Brown–Forman Financial Model
Beverages Company Financials Example (Free Excel Download)
Brown-Forman is a global leader in the production and distribution of premium spirits, with a portfolio heavily anchored by the Jack Daniel's family of brands.
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About this model
This model projects the three-statement financials and intrinsic valuation of Brown-Forman Corporation to help an equity research analyst determine a target price and assess the impact of premiumisation, recent portfolio restructuring, and input cost inflation on long-term cash flow generation.
Brown-Forman is a global leader in the production and distribution of premium spirits, with a portfolio heavily anchored by the Jack Daniel's family of brands. The company manufactures, bottles, and markets alcoholic beverages across more than 170 countries, operating primarily in the whiskey, tequila, and ready-to-drink categories.
Key business segments by product category include Whiskey (approximately 65-70% of revenue), Ready-to-Drink (15-20%), Tequila (5-10%), and Rest of Portfolio (5-10%). Geographically, the business is split between the United States (nearly half of sales), Developed International markets, Emerging markets, and Travel Retail. The business model is asset-heavy regarding working capital, as spirits require significant aging time in barrels, leading to massive inventory balances. Brown-Forman holds a dominant competitive position in American whiskey and has recently reshaped its portfolio by divesting lower-margin or non-core assets (Finlandia vodka, Sonoma-Cutrer wines) and acquiring super-premium brands (Diplomático rum, Gin Mare).
The downloadable Brown–Forman financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
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Live formulas, no hardcoded values
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Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsBrown–Forman financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Revenue | $3.93B | $4.23B | $4.18B | $3.98B | $3.93B |
| Gross profit | $2.39B | $2.49B | $2.53B | $2.34B | $2.38B |
| Operating income | $1.20B | $1.13B | $1.41B | $1.11B | $1.00B |
| Net income | $838.0M | $783.0M | $1.02B | $869.0M | $715.0M |
How to build a detailed financial model for Brown–Forman
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Whiskey
- Segment name: Whiskey (includes Jack Daniel's, Woodford Reserve, Old Forester).
- Revenue driver formula: Nine-Litre Equivalent Cases Sold x Average Revenue per Case.
- Historical growth rate: 2-5% organic CAGR, though recently pressured by distributor inventory destocking.
- Key growth levers and headwinds: Premiumisation (consumers trading up to Woodford Reserve and Jack Daniel's Single Barrel), international expansion, and pricing power. Headwinds include macroeconomic pressure on consumer discretionary spending and tariffs.
- Pricing dynamics: High pricing power due to brand equity, allowing the company to take regular price increases to offset inflation.
- Revenue recognition notes: Recognised when control transfers to the distributor or retailer, net of excise taxes in some jurisdictions.
- Seasonality: Strongest in the fiscal third quarter (November to January) due to holiday gifting and celebrations.
Tequila
- Segment name: Tequila (Herradura, el Jimador).
- Revenue driver formula: Nine-Litre Equivalent Cases Sold x Average Revenue per Case.
- Historical growth rate: Historically high single-digit, recently declining 10-14% due to intense US competition and Mexican macroeconomic weakness.
- Key growth levers and headwinds: Agave cost cycles heavily influence pricing and margins. The US market is highly saturated, requiring heavy promotional spend.
- Pricing dynamics: Highly competitive; recent periods have seen higher promotional pricing to defend market share.
- Revenue recognition notes: Standard shipment-based recognition.
- Seasonality: Peaks around spring and summer holidays (Cinco de Mayo, summer months).
Ready-to-Drink (RTD)
- Segment name: Ready-to-Drink (New Mix, Jack Daniel's RTD/RTP).
- Revenue driver formula: Case Volume x Price per Case.
- Historical growth rate: 5-15% driven by consumer convenience trends and the Jack Daniel's & Coca-Cola partnership.
- Key growth levers and headwinds: Transition of Jack Daniel's Country Cocktails to Pabst Brewing Company altered the business model. Growth is driven by convenience trends and brand extensions.
- Pricing dynamics: Lower price point per unit but high volume; highly sensitive to consumer trading-down behaviour.
- Revenue recognition notes: Standard shipment-based recognition.
- Seasonality: Highly seasonal with peaks in the summer months.
Rest of Portfolio
- Segment name: Rest of Portfolio (Diplomático, Gin Mare, Korbel).
- Revenue driver formula: Case Volume x Price per Case.
- Historical growth rate: Highly variable due to M&A; recently grew 60%+ reported due to acquisitions, with organic growth around 15%.
- Key growth levers and headwinds: Integration of newly acquired super-premium brands and expansion into global distribution networks. Headwinds include the loss of revenue from divested brands like Finlandia.
- Pricing dynamics: Super-premium pricing for rum and gin acquisitions.
- Revenue recognition notes: Standard shipment-based recognition.
- Seasonality: Holiday-driven, similar to whiskey.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Raw materials (corn, rye, agave, glass, packaging), distillation and brewing costs, warehousing for aging barrels, and inbound freight.
- Gross margin range: 58.0% to 61.0% (recently contracted to 58.9% in FY25 due to input costs and lower fixed cost absorption).
- Key input costs and commodity exposures: Agave prices, grain prices, wood for barrels (white oak), and energy for distillation.
- How COGS scales with revenue: Generally linear, but lower production volumes lead to unfavourable fixed cost absorption at distilleries.
Operating Expenses
- Advertising: Approximately 11-12% of net sales. Crucial for brand equity maintenance.
- SG&A: Approximately 16-18% of net sales. Driven by headcount, corporate overhead, and distribution network management.
- Depreciation & Amortisation: Roughly 2-3% of sales, split between tangible distillery assets and amortisation of acquired intangibles.
- Restructuring / one-time charges: The company incurred a $63 million charge in FY25 for a 12% workforce reduction and closure of the Louisville cooperage.
Margin Profile
- Gross margin: 58.5% - 60.5%.
- Operating margin: 27.0% - 32.0% (recently compressed to 27.9% in FY25).
- Net margin: 18.0% - 22.0%.
- Margin trend: Compressing recently due to input cost inflation, lower production volumes, and the absence of high-margin divested brands, though management targets long-term expansion through premiumisation.
Balance Sheet Structure
- Total assets: Approximately $7.5 to $8.5 billion.
- Key asset categories: Inventories (aging spirits) and Goodwill/Intangibles (acquired brands).
- Goodwill & intangibles as % of total assets: Approximately 25-35%, bolstered by the recent Diplomático and Gin Mare acquisitions.
- Working capital profile:
- Days Sales Outstanding (DSO): 45 - 55 days.
- Days Inventory Outstanding (DIO): 500 - 600+ days. Whiskey must age for several years, making inventory the largest tangible asset.
- Days Payable Outstanding (DPO): 60 - 80 days.
- Net working capital as % of revenue: Highly positive (often 40-50% of sales) due to the massive aging inventory required.
- Is working capital positive or negative?: Positive. The company must invest heavily in working capital to fund future growth.
- PP&E: Distilleries, bottling plants, and previously cooperages. Useful lives range from 10 to 40 years for buildings and equipment.
- Right-of-use assets / operating leases: Relatively immaterial compared to owned production assets and inventory.
Capital Expenditure & Investment
- Capex as % of revenue: 3.0% - 4.5% (FY26 guidance is $110 to $120 million).
- Maintenance capex vs. growth capex: Approximately 40% maintenance, 60% growth (expanding distillery capacity and barrel warehousing).
- Major capex programmes underway or planned: Expansion of tequila production facilities and bourbon warehousing.
- Capitalised software / development costs if material: Immaterial.
- M&A pattern: Active portfolio manager. Recently divested lower-tier brands (Finlandia, Early Times) and acquired super-premium assets (Diplomático, Gin Mare).
- Typical acquisition multiple paid: High teens to low twenties EV/EBITDA for super-premium spirits brands.
Debt & Capital Structure
- Total debt: Approximately $2.5 to $3.0 billion.
- Debt/EBITDA ratio: 1.5x - 2.5x.
- Credit rating: Investment grade (typically A- or equivalent).
- Key debt instruments: Senior unsecured notes and a revolving credit facility. Recently repaid $300 million of 3.50% senior notes in April 2025.
- Maturity profile: Well-laddered with maturities spread over the next 10-20 years.
- Interest rate profile: Predominantly fixed-rate bonds.
- Covenants: Standard interest coverage and leverage maximums; currently operating with significant headroom.
- Share repurchase programme: Active. Completed a $400 million programme in December 2025.
- Dividend policy: Member of the S&P 500 Dividend Aristocrats. Paid regular quarterly dividends for 82 consecutive years and increased them for 42 consecutive years. Current quarterly dividend is $0.2310 per share.
Cash Flow Characteristics
- Operating cash flow conversion: Strong, though heavily influenced by inventory build. OCF is typically $700 million to $900 million annually.
- Free cash flow margin: 12% - 18% of revenue.
- Major non-cash items that bridge net income to OCF: Depreciation, amortisation, stock-based compensation, and occasional impairment charges (e.g., Gin Mare brand name impairment in FY25).
- Working capital cash flow impact: Inventory build is a major use of cash. As the company projects future growth, it must lay down whiskey today, consuming cash years before revenue is realised.
- Capex intensity: Moderate (3-4% of sales).
- Cash tax rate vs. GAAP effective tax rate: GAAP effective tax rate is typically 21% to 23%. Cash taxes generally align with GAAP taxes.
Sheet Structure
- Assumptions: Hardcoded inputs for macroeconomic drivers, segment growth, margins, working capital days, and capital structure.
- Revenue Build: Volume (cases) and pricing (revenue per case) projections for Whiskey, Tequila, Ready-to-Drink, and Rest of Portfolio.
- Income Statement: Consolidated P&L from Net Sales down to Net Income and EPS. Includes specific lines for Advertising and Restructuring charges.
- Balance Sheet: Assets, Liabilities, and Equity. Must feature a prominent line for Aging Inventories.
- Cash Flow Statement: OCF, CFI, CFF, and the cash bridge.
- Working Capital Schedule: Calculation of Accounts Receivable, Inventory (split by aging vs. finished goods if possible), and Accounts Payable based on days assumptions.
- Depreciation & Capex Schedule: PP&E roll-forward, capex projections, and depreciation calculations.
- Debt Schedule: Tranche-by-tranche debt roll-forward, interest expense calculation, and debt paydown logic.
- Equity & Dividends: Share count roll-forward, share repurchases, and dividend payouts.
- DCF Valuation: Unlevered free cash flow calculation, WACC build, terminal value, and implied share price.
Key Financial Relationships
- `Whiskey Revenue = Whiskey Volume (Cases) x Average Price per Whiskey Case`
- `Tequila Revenue = Tequila Volume (Cases) x Average Price per Tequila Case`
- `Total Net Sales = Whiskey Revenue + Tequila Revenue + RTD Revenue + Rest of Portfolio Revenue`
- `Gross Profit = Total Net Sales - Cost of Sales`
- `Advertising Expense = Total Net Sales x Advertising % of Sales (historically ~11-12%)`
- `SG&A Expense = Total Net Sales x SG&A % of Sales`
- `Operating Income = Gross Profit - Advertising Expense - SG&A Expense - Amortisation - Restructuring Charges`
- `Inventory Balance = (Cost of Sales / 365) x Days Inventory Outstanding (DIO)`
- `Accounts Receivable = (Total Net Sales / 365) x Days Sales Outstanding (DSO)`
- `Interest Expense = Average Debt Balance x Weighted Average Interest Rate`
- `Dividends Paid = Shares Outstanding x Annual Dividend per Share`
- `Share Repurchases = Hardcoded Target Spend / Average Share Price`
Cross-Sheet Dependencies
- The Revenue Build sheet feeds the top line of the Income Statement and drives the DSO calculations on the Working Capital Schedule.
- The Income Statement generates Net Income, which is the starting point for the Cash Flow Statement.
- The Working Capital Schedule calculates changes in operating assets and liabilities, which feed the operating cash flow section of the Cash Flow Statement.
- The Depreciation & Capex Schedule feeds depreciation to the Income Statement and Cash Flow Statement, and ending PP&E to the Balance Sheet.
- The Debt Schedule calculates interest expense for the Income Statement and ending debt balances for the Balance Sheet.
- The Cash Flow Statement determines the ending cash balance, which links to the Balance Sheet to ensure Total Assets equal Total Liabilities plus Equity. Circularity exists between the Debt Schedule (interest expense) and the Cash Flow Statement (cash available for debt paydown).
Sign Convention
- Revenue and asset balances are positive.
- Expenses (COGS, Advertising, SG&A, Interest) are modelled as positive numbers and subtracted in subtotals.
- On the Cash Flow Statement, cash inflows are positive, and cash outflows (capex, dividends, debt repayment) are negative.
- Contra-asset accounts (Accumulated Depreciation) are positive and subtracted from gross assets.
Things Most Likely to Go Wrong
- Inventory Aging Dynamics: Standard manufacturing DIO assumptions will break this model. Brown-Forman's DIO is massive because whiskey ages for 4-7 years. The model must accommodate structurally high inventory balances.
- Divestiture Noise: The company recently sold Finlandia and Sonoma-Cutrer. Historical consolidated growth rates include these brands, while future projections will not. The model must use organic growth rates or pro-forma base years to avoid projecting false declines.
- Foreign Exchange Volatility: Over 50% of sales are outside the US. Fluctuations in the USD significantly impact reported revenue and gross margins.
- Advertising Expense Classification: Brown-Forman reports Advertising as a separate line item from SG&A. The builder must not lump them together, as management guides them differently.
- Class A vs. Class B Shares: The company has two classes of stock (BFA and BFB). The model must aggregate both for market capitalisation and EPS calculations, but price targets are typically based on the liquid Class B shares.
- Restructuring Add-Backs: The FY25 $63 million restructuring charge distorts GAAP operating margins. The model should separate this to calculate clean adjusted EBITDA.
- Tariff Impacts: The spirits industry is highly sensitive to retaliatory tariffs. Margin assumptions must account for potential gross margin compression if trade disputes arise.
- Agave Cost Cycles: Tequila margins fluctuate wildly based on the multi-year agave growing cycle. Straight-lining Tequila gross margins ignores this fundamental industry dynamic.
Validation Checks
- "Gross margin should be in the 58.0% - 61.0% range based on the last 5 years; flag if outside this band."
- "Advertising expense must be between 10.0% and 13.0% of Net Sales."
- "Days Inventory Outstanding (DIO) must remain above 500 days to reflect the whiskey aging process."
- "Operating margin should remain between 27.0% and 32.0%."
- "Capex as a % of revenue should run between 3.0% and 4.5%."
- "Effective tax rate should be between 21.0% and 23.0% based on management guidance."
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
- "Dividend per share must not decrease year-over-year, respecting the company's 42-year growth streak."
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Whiskey Organic Volume Growth | 2.0 | % | Normalised growth post-destocking |
| Tequila Organic Volume Growth | 3.0 | % | Recovery from recent macroeconomic weakness in Mexico |
| RTD Organic Volume Growth | 5.0 | % | Continued consumer preference for convenience |
| Rest of Portfolio Volume Growth | 4.0 | % | Driven by integration of Diplomático and Gin Mare |
| Annual Price/Mix Increase | 2.0 | % | Historical average pricing power |
| Gross Margin | 59.5 | % | Rebound from FY25 compression (58.9%) but below peak |
| Advertising as % of Sales | 11.5 | % | Historical average required to maintain brand equity |
| SG&A as % of Sales | 17.0 | % | Historical average, adjusting for recent cost savings |
| Days Sales Outstanding (DSO) | 50 | Days | Based on historical receivables turnover |
| Days Inventory Outstanding (DIO) | 550 | Days | Reflects multi-year barrel aging requirement for whiskey |
| Days Payable Outstanding (DPO) | 70 | Days | Based on historical payables turnover |
| Capex as % of Revenue | 3.5 | % | Aligns with FY26 guidance of $110-$120M on ~$4B sales |
| Effective Tax Rate | 22.0 | % | Midpoint of FY26 management guidance (21-23%) |
| Annual Dividend per Share | 0.924 | $ | Annualised current quarterly dividend of $0.2310 |
| Weighted Average Cost of Capital | 8.5 | % | Standard for large-cap consumer staples with stable cash flows |
| Terminal Growth Rate | 2.5 | % | Aligns with long-term global GDP and premiumisation trends |
Data Sources & Benchmarks
- Filings: SEC EDGAR for Brown-Forman 10-K and 10-Q filings.
- Investor Relations: Brown-Forman investor relations website for earnings presentations and M&A press releases.
- Key Peers: Diageo (DEO), Pernod Ricard (PRNDY), Constellation Brands (STZ), Campari Group.
- Industry Data: IWSR (International Wine and Spirits Record) for category volume and premiumisation trends, DISCUS (Distilled Spirits Council of the US) for US market data.
- Commodity Data: Agave spot prices and corn futures for COGS validation.
Sources
- Brown-Forman Investor Relations: FY24 and FY25 Earnings Releases.
- Brown-Forman Investor Relations: FY26 Q3 Earnings Release.
- Brown-Forman Press Releases: Diplomático and Gin Mare Acquisitions.
- Seeking Alpha: Brown-Forman Initiation Report and M&A Analysis.
- CapyFin: Brown-Forman Fiscal Q3 2025 Earnings Report.
Do more with the Brown–Forman model
Frequently asked
What is Brown-Forman's primary business model and product focus?+
Brown-Forman is a global leader in premium spirits, primarily producing and distributing alcoholic beverages across more than 170 countries. Its portfolio is heavily anchored by the Jack Daniel's family of brands, alongside significant presence in ready-to-drink and tequila categories.
How does Brown-Forman generate its revenue, and what are its key product categories?+
Brown-Forman generates revenue through the sale of its alcoholic beverages, with whiskey accounting for 65-70% of sales, ready-to-drink products 15-20%, and tequila 5-10%. The company's strategy focuses on premiumization and geographic expansion, particularly in developed and emerging international markets.
What is a significant characteristic of Brown-Forman's working capital profile?+
Brown-Forman has a highly positive net working capital profile, often representing 40-50% of sales, primarily driven by massive inventory balances. This is due to the significant aging time required for spirits like whiskey, leading to Days Inventory Outstanding (DIO) of 500-600+ days.
What is Brown-Forman's capital expenditure strategy and recent M&A activity?+
Brown-Forman's capital expenditure typically ranges from 3.0% to 4.5% of revenue, with approximately 60% allocated to growth initiatives like expanding distillery capacity. The company actively manages its portfolio, recently divesting lower-margin brands and acquiring super-premium assets such as Diplomático rum and Gin Mare.
What key factors should an analyst consider when assessing Brown-Forman's long-term cash flow generation for valuation?+
Analysts should consider the impact of Brown-Forman's premiumization strategy, recent portfolio restructuring towards super-premium brands, and potential input cost inflation. The significant investment in working capital due to aging inventory is also a critical factor influencing long-term free cash flow generation.
Is an Excel financial model for Brown-Forman available for download?+
An Excel financial model for Brown-Forman is not currently available for download. This model is intended for equity research analysts to project financials and determine an intrinsic valuation.
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