Part of Brown-Forman‘s investments in fiscal years 2024 and 2025 (concluded at the end of April) were to increase tequila warehouses.
In sum, this company’s capital expenditures for both years were $395 million.
Tequila is an alcoholic beverage with a strong regional identity. It is made from the distilled juice of the agave, especially the blue agave. This plant takes between six and eight years to mature. For this reason, its cultivation does not respond easily to market fluctuations. When prices rise or fall, producers cannot adjust supply immediately. Thus, the tequila industry faces prolonged cycles of shortage or oversupply.
Brown-Forman’s investments
In 1974, the then Ministry of Industry and Commerce published in the Official Gazette the resolution to protect the appellation of origin of tequila. Protection was granted for the cultivation and harvesting of agave, as well as the production of tequila, to the territory that now encompasses 181 municipalities in five states.
Brown-Forman’s investments in fiscal years 2024 and 2025 focused on driving growth in its whiskey, tequila and rum brands.
This included the completion of a $125 million expansion of its bourbon production capacity in Kentucky and the construction of additional warehouses for barrels of Jack Daniel’s, Woodford Reserve, Glenglassaugh, Diplomatico and its tequilas.
In 2024, the company achieved net sales of $3.975 billion, a decrease of 5% compared to fiscal 2024.
Mexican market
In particular, net sales in Mexico declined 8% in a complex macroeconomic environment, due to the negative effect of the exchange rate, coupled with lower volumes and lower net prices for its tequilas.
These declines were partially offset by growth in New Mix, the distribution of new agency brands and higher volumes in the Jack Daniel’s family of brands.
El Jimador net sales decreased 13%, due to lower volumes in the United States and Mexico.
At the same time, Herradura’s net sales declined 13%, mainly due to lower volumes and net prices in Mexico and the United States.