regulations regarding advertising and promotional activities could limit market opportunities and increase costs[74]. - The company is subject to extensive regulatory requirements that could increase operational costs and impact growth in affected markets[74]. - The Tax Cuts and Jobs Act has significantly revised U.S. corporate income tax rates, impacting the company's financial results[79]. - The company remains subject to risks of corruption in certain markets, which could lead to legal and financial repercussions[71]. - Compliance with various laws, including anti-money laundering and data protection regulations, poses ongoing risks for the company[114]. Financial and Operational Risks - The company is exposed to foreign currency exchange rate fluctuations, which can adversely affect financial results due to net exposure from foreign currency revenues exceeding expenses[71]. - The company does not attempt to hedge all foreign currency exposure, which may lead to unmitigated risks from currency fluctuations[71]. - A significant decline in the volume or selling price of Jack Daniel's products could negatively impact the company's financial results[83]. - There is an inherent risk of forecasting imprecision in determining the quantity of aged and maturing products to produce, which could lead to inventory surplus or shortages[91]. - The company relies heavily on the availability of raw materials, and disruptions in supply could adversely affect production capabilities and financial results[94]. - Disruptions in the distribution network or fluctuations in inventory levels could negatively affect sales and financial results[104]. Intellectual Property and Cybersecurity - The company has registered trademarks globally, focusing on markets where it sells or plans to sell its products, to protect its intellectual property[24]. - The company faces challenges in protecting its intellectual property rights globally, with varying success in different markets[110]. - Counterfeiting and trademark infringement are significant issues for the spirits industry, potentially harming brand equity and financial results[111]. - Cybersecurity threats and IT system failures could materially impact business operations and financial results[115]. - The company relies heavily on IT systems for various business functions, making it vulnerable to disruptions[116]. - Changes in personal data protection laws, such as GDPR, could lead to increased costs and operational challenges[119].
Brown-Forman(BF_A) - 2019 Q4 - Annual Report