Brown-Forman (BF.B) -- Navigating Industry Challenges with a Focus on Premiumization | Fundsmith 2024 Q4

Leveraging Family Control and Premium Spirits to Mitigate Market Headwinds

Apr 13, 2025

Summary

Investment rationale: Strong brand portfolio with a focus on premium spirits.
Market positioning: One of the top global drinks companies with a heritage brand in Jack Daniel’s.
Risks and challenges: Decline in consumption post-pandemic and potential impact of weight loss drugs.
Recent performance: Negative attribution of -0.6% to the fund’s performance in 2024.
Future outlook: Confidence in long-term decision-making and premiumization strategy.

Brown-Forman (BF.B, Financial) was highlighted in the Fundsmith 2024 Q4 letter as facing challenges from reduced consumption levels post-pandemic and potential impacts from weight loss drugs. Fundsmith LLP remains committed to holding Brown-Forman, citing its strong brand portfolio and the benefits of family control in strategic decision-making. The focus on premium spirits is seen as a potential buffer against industry headwinds.

"Brown-Forman... is probably seeing early signs of the adverse impact of weight loss drugs. We sold our Diageo stake during the year... but retaining Brown-Forman keeps a foothold in what has long been a sector with good business characteristics." — Fundsmith LLP, Fundsmith 2024 Q4 Fund Letter

Read full letter at gurufocus Fundsmith 2024 Q4 page.

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