Sales and Market Presence - The United States accounted for 47% of the company's net sales in fiscal 2023, with the remaining 53% from international markets[18]. - The company competes in a highly competitive market, with major competitors including Bacardi, Diageo, and Pernod Ricard, among others[22]. - The company utilizes various route-to-consumer models, including owned distribution and partnerships, to adapt to market dynamics[19]. - The company expects continued growth from its whiskey brands, particularly Woodford Reserve and Old Forester, driven by innovation and premiumization[33]. - The company aims for continued growth of the Jack Daniel's family of brands, with potential risks if consumer preferences shift away from spirits[447]. Financial Performance and Risks - The aggregate market value of the company's voting and nonvoting equity held by nonaffiliates was approximately $23.4 billion as of the last business day of the most recently completed second fiscal quarter[9]. - The company is exposed to foreign currency exchange rate fluctuations, which can impact financial results due to net exposure to changes in the value of the U.S. dollar[432]. - The company evaluates the potential impact of global tax rule changes on its consolidated financial statements and related disclosures[434]. - Changes in U.S. tax legislation, such as the 15% minimum tax on book income from the Inflation Reduction Act, could adversely affect the company's effective tax rate and net earnings[464]. - The company faces risks related to indirect taxes, which could increase product costs and reduce consumer affordability, potentially impacting financial results[465]. Operational Challenges - Supply chain disruptions during the COVID-19 pandemic led to higher costs and delays in product delivery, affecting financial results[451]. - The quality and availability of water, essential for production, could be impacted by droughts, adversely affecting operations[452]. - Unfavorable economic conditions could negatively impact operations, including cash flow challenges for suppliers and customers, leading to potential disruptions in supply chains[456]. - The company is exposed to risks associated with global operations, including political instability, military conflicts, and health crises, which could disrupt business and impair brand reputation[460]. Regulatory and Legal Issues - The European Union plans to propose mandatory health warnings on beverage alcohol product labels by the end of 2023, which could adversely affect product demand and profitability[436]. - Legal challenges related to alcohol marketing and health consequences could negatively impact the company's reputation and financial results[438]. - The company faces challenges from product counterfeiting and trademark infringement, despite efforts through the Alliance Against Counterfeit Spirits (AACS) and React[437]. Corporate Governance and Strategy - The company continues to seek acquisition and investment opportunities to enhance long-term stockholder value, although risks include overpaying for acquisitions and integration challenges[453]. - The company may consider disposing of assets or businesses that no longer align with financial or strategic objectives, but may face challenges in achieving favorable sale terms[454]. - The dual-class share structure may lead to conflicts of interest between the Brown family and other stockholders, potentially affecting stock price and attractiveness to investors[473]. Consumer Responsibility and Marketing - The company aims to enhance consumer experience while promoting responsible drinking through its 2030 Alcohol Responsibility strategy launched in 2022[34]. - The company adheres to high standards of self-regulation in marketing and promotes responsible drinking through various industry partnerships[32]. - The company relies on IT systems for various business operations, and any cyber breach could result in significant financial and operational impacts[469]. Workforce and Retirement - Turnover related to retirements increased in fiscal 2023, influenced by interest rate movements on defined benefit pension plans[439]. - The company has production locations and corporate offices in Louisville, Kentucky, and leases office space in over 50 cities globally, indicating a broad operational footprint[477].
Brown-Forman(BF_A) - 2023 Q4 - Annual Report