Beruflich Dokumente
Kultur Dokumente
Strategic Management
10/13/10
Brown-Forman Case Study
The Brown-Forman Company likes to refer to itself as a
diversified producer of fine quality consumer products
(Our Company). In reality this description could not be
any more appropriate based on the companies heritage. The
Brown-Forman Company was born in 1870 when George Garvin
Brown decided that there was a strong need for medically
appropriate whisky. Brown filled this need with the first
bottled bourbon that he called, Old Forester Kentucky
Straight Bourbon Whisky. Today, the Brown-Forman Company
produces more than 25 different brands and employs over
4,000 people worldwide. The global expansion has taken their
brands into 135 countries and has transformed the company
into a leader in their industry (Our Company). The purpose
of this case study is to take a quick look into the BrownForman Company and provide suggestions based on the
information gathered.
The first section of the case will be the analysis of
Brown-Formans industry and competitors. After a bit of
research, the industry is referred to by a few different
names. According to Yahoo Finance the competitive industry
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concern for the two leaders. The third spot in the industry
goes to Constellation Brands Inc. which is based in Victor,
New York. Another U.S. based company; Constellation actually
recorded higher revenues in 2009 than did Brown-Forman.
However, the 500 million dollar difference in revenues did
not compare to Brown-Formans lead in operating profit.
Constellation Brands may employ more workers and bring in
higher revenues but Brown-Forman had nearly 30 times as much
operating profit (Datamonitor). Obviously, Constellation
has much higher over head and operating costs which may hurt
them in the future.
The final competitor that we will discuss takes the
fourth spot in the industry with a market capitalization of
1.70 billion (Brown-Forman (BEB)). Central European
Distribution Corporation operates in many countries
including: Poland, Russia, Hungary, and the United States
(Datamonitor-CED). Once again, they like many others have
stationed their headquarters in the United States. Centrals
financial records show an improvement over Constellation but
are still no where near the two market leaders. Now that we
know a bit about the industry and the competition lets focus
in on Brown-Forman.
The next step in analyzing Brown-Forman is to conduct a
SWOT analysis. The first and most obvious place to start is
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of alcoholic products.
One of the most important pieces of a SWOT analysis is
the opportunity section. These opportunities are doors that
the company can open to reveal huge profit potential and
growth. The most significant opportunity that has been on
the rise for a few years is the growing wine market. There
has been an increased demand for wine in the United States
and we have officially become the largest wine consumers in
the world. Another positive for Brown-Forman is that, The
average US retail price for a bottle of wine is more than
twice as expensive as the typical bottle sold in France, and
more than three times the average in Italy (Datamonitor
2009). This change in the American society is going to be a
huge money maker if Brown-Forman can capitalize. In their
current spot they should be able to increase profits
dramatically in the wine sector.
The most important piece of SWOT that all companies
have to keep in mind is the threats that are external. One
of the most prominent threats to the company is the rising
labor costs in the United States. A positive family
tradition is now hurting their profit margin. Over the past
few years the minimum wage requirement has gone from under
$6.00 to now over $7.00. Employing over 4,000 workers in
which 80% are full time is really going to make a large dent
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have the same taste and quality but it all has the same
effect. Just walk into a liquor store today and there will
be twenty different varieties of the same bourbon or vodka.
Luckily, Brown-Forman has a variety of different brands so
they have a good chance of being one of those substitutes.
On a continuum the availability of substitutes would be at
the highest point possible.
The third force goes in a completely different
direction on the continuum scale. Every company is afraid of
the threat of new entrants to the industry. This is a normal
activity that will occur in many industries. However, in the
industry that Brown-Forman participates in this is not a
large concern. All of the competitors of Brown-Forman are
multi-billion dollar companies that were started decades
ago. Lets give a little refresher, the current Chairman of
the Board is, Geo. Garvin Brown IV, a descendant of the
founder, is part of the 5th generation of Brown Family
members engaged with the company (Our Company). In order
to have a fifth generation family member as a leader in you
compnay you couldnt have started up last year. The business
has been around for more than 140 years. In an industry with
compoanies like that a new enetrant is not a threat. The
continuum would put new entrants near the lowest end.
Now come the two forces that deal with bargaining
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Works Cited
Analysis. Mergent Online. 12 Oct. 2010.
Our Company. Brown-Forman. Homepage. 13 Oct. 2010. <http://www.brownforman.com/company/heritage/>
Brown-Forman (BFB). Yahoo Finance. 13 Oct. 2010
<http://finance.yahoo.com/q/in?s=BF-B+Industry>
Brown-Forman Corp. Mergents Dividend Achievers (Wiley) 5.3 (2008):
42.
"Brown-Forman Corporation at Deutsche Bank Global Consumer & Food
Retail Conference - Final." Fair Disclosure Wire (Quarterly
Earnings Reports) (n.d.).
Brown-Forman: high spirits from spirits. MarketWatch: Drinks 4.7
(2005): 14-15.
"Brown-Forman MAKES MOVES." Beverage Industry 91.7 (2000): 1.
Chura, Hillary. "Brown-Forman brands target Gen X." Advertising Age
71.11 (2000): 33.
Chura, Hillary. "Drinking in the Internet." Advertising Age 72.36
(2001): 16.
Clarke, Anishka. "Brown-Forman's Well-Stocked Bar." Business Week
Online (2004): N.PAG.