Most if not all industries have been affected by the coronavirus pandemic. Mandatory lockdowns across the globe have ground economies to a near halt, while the spread of COVID-19 threatens the health of the entire planet’s population.
Global corporations have had to react quickly. Leading drinks producer Brown-Forman is no different. For a look at how this worldwide company has handled the explosive and potentially deadly disruption of COVID-19, we recently spoke with John V. Hayes, president of Brown-Forman USA & Canada, and a member of Brown-Forman’s Executive Leadership Team.
Beverage Dynamics: How is Brown-Forman weathering this pandemic?
John V. Hayes: Our first and utmost priority has been, and will continue to be, ensuring the safety, health and wellbeing of our dedicated and talented employees across the world. We believe that the plans we have put in place over the last few months are an important and necessary step to do our part in helping ‘flatten the curve’.
This year is our 150th birthday. As a result we have a long-term perspective. Next week and next month are uncertain, but here’s what I know: Brown-Forman will continue to be a company that demonstrates how to care for one another and our communities. We are a company with great brands built by great people. That won’t change.
We made a donation of $1 million to help our communities and the hospitality industry during this time of crisis. [See below.]
I will say the practice of social distancing is a foreign concept for most of the Brown-Forman family, because so much of our business and our culture is built around relationships and hospitality. However, we are putting our employees first, doing our part to help our communities, and letting our values guide our decisions.
We are grateful that we have shareholders with a long-term perspective who understand that in a 150-year history, this is a relatively short-term situation.
BD: Has this crisis affected Brown-Forman’s production plans?
JH: We continue to produce at the majority of our locations, currently closing only those locations where we must follow government mandates (such as Chambord in France). We know the situation is fluid and it could change in other locations by the time this article is published.
We have prioritized the health and safety of our production employees by instituting strict sanitizing procedures, distancing where possible, restricting access to production workers only, and self-monitoring health.
We have also required all non-production employees to work remotely to limit the number of people in our production sites.
We are extremely grateful for our production colleagues who continue to ensure that our brands are available for consumers around the world. They are the makers, and we can’t say ‘Thank you’ enough.
To date, we have not been impacted by supply chain issues, but we recognize that could change in this environment.
BD: How much will the on-premise shutdowns impact the alcohol industry?
JH: Of course, we anticipate that the on-premise will be significantly impacted, and rightly so, as it is important that we all put the good of the community at the forefront. Bartenders, restaurant workers and others in broader beverage and hospitality are feeling real pain right now, and the rest of the industry needs to be there for them now, and also when this is behind us.
I have been heartened to see so many in the industry stepping up to contribute in many different ways. This is a time when we are all family and all need to be looking out for one another. There is more that is going to be done the longer this goes.
Our friends in the hospitality and service industry are facing difficult times as they wrestle with the financial challenges of being out of work for an unknown period of time. These individuals, including bartenders and restaurant workers, are the face and voice of our brands to so many consumers around the world. Our recent donation will go to, in part, the United States Bartenders’ Guild (USBG) Foundation Emergency Assistance Program and the Restaurant Workers’ Community Foundation to support their COVID-19 relief.
It’s too early to report on how off-premise is countering on-premise, or what the impact will be. It’s certainly a test of resilience.
BD: Assuming liquor stores remain open, how much will that help?
JH: Again, it is still too early in this situation to determine how much the off-premise will offset the decline in on-premise sales.
We have seen several states deem liquor stores/delivery to be essential business and that gives us some confidence.
It’s just too early and volatile to make any predictions.
BD: Alcohol businesses typically fare well during recessions. Will that be the same this time?
JH: At this point, no one knows what the future holds. We do know we believe in our long-term strategy, and that we have great brands built by great people.
Currently, our stock is trading in-line with the market. We’re seeing the ups and downs that everyone is seeing.
BD: What alcohol products do you think people will buy during this crisis?
JH: Typically, consumers try new products in the on-premise. If you follow that line of thought, you would see people gravitating towards brands people know in the off-premise, brands they trust, brands like Jack Daniel’s and Woodford Reserve. They provide a sense of normal to consumers.
Also, we are hearing the acceleration of the ePremise business, and this should accelerate the comfort level consumers have ordering online, home delivery, etc.
BD: What does Brown-Forman see as the future of the industry at this time?
JH: We are confident in our long-term strategy. We have the right brands, in the right locations being made and grown by the best people in the industry. I truly believe, as George Garvin Brown said 150 years ago, ‘There is nothing better in the market’.
This global pandemic will test all of us, in every country and in every industry. It has already tested us the last few months. At every turn, I am impressed — but not the least bit surprised — by Brown-Forman’s resilience, our employees’ agility and care for their colleagues and communities.
This interview was edited and condensed for publication.