Trade trouble brews in Kentucky’s flagship industry as Brown-Forman expects sales to drop

LOUISVILLE, Ky.–Brown-Forman Corporation, the Louisville-based maker of Jack Daniel’s and Woodford Reserve, reported a challenging fiscal fourth quarter and issued a cautious outlook for fiscal 2026, projecting declines in both organic net sales and operating income. The whiskey giant’s gloomy forecast reflects the broader struggles within Kentucky’s whiskey industry.

Financial Performance

In the quarter ending April 30, Brown-Forman’s net sales declined 7% to $894 million, missing analysts’ expectations of $967.4 million. Net income fell to $146 million, or 31 cents per share, down from $266 million, or 56 cents per share, a year earlier. For the full fiscal year 2025, the company reported a 5% decrease in net sales to $4.0 billion, though organic net sales saw a modest 1% increase.

Looking ahead, Brown-Forman anticipates low single-digit declines in both organic net sales and operating income for fiscal 2026, citing “macroeconomic and geopolitical volatility” and “currently unknown tariffs” as key challenges.

Industry Context

The bourbon and whiskey industry, particularly in Kentucky, is experiencing significant financial strain. Distilleries like Garrard County Distilling Co. have faced financial distress, with Garrard entering receivership amid lawsuits and liens totaling over $26 million. Similarly, Whiskey House of Kentucky is confronting a $1.7 million lien from a construction company less than a year after commencing operations.

These challenges are compounded by a saturated market and shifting consumer preferences. The pandemic-era bourbon boom has waned, with U.S. whiskey sales volumes dropping 1.2% in 2023 and a further 4% in 2024. Factors such as increased health consciousness and the rise of non-alcoholic alternatives have contributed to this decline.

Policy Impacts

Trade policies have further complicated the landscape. The Trump administration’s “Liberation Day” tariffs, announced in April 2025, imposed a 10% universal tariff on all imports, with additional country-specific tariffs reaching up to 50%. In retaliation, Canada imposed a 25% tariff on U.S. spirits and removed American liquors from store shelves, actions described by Brown-Forman as “worse than a tariff.”

The European Union also threatened to reinstate a 50% tariff on American whiskey, exacerbating export challenges. These trade tensions have disrupted international sales and created uncertainty for producers reliant on global markets.

Company Response

In response to these multifaceted challenges, Brown-Forman has implemented strategic restructuring initiatives, including a 12% reduction in its global workforce and the closure of its Louisville-based cooperage. These measures are projected to yield annualized savings of $70 to $80 million, which the company plans to reinvest in future growth opportunities.

Despite the current headwinds, CEO Lawson Whiting expressed confidence in the company’s resilience, stating, “While our results did not meet our long-term growth aspirations, we made important progress in an exceptionally challenging macroeconomic environment.”

As Brown-Forman navigates the complexities of a contracting market and volatile trade environment, its ability to adapt and innovate will be critical to sustaining its position in the global spirits industry.