Brown-Forman Corporation Class B

• Wholesale distributors further reduce target inventory buffers across key distribution regions.
• Consumer discretionary pressure drives trade-down into lower-margin beverage categories.
• Export tariffs or foreign currency headwinds constrain international operating margins.

In the downside case, persistent consumer trade-down in domestic whiskey and retailer inventory destocking compress shipment volumes. Concurrently, packaging cost inflation and potential retaliatory export tariffs diminish international profitability, delaying top-line recovery and suppressing cash flow generation.

Wholesale distributors in the domestic market ($1,649M net sales in FY2026) aggressively lower target inventory holding levels, depressing annual revenue growth below -3.0% YoY.⁵

• Wholesale shipments align with underlying consumer depletions over the medium term.
• Operating margin remains steady near historical baseline performance.
• International markets provide consistent volume diversification against domestic fluctuations.

Under the modal base case, wholesale distributor inventory levels normalize gradually while core brand equity sustains pricing discipline and high gross margins. Modest top-line growth combined with steady cash conversion supports our Fair value of $30.17, targeting $30.17 with an expected return of 16.3% over the forecast horizon.

• Wholesale inventory destocking concludes faster than projected across domestic distribution networks.
• International ready-to-drink premix formulations achieve higher retail penetration.
• Super-premium tequila sales in Latin America accelerate above historical trend.

In the bull case, rapid global adoption of ready-to-drink premixes and accelerating super-premium tequila growth across international markets drive expansion toward $53.74. on expands , lifting the shares to $53.74 representing a return of 107.2%.