By Jim Hopkins
George Garvin Brown IV, a great-great grandson of the young pharmaceuticals salesman who started Brown-Forman in 1870, stepped onto a dais at the whiskey giant’s annual stockholders meeting today, and told an amusing story about a subject that might otherwise have been deadly dull: brand loyalty.
It was 9:30 a.m., and several hundred stockholders had assembled in a conference room at the white-collanaded headquarters on Dixie Highway west of downtown. On a classically muggy Louisville summer morning, this was a dressy crowd. Many of the men wore dark suits, crisp white shirts, and boarding school repp ties. Women wore tailored dresses, or smart skirts paired with jackets, and an occasional pearl necklace. People were tan and slim and — in the case of the many Browns there — very, very rich.
This was a business event, but it felt as much like a family reunion, too — because, after all, a core group of Browns control the company through an equity stake worth well north of $6 billion. Garvin Brown, who is 47 and lives mostly in London, was running the meeting as chairman of the board. Seated nearby in Chippendale-style chairs facing the audience were the other 11 directors up for re-election.
This is the story Brown told. He was on a flight from London to Warsaw for a meeting with the Brown-Forman team responsible for the company’s growing business in Poland. Brown had lucked out, scoring one of his favorite seats — aisle, in a roomy exit row — with two empty ones between him and the window. Then a British man, one of the many harried road warriors aboard, arrived to take the window seat. He asked for a Jack Daniel’s, Brown-Forman’s most profitable brand, when the flight attendant rolled the snack cart down the aisle. Here, Brown’s ears perked up.
But the airline was all out. Would the Brit settle for another brand of whiskey, the attendant asked, perhaps a Johnnie Walker? Nope, he replied, and asked for a glass of champagne instead. As Brown pointed out to the audience, here was a man so loyal to Jack Daniel’s, he’d sooner drink airline champagne than just any other whiskey.
That’s how Brown eased the stockholders into a more formal presentation by CEO Paul Varga, who deployed many bar charts and fever graphs showing return on shareholder equity over one year, five years, and 20 years — important stuff, to be sure, but not quite as compelling as Brown’s literally on-the-fly market research.
By this point, Brown had already dispatched with the meeting’s mandatory legal business in under 15 minutes: approval of a stock issue for a planned 2-for-1 stock split, and the seemingly perfunctory re-election of 12 board members, himself included. Crucially, three were new ones who, like Brown, are fifth-generation family members.
Beating the odds, again
The company had announced the shift last May in a press release that barely registered in the local news media. You could practically hear the assignment editors muttering: Tell me something I don’t know. The Browns were passing the baton again. They’d been doing this for nearly 150 years. Cue sound of crickets.
In fact, though, it was rather extraordinary. Few family businesses make it this far; more than 30% survive into the second generation, according to the Family Business Alliance. But the numbers dwindle rapidly after that: Just 12% make it to the third generation, and a slim 3% survive to the fourth and beyond.
The three new board members took the seats of three retiring ones — two of whom are also Browns. This was how they’d retained control for decades: a carefully orchestrated transition from one generation to the next, made possible by their majority ownership of Brown-Forman’s stock. And all it took today was a vote that was over in minutes. The whiskey, wine and vodka empire straddling 160 countries marched forward, with 1,300 employees in Louisville and another 3,300 beyond.
The newest directors are Garvin’s brother, Campbell Brown, 48, who manages the company’s founding bourbon brand, Old Forester; Marshall Farrer, 45, who runs the distiller’s global travel retail operation; and Laura Frazier, 58, who owns the luxe home and commercial furnishings company Bittners in NuLu. They each received nearly 100% of the vote.
Soon enough, Varga wrapped up his presentation. He and Garvin thanked the stockholders who’d turned out in person during bad weather. Then everyone adjourned to a nearby reception, where servers passed trays of canapés and, appropriate to the moment, there was a whiskey tasting.
The Browns had done it again, just like that.