Brown-Forman (BF.B -0.45%) might be the first name in whiskey with brands like Jack Daniel's, Woodford Reserve, and Old Forester, but the distiller is close to last when it comes to the stock market. Over the past three years, the stock is down 63%, plunging through 2023 and 2024, even when the broad market was soaring.
Through 2025, the stock has continued to struggle, plagued by consumer tastes shifting away from whiskey and alcohol more generally, and concerns about tariffs as American spirits have been a primary target for foreign countries looking to punish American businesses for placing tariffs on their exports.
As you can see from the chart below, the stock is down sharply this year and has woefully underperformed the S&P 500 year to date.
BF.B Total Return Price data by YCharts
What's ailing Brown-Forman?
It's been a tough few years for the alcohol sector in general as health-related concerns around drinking, the rise of mocktails, and Gen Z preferences are putting pressure on demand for spirits. Additionally, Brown-Forman has been a target in the trade war due to a stable of well-known American brands like Jack Daniel's.
The company has continued to post revenue and profit declines. In the third quarter of its fiscal 2025, which ended on Jan. 31, revenue fell 3% to $1.04 billion and net income slipped 6% to $270 million.
As you can see, Brown-Forman is still highly profitable thanks to the strength of its brands, but factors outside of its control are weighing on the business.
Those trends continued into the fourth quarter as revenue fell another 7% to $894 million, though adjusting for a $177 million gain on the sale of its Sonoma-Cutrer wine business in the quarter the year before, operating income was up slightly from $198 million to $205 million.
A closer look at the numbers shows that the company is struggling with broad-based headwinds. Management said the operating environment remained challenging due to "ongoing macroeconomic and geopolitical uncertainties."
Revenue was down in all of its geographies, though mostly from its divestitures of Finlandia and Sonoma-Cutrer, while gross margin declined 150 basis points. Whiskey sales were a relative bright spot at flat for the year, though other beverage categories, including tequila, ready-to-drink, and the rest of its portfolio were all down.
Image source: Getty Images.
What's next for Brown-Forman?
A mix of weakening consumer sentiment and trade issues have weighed on Brown-Forman so far this year, and that seems unlikely to change anytime soon. President Donald Trump has just issued a new round of tariffs on several major markets for the company, including the European Union.
Meanwhile, the June Consumer Price Index showed price increases are accelerating again -- reflecting the tariffs that have already gone into effect and indicating the recent challenges facing the company could get worse. Rising prices, for example, could lead some customers to trade down to cheaper alternatives.
Brown-Forman's own guidance called for organic sales and operating income to decline by low single digits for fiscal 2026.
For investors, there's not much to get excited about here. While Jack Daniel's is one of the biggest brands in spirits and makes up more than half of the company's volume sales, without growth the business can do little more than generate profits to be returned as dividends.
The company also did not repurchase many shares, showing it's not trying to take advantage of the beaten-down stock price that way -- using its profits to reduce shares outstanding and lift earnings per share.
At a price-to-earnings ratio of 15 and a dividend yield of 3.4%, Brown-Forman offers reasonable value and a decent dividend. But without a significant change in trade policy or a shift in consumer tastes, the stock is likely to continue to struggle for the foreseeable future.
