Brown-Forman to Set up Own Distribution Company in Germany

Brown-Forman (NYSE:BFB)(NYSE:BFA) announced today that it is establishing its own distribution company in Germany, effective October 1, 2010.

Brown-Forman will establish a fully-owned sales and marketing operation in Germany, long one of the company’s largest and most important countries outside of the United States. Germany will join the U.S., Australia, Poland, Mexico, China, South Korea, the Czech Republic, and Taiwan as countries where Brown-Forman has fully-owned sales and marketing operations.

Brown-Forman’s current distributor in Germany is Bacardi. “We thank Bacardi for their valued contributions on our behalf in Germany over the years,” said Brown-Forman Chief Executive Officer Paul Varga, noting that Brown-Forman and Bacardi continue to do business together in a number of important markets around the world, most notably in Brown-Forman’s two largest countries, the United States and the United Kingdom.

“Our route-to-market decisions illustrate Brown-Forman’s desire to continuously improve our in-market knowledge, influence, and brand-building capabilities across the globe,” stated Varga. “We believe that establishing our own distribution company will help us accelerate the development of our brand portfolio in Germany over time."

Brown-Forman principally markets the Jack Daniel's family of brands, Southern Comfort, and Finlandia Vodka, and has expectations that other brands in its portfolio, such as Woodford Reserve, Tequila Herradura, and el Jimador Tequila, will grow in importance over the long term.

Brown-Forman is in discussions with Bacardi and other distributors in additional European markets with contracts expiring in 2010. The company expects to provide an update on these distribution arrangements when they are completed.

Brown-Forman Corporation is a producer and marketer of fine quality beverage alcohol brands, including Jack Daniel’s, Southern Comfort, Finlandia, Canadian Mist, Fetzer, Korbel, Gentleman Jack, el Jimador, Tequila Herradura, Sonoma-Cutrer, Chambord, Tuaca, Woodford Reserve, and Bonterra.

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• deepening or expansion of the global economic downturn or turmoil in financial and equity markets (and related credit and capital market instability and illiquidity; decreased consumer and trade spending; higher unemployment; supplier, customer or consumer credit or other financial problems; inventory fluctuations at distributors, wholesalers, or retailers; bank failures or governmental nationalizations; etc.)
• competitors’ pricing actions (including price promotions, discounting, couponing or free goods), marketing, product introductions, or other competitive activities aimed at our brands
• trade or consumer reaction to our product line extensions or new marketing initiatives
• prolonged or deeper declines in consumer confidence or spending, whether related to global economic conditions, wars, natural disasters, pandemics (such as swine flu), terrorist attacks or other factors

• changes in tax rates (including excise, sales, corporate, individual income, dividends, capital gains) or related reserves, changes in tax rules (e.g., LIFO, foreign income deferral, U.S. manufacturing deduction) or accounting standards, tariffs, or other restrictions affecting beverage alcohol, and the unpredictability and suddenness with which they can occur
• trade or consumer resistance to price increases in our products
• tighter governmental restrictions on our ability to produce and market our products, including advertising and promotion
• business disruption, decline or costs related to reductions in workforce or other cost-cutting measures
• lower returns on pension assets, higher interest rates on debt, or significant changes in recent inflation rates (whether up or down)
• fluctuations in the U.S. dollar against foreign currencies, especially the euro, British pound, Australian dollar, or Polish zloty
• continued reduction of bar, restaurant, hotel and other on-premise business; consumer shifts to discount stores to buy our products; consumer shifts away from premium-priced products; decreased travel; or other price-sensitive consumer behavior
• changes in consumer preferences, societal attitudes or cultural trends that result in reduced consumption of our products
• distribution arrangement decisions that affect the timing of our sales or limit our ability to market or sell our products
• adverse impacts resulting from our acquisitions, dispositions, joint ventures, business partnerships, or portfolio strategies
• lower profits, due to factors such as fewer used barrel sales, lower production volumes (either for our own brands or those of third parties), or cost increases in energy or raw materials, such as grapes, grain, agave, wood, glass, plastic, or closures
• climatic changes, agricultural uncertainties, our suppliers’ financial hardships or other factors that reduce the availability or quality of grapes, agave, grain, glass, closures, plastic, or wood
• negative publicity related to our company, brands, personnel, operations, business performance or prospects
• product counterfeiting, tampering, or contamination and resulting negative effects on our sales, brand equity, or corporate reputation
• adverse developments stemming from state, federal or other governmental investigations of beverage alcohol industry business, trade, or marketing practices by us, our distributors, or retailers
• impairment in the recorded value of inventory, fixed assets, goodwill or other intangibles