Brown-Forman Corporation BF.B revealed some changes to its organizational structure with an aim to unlock the growth potential of markets, brands and people. The changes will mainly relate to its international business, which will be split into two parts — Europe and Emerging International. The changes will be effective from Aug 1, 2020.
The Europe division will primarily comprise the UK/Ireland; Germany/Czechia; France/Spain/Portugal; Poland; and the greater Europe markets that make up for the Developing Europe markets. Meanwhile, markets in the Emerging International division will mainly include — Global Travel Retail (GTR); Asia; Australia/New Zealand; Latin America; and Russia/CIS/Turkey/India/Middle East and Africa.
To oversee the operations, the company appointed Marshall Farrer as the president of the Europe division and Thomas Hinrichs as the president of Emerging International.
The move is also in sync with Brown-Forman’s goal to deliver balanced growth across geographies by establishing competitive routes to consumers. The company notes that this calls for a more agile and simplified organizational structure.
Earlier this week, Brown-Forman reported mixed fourth-quarter fiscal 2020 results, wherein earnings missed estimates and revenues beat the same. Results were marred by the impacts of the coronavirus pandemic on its on-premise channel — representing 20% of its global business — and the Travel Retail business. Meanwhile, strong growth in the off-premise and e-premise channels in most of the developed markets supported the top line.
The nationwide lockdowns and government restrictions imposed to curtail the spread of coronavirus led to increased at-home consumption and pantry loading, which mainly resulted in accelerated growth in the channels.
In the United States, the company witnessed a significant acceleration in the off-premise takeaway trends for alcoholic beverages since the pandemic spread. While the off-premise channel benefited initially from the robust pantry-loading trends in March, the company notes that consumption trends have gradually shifted from on-premise due to increased at-home consumption occasions. Further, it witnessed impressive growth for its brands in the e-premise channel, as consumers made fewer shopping trips. The company benefited from quickly shifting focus and resources based on consumer demand trends. This also led Brown-Forman to report strong underlying sales growth in the United States.
Driven by the robust trends despite the ongoing impacts of the pandemic, shares of this Zacks Rank #3 (Hold) company gained 36.8% in the past three months compared with the industry’s growth of 22.3%.
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