Distillery Investment Expands Tequila Production in Mexico

Brown-Forman Corporation (NYSE:BFA,BFB) today announces plans to expand its Casa Herradura tequila distillery in Jalisco, Mexico. The approximate $200 million USD investment will allow the company to meet the increasing global demand for its premium tequilas. Construction is expected to begin in July, 2023.

“The world’s growing taste for premium tequila is driving double-digit net sales growth^* of our Herradura and el Jimador brands. We believe strong consumer interest in tequila will continue and we’re expanding our production capacity to meet this demand,” said Lawson Whiting, President and Chief Executive Officer, Brown-Forman Corporation. “This strategic investment will improve our production efficiencies and increase our competitiveness.”

Casa Herradura is one of Mexico's most historic and renowned tequila producers. They have been hand harvesting, producing, and estate bottling fine tequilas from the small town of Amatitán, Jalisco, since 1870. Brown-Forman acquired Casa Herradura in 2007.

“This multi-phase project includes adding to our distillery operations, bottling, maturation, and processing areas. This expansion is particularly exciting as it will also advance our existing waste-to-energy efforts with a new water recycling and treatment plant,” said Elisa Gutierrez, Vice President and General Manager, Casa Herradura.

The first phase will expand the water recycling and treatment plant, followed by the expansion of capacity for distilling, bottling, maturation, and processing. It builds upon Casa Herradura’s commitment to environmental sustainability.

Casa Herradura was a pioneer in establishing a water recycling and treatment plant that met government standards and is one of Brown-Forman's zero waste to landfill sites. Less than one percent of the solid waste generated goes to landfill, creating a more sustainable process and product. Over the past decade, Brown-Forman has made significant investments in state-of-the-art technology and implementation of processes for environmental care.

Tequila is the fastest growing spirits category globally by value with the majority of the growth within the category driven by the super premium+ price segment. The U.S. market accounts for 32 million 9L cases, and $12 billion in retail value. (IWSR 2022)

* Reported net sales growth for the nine months ended January 31, 2023

About Brown-Forman:

For more than 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel's Tennessee Whiskey, Jack Daniel's Ready-to-Drinks, Jack Daniel's Tennessee Honey, Jack Daniel's Tennessee Fire, Jack Daniel's Tennessee Apple, Gentleman Jack, Jack Daniel's Single Barrel, Woodford Reserve, Old Forester, Coopers’ Craft, The GlenDronach, Benriach, Glenglassaugh, Slane, Herradura, el Jimador, New Mix, Korbel, Sonoma-Cutrer, Finlandia, Chambord, Fords Gin, Gin Mare, and Diplomático Rum. Brown-Forman’s brands are supported by approximately 5,200 employees globally and sold in more than 170 countries worldwide. For more information about the company, please visit brown-forman.com. Follow us on LinkedIn, Instagram and Twitter.

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• Our substantial dependence upon the continued growth of the Jack Daniel’s family of brands
• Substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks
• Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs
• Disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers
• Changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; shifts in consumer purchase practices; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation
• Production facility, aging warehouse, or supply chain disruption
• Imprecision in supply/demand forecasting
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• Impact of health epidemics and pandemics, including the COVID-19 pandemic, and the risk of the resulting negative economic impacts and related governmental actions
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• Failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations
• Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
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• Tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur
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For further information on these and other risks, please refer to our public filings, including the “Risk Factors” section of our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.

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