George Garvin Brown, a pharmaceutical salesman who had the idea to serve bourbon in sealable glass bottles, originally founded company in 1870. The brand that George started was originally known as Old Forester Kentucky Straight Bourbon Whiskey, which became America’s first bottled bourbons, remains one of the best selling brands 140 years later. The company has expanded however; the Brown’s have stayed with the firm for five generations, as George Garvin Brown IV serves as the Presiding Chairman of the Board.
Today, Brown-Forman has developed into a leader in the wine and spirits industry. Based out of Louisville Kentucky, this US based firm sells its brands in 135 different countries producing more than 35 alcohol brands, which include Southern Comfort, Korbel, Canadian Mist, and Fetzer. The most important brand in its portfolio is Jack Daniels, which is not only the largest selling American whiskey according to volume, but also the fourth largest premium spirits brand sold in the world. According to Mergent online, Brown-Forman’s 2009 total revenue was $2.481 billion with approximately 3,800 employees on staff. Brown-Forman is the largest American based firm in its class of wine and spirit distributors.
As shown in the graph below Brown-Forman has many different segments, the most successful of which is their Jack Daniel’s line. The second best producing segment is their wines, which represents almost one-fourth of revenues. One of the area’s Brown-Forman has branched off into is the area of RTD’s. As a method of creating new products and increasing sales Brown-Forman has been trying to stay on top by developing innovative mixed drinks that are ready to drink. This category represents 12% of the revenue. Liqueurs and cordials represent 9% of the revenue; this is one of the least known segments that Brown-Forman operates. The rest of its alcohols make up the remaining 26%, mostly comprised of Tequila, Canadian Whiskey, and Vodka, with others including various liquors as rum, Scotch, Gin, and Brandi.
The alcoholic beverages industry is a mature industry that spans the globe. The industry has posted low growth rates of 2-3% annually over the past decade, which has forced participating firms to compete primarily for existing market share through acquisitions and development of innovative products to differentiate themselves from the competition. Brown-Forman currently owns 5% of the US market share. The firm competes primarily with producers of similar products of wine and spirits, however, substitute products, which consist of mainly beer, exists as indirect competition.
Brown-Forman’s largest competitor is the company that owns the largest share of the market Constellation Brands. Constellation Brands is a producer of wine, spirits, and beer with over 250 brands under management that sold in over 150 different countries. Its largest subsidiary is Constellation Wines US, which accounts for 55% of net sales, which based on volume is the global leader in wine production. Constellation currently owns 20% of the U.S. wine market share and 5% of the global market share. The Constellation which focuses mainly on wine is a much larger company than the likes of Brown-Forman whose major focus is spirits, but while their focuses may be different, they still fall within the same categorical family of wine and spirits. Constellation Brands
One of the other major direct competitors that Brown-Forman faces is the world’s largest producer and distributor of alcoholic beverages in general Diageo. Diageo was formed in 1997 by the merger of Ireland’s Guinness and the food and spirits manufacturer Grand Metropolitan. The list of produced of and distributed spirits include Johnny Walker Scotch, Jose Cuervo tequila, Smirnoff Vodka, and the recently acquired Captain Morgan rum. These spirits represent the largest competition...