The Dealmakers’ Edge with A.Y. Strauss

Leadership and Governance in a Multi-Generational Business with Garvin Brown

• A.Y. Strauss • Season 1 • Episode 54

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Garvin Brown recently retired from Brown-Forman Corporation, the company behind Jack Daniel’s Tennessee Whiskey, founded by his great-great-grandfather in 1870. His career with the company began as a wine salesperson in New York and evolved through various corporate and operational roles. By 2007, Garvin had become chairman, steering the company through key transitions between the fourth and fifth generations of the Brown family.

Currently, Garvin serves on Brown-Forman's family-holding company board and contributes to global initiatives in democracy and development. He is also a board member of Dendrifund, a foundation dedicated to the sustainability of the elements essential to crafting premium bourbon.

In this episode of The Dealmakers’ Edge, Aaron Strauss sits down with Garvin Brown to explore his unique journey and the pivotal role of family governance in sustaining a multi-generational business. They discuss how Brown-Forman balances innovation with tradition, the company’s marketing and brand strategies, and the importance of financial discipline. Garvin also shares insights into navigating the challenges of leadership, managing stress, and building trust with stakeholders. Additionally, they delve into his philanthropic pursuits and his passion for community impact.

1:27 – Garvin’s bicultural background and career journey at Brown-Forman

5:06 – The economics of family businesses and surviving Prohibition

8:42 – Non-family CEOs and the evolution of Brown-Forman’s governance model

13:52 – Leveraging marketing, branding, and innovation to drive financial success

20:59 – Managing stress, overcoming challenges, and fostering trust in leadership

26:27 – Philanthropy and Garvin’s dedication to sustainability and community impact

Mentioned In Leadership and Governance in a Multi-Generational Business with Garvin Brown

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Aaron Strauss: You're listening to The Dealmakers' Edge with A.Y. Strauss diving deep into stories behind commercial real estate leaders.

Hello everybody and welcome to The Dealmakers' Edge. Today I'm really excited to be joined by Garvin Brown. Garvin Brown recently retired from Brown-Forman Corp, the distiller of Jack Daniel's Tennessee Whiskey, a company founded by his great-great-grandfather in 1870, where he served as chairman for 14 years. Today, he sits on the family holding company board for Brown-Forman and is engaged in democracy and global development issues as a board member of The International Foundation for Electoral Systems in Washington, DC, and via the Diamond-Brown Chair in Democratic Studies at McGill University.

Garvin, I know this is the bio we have, but it's so skeletal, and we're going to extract a lot more from you. First of all, thank you for making the time. I know you don't do a lot of interviews, but we're so appreciative you made the time today to be on with us.

Garvin Brown: Look, thanks, Aaron. I'm delighted to see you again. Thank you for having made it down to Louisville, Kentucky back in September for the event that my wife and I had the pleasure of co-hosting, and great, great to be with you all today.

Aaron Strauss: No, terrific and amazing. You're very unique, as we were talking about before, you're very uniquely qualified to talk about several topics. Maybe just to get the conversation going, we could talk about kind of the early arc of your upbringing, which I know is a little bit unique, and then your starting in the company business and so on and so forth.

Even just to put things in perspective, it's incredibly rare to have someone like you who has recently been in the helm of a company for that long in the family. There's a lot of dynamics we'll uncover, but maybe you could take us back to the beginning days and your sort of career arc.

Garvin Brown: Thank you. Yeah, I grew up in Montreal, Quebec. I always tell people I'm half Canadian, half American from Quebec and Kentucky, not two regions that are often paired together. But my mother's Canadian from Montreal, which accounts for my accent. She's from the English-speaking community in Montreal, but I unfortunately don't have a beautiful southern accent like my father would have had.

The short of it is that my parents divorced, and my mother moved back to her home of Montreal when I was almost three, and my brother Campbell was almost five, and I lived in Canada until I was about 25. I went to a boarding school in the US. I spent summers visiting Kentucky, staying on my grandmother's farm outside Louisville. I went to McGill University for undergrad in Montreal, where I met my wife Steffanie Diamond from Toronto, and then she and I ended up in Vancouver for a little while.

I did a master's in political science. She was at law school, and then I moved on to New York, and she eventually joined, and we got married in '96, and kind of the rest is history. I joined Brown-Forman Corporation in New York in April '96 as a wine salesman. In Metro New York, I was selling our Italian wine portfolio, Bolla Pinot Grigio, Bolla Soave.

Anyone who's older on this podcast might remember those brands from the Northeast, and Fetzer Vineyards, and some others. I was calling on liquor stores in Queens and Brooklyn and Nassau County for a couple of years. I went back to business school and did an MBA at London Business School. Then my wife and I moved to Kentucky in 2001, finally.

Then I had a great run, I had a lot of fun. I had the privilege of working at Brown-Forman in a corporate capacity, thanks to the trust that the board put me in and that some of my older relatives did. They took a risk on a guy called Paul Varga, our first non-family CEO, and yours truly. In 2007, when Paul and I stepped into these jobs, he was only about 42, I think? Was he 42, 43, and our first non-family CEO.

I think I might have been 37 years old or something, and he and I had a great run together for about, I guess, 10, 12 years until Paul and I got his successor, Lawson Whiting, into the current job he has now, our current CEO, another non-family member, and my brother's our chairman. He's announced that our first cousin, Marshall Farrer, is going to step in as chairman next summer.

So, Campbell and I, two kids raised in Montreal by their mother, ended up heading south and enjoying a wonderful time at Brown-Forman Corporation.

Aaron Strauss: 2006, I believe, was when you joined the board and it was a planned transition between the fourth and fifth generations of the Brown family. Then you assumed the chair of the board and relinquished them, the other prior board member relinquished them in 2007, if I'm getting that correct.

Garvin Brown: That’s right. The first week we had a generational transition, which anyone who's in a family business listening to this call will know how awkward those can be. I do think it's easier when you get into further generations because there's an effect so many of you that you end up just gravitating towards more conventional corporate governance practices and so in our case, we set up for the first time a nominating and governance committee, a GovNom committee staffed by independent directors to run that process of getting the fifth generation onto the board.

We all would have gone through a headhunter for interviews to submit CVs. The headhunter made a recommendation to the independent directors on the committee who actually then came up with their own ideas, kind of surprised all of us that we thought one or two of us might get onto the board. They put three of us on the board, my cousins Sandra Frazier and Martin Brown and myself.

I bet you Sandra was one of the youngest, if not the youngest board director in the S&P 500 at that time, you had a 33-year-old woman who got thrown in the hot seat with the rest of us, and actually Martin, Sandra, and I are all on the holding company board you referenced earlier. The three of us have had a great run together for I guess almost 20 years now.

Aaron Strauss: I definitely want to dig into that, too. I know there's been a lot of awards and transition planning in a family is a very delicate topic, but what your family has done is remarkable. If I'm getting my facts right, I believe the Brown family today owns approximately 51% of Brown-Forman, maybe the numbers have shifted, and at least 25 members are involved to some degree or another.

Garvin Brown: I need to watch myself. I can't remember what I might know from private… what's publicly discoverable, the economics, or that we would own more than half of the economics of the business as a family.

Then we have two classes of shares and have since 1960s, maybe the late '50s, I can't remember. We've got more than 70% of the voting shares. Then this holding company that we set up in 2017 formally votes, I don't know, 55% of the voting shares or something. But we went public in 1934 is the longer answer. George Garvin Brown, my great-great-grandfather, started the company in 1870. He dies right before prohibition, having published The Holy Bible Repudiates "prohibition". God bless him.

He researched every instance of the Bible, supporting the enjoyment of wonderful alcoholic beverages, and published the book. He was a great Presbyterian. His mom was from Northern Ireland. We're still in touch with her relatives, descendants in Belfast today, our fifth cousins.

George's son, Owsley Brown, I took over the business and managed to get through prohibition with a license to sell alcohol for medicinal purposes, he went out to Cognac and sold the state's bourbon allocation to the French for a couple of years as well. Then he took the company public in '34 because we obviously needed to raise capital.

Aaron Strauss: Amazing. Then we'll talk about that corporate governance and leadership, we talked about the importance of having a non-family CEO in family businesses. A lot of people listening to this, maybe they've scaled their own company or they work for another company. They want to be a partner in a family-owned business.

I think you had an amazing term where the CEO is kind of a lead guitar and the chairman is the bass. Maybe you could talk about Brown-Forman's award-winning corporate governance practices. It's not easy to take such complexity and continue to steer generation by generation, and how you've won those awards.

Garvin Brown: Yeah, and look, anyone in the family business space will know what a hard time we get from proxy advisory services. The ISS and others will always recommend voting against the family directors on the board because in effect, we own too many shares. They say we're conflicted. God forbid, the line were shareholders, but in any event, it's a tough needle to thread.

Look, we worked on it again, Paul and I were great partners at this, and having a non-family CEO who takes family corporate governance seriously in a company like ours is a huge help to have that partnership. That's step number one. We like having a non-family CEO, by the way, because things get complicated.

Paul and Lawson always used to laugh nervously when I'd say this. They were like, "Stop using that as your illustration of the advantages." But at the end of the day, it's much easier to part ways with a non-family CEO than it is with a family member.

Aaron Strauss: 100%

Garvin Brown: So, we can get all the drama out of, for lack of better words, firing a family member by having a non-family CEO in there. I think that the family shareholders will just sleep better at night and so all the board and then you can just get back to running the business rather than dealing with all the own goals, as the Brits would say, or all the drama of, look, you'll never lose all the drama, but you'll lose a lot of the drama if you've got a non-family CEO.

Then we worked hard at governing the family in such a way so that we could get all the benefits of a family company, family culture, commitments of the long term, hopefully having a corporate culture where all the employees felt like they were part of a family. All those things, one would hope you could get from a family business.

We set up a family committee as a sort of communications mechanism halfway between being a shareholder and being a board member, we've got five or six other different entities in what we call our governance ecosystem to help the company communicate with the family, to engage the family at the right altitude at the right volume in a really constructive and productive way.

The Kellogg and IMD in Europe have been very kind to give us awards for that work. It's been a hell of a journey on that path, and it's still evolving. The sixth generation of the family right now, a lot of them are volunteering to join what we're calling a next-gen committee. They were actually just at Woodford Reserve, one of our brands. They were at our distillery in Woodford County.

This October, I think 18 of them or something rallied around by thanks to two or three members of the family who work at the company. We have two six-gen members working at the business right now, and then another member of our fifth-gen who's younger than I am, who's running sales in the US. Yeah, he's helped organize that work.

Getting all those kids' kids, I mean, they're young adults, engaged in their own ways has been helped to an example of how the sixth-gen will go out and improve our family governance is that they are now looking at rewriting the family constitution that we wrote in the year 2007, 2008, 2009, and they want to refresh it. I think that there's so much more value to be had from their engagement in writing the constitution than there is from what we may have written 15 years ago.

It's critical to keep each generation engaged and excited so that they feel a sense of ownership, not just electing the dividends. I'm delighted to say we've paid every quarter for like 80 years and we've increased every year for 41 years. The dividends aren't good enough. They need to actually engage with the power of their pen and their presence to make it all work.

Aaron Strauss: Well said. Yeah, those consistent increases and dividends over many years, very rare to be able to do that on that consistent level that the company has, sort of balancing the P&L with the family business dynamics like we talked about navigating the proverbial family barbecue, that's a masterclass right there. That's a masterclass.

Many companies don't survive first-gen or second-gen, but whatever the family is doing collectively and hanging together and establishing best practices, you could probably write books on it, frankly, and really teach a lot of people on the topic.

Garvin Brown: All the family governance work that we've done when I present it, I always preface by saying, "Look, everything I'm about to present might be irrelevant to the Brown-Forman’s longevity and the engagement of the family. Maybe the only thing that's kept us going is the dividend." As I said, we're dividend aristocrats, we pay a quarterly dividend. The dividend yield is not extraordinarily high because we want to invest internally in the business, but it's consistent.

I think that that's also a good way for the Brown family to be and for our board to honor its fiduciary duty to all shareholders because some families will end up treating the business like their own personal hobby and actually not fulfill their duties to non-family shareholders. I think that keeping the discipline around that dividend is part of our contract with the public markets.

Aaron Strauss: Well said. I think we'd be remiss in this interview to not also talk a little bit about marketing. As somebody who literally has marketing in your blood and brand building in your blood for generations, we've talked about the fact that sometimes laser focusing on key brands and not to get distracted or becoming frankly unemotional around brands that have tested time, I believe Southern Comfort was sold as a brand just several years ago and obviously the Jack Daniel's brand is so iconic and so pervasive in what the company does.

But there have been a lot of brands shed and making those decisions are not easy, maybe you can sort of describe, and it doesn't have to be from an economic perspective per se, but how to focus on that strategic marketing and market share growth and how does a company that's been around for so long make a decision to shed a non-core brand altogether and maintain that discipline because that discipline is really what's keeping that dividend going.

Garvin Brown: From a financial standpoint, it's funny people, well, certainly the marketing team used to joke that the reputation internally in the old days is that Brown-Forman was more of a bank than it was a distillery. The culture of financial discipline was absolutely there and is there. Our finance function is one that we take really seriously. Anyone who creates a product over the course of four years at minimum would understand that.

In our case, every bottle of Jack on every shelf that you see, we took four years to make that single bottle because of the aging process in that new American oak sitting in the hills of Moore County outside Lynchburg waiting for the humidity of Tennessee to bring that to age. That is a patient process.

Anyone who doesn't have at least a four-year time frame would struggle with that. When you're putting money up in barrels and in warehouses for four years, you better know what you're doing financially. I'll credit it again, I think that the combination of our financial wherewithal and having a non-family CEO come along and pick at what the family might get sentimental about has been helpful. We actually have sold every single brand we've ever acquired except for Jack Daniels.

Southern Comfort, Early Times, Canadian Mist, a bunch of brands that people outside the industry wouldn't be familiar with, we've sold, while we sold Finlandia vodka recently, its largest market with Russia, and after the invasion of Ukraine suffice to say, that was not an appealing brand for us anymore.

Our financial discipline, the internal rate of return, and all the classic ROIC metrics have kept us sharp on that. The only other brands we continue to hold in addition to Jack over time, are Old Forester, our founding brand from 1870, and then Woodford Reserve, which we created in 1996. [inaudible] set kicks it off in '96.

Yes, we've had a financial discipline to manage our balance sheet well, and anyone in the aged inventory business has to have that. From a marketing standpoint, I think that spirits brands do remarkably well in the hands of families, of multi-generational businesses.

These brands weren't created overnight, they do take patience. In particular, if you're from that region, if your family is not, I know I'm an exception because I've got sort of a Canadian accent and was raised in Montreal, but as I used to say at Brown-Forman, I don't care who you are, or where you're from when you join this company, you're a distiller, you're from Kentucky and you're here to stay.

I think that if you're from the region the odds are that you'll do pretty well managing a brand like Jack Daniels, Tennessee Whiskey. Obviously, it's from Tennessee and not Kentucky, but the bourbon belt, as we call it, Kentucky and Tennessee, is a region where stories are told and traditions passed on.

I think we've done a good job of letting the values of Lynchburg, Tennessee and of that brand show themselves to the world. I'm calling in right now from London, England. I was taking the tube last week and stood on the platform looking across at a beautiful ad of a Christmas tree built from barrels that stands in the town square of Lynchburg, Tennessee.

The copy sounded like I was listening to someone speak from that town square there at Oxford Circus waiting for the central line to get back to Notting Hill. I think we've done a good job of communicating those values outside the United States. We've also not been gun-shy about when to innovate. Doing something contrary to ones like Kentucky and Tennessee instincts, coming out with Tennessee Honey, or Tennessee Fire, or Tennessee Apple, these line extensions, putting Jack Daniels with Coca-Cola in a can, like we've done now.

I remember the battles in the boardroom over whether we should admit that consumers mixed it with Coca-Cola. It took us eight or nine years to finally admit it to ourselves, but when you finally go meet consumers, where they are, they respond well to the electricity and the energy of that encounter. I think we're striking the right balance between our home place and the consumer's home place.

Aaron Strauss: Well said, really sounds like threading a needle. Those conversations must have been very dynamic, to say the least, but fantastic to get a little glimpse into some of those nuances that touch all these elements we're describing. I mean, you have a lot going on and we could take this conversation, maybe focus more on philanthropy.

I know we've talked a little bit about almost mental health. You're a man who's been part of a lot historically and has juggled a lot of responsibilities. I know people who listen to this are aspiring success stories in and of themselves. We call the deal-makers edge because it's hard to get through life and juggle all these responsibilities.

Maybe you could describe this briefly, how you mean focused, almost the mental aspect of it. It sounds easy to just do what you're doing and have done, but how you navigate the stressful parts of it?

Garvin Brown: The most stressful part of Brown-Forman for me has always been navigating the Venn diagram where meritocracy overlaps with family and having to thread that needle and have awkward conversations along the way. I distinctly remember I guess it was probably about 10 years ago, I think what is described as panic attacks. 

Thinking about how to navigate different situations in the boardroom, I think I almost blacked out driving alone on the highway once for a panic attack because I was noodling on the branches of the decision tree, and how to go down each branch.

I was lucky enough to find an executive coach, a guy called Peter Danby through London Business School, and he's an ex-British Army, ex-rugby player, and cricket player, but also very adept in the world of martial arts and meditation and so on.

He got me into this Headspace. I've been using this Headspace app to do meditation for 15 minutes every morning now for eight years, and I can't recommend it enough. I wish I discovered it in my late 20s, my late teens, or I'd have been a much better young father, husband, etc.

I'd certainly recommend taking that seriously. I'm not a very spiritual person, I'm a lapsed Catholic married to a Jewish woman with kids who celebrate Passover and Christmas. That's the extent of my religiosity. The meditation or headspace, whichever form of it one chooses, will have a physiological impact on the gray matter in your brain over time.

The other thing I found that also managed my own stress and my own productivity is, again, it was advice from Paul Varga when I got going in things and suddenly found that I had a staff to help me. He always said, "Garvin, do your own staff work. Write your own presentations, your own emails, your own letters to the company, and obviously, people are going to come along and help. But to do your own first draft and own the quality of that work would just make it so much easier to speak to the work in the right setting and later.”

For those on the call who are lucky enough to be in really senior jobs or they're about to get them, I just repeat what Paul said to me, “Do your own staff work. You'll be able to own it. I know you'll be surrounded by some genius kids who are volunteering to do it for you. Resist that temptation of this first draft.”

The other tip I used to give people, a guy at Brown-Forman recently reminded me of it, I would say, “Think and behave like you're auditioning for your next job. Just show people that you've got the capacity to do it. Every time you're in front of a board, an investor, or a boss, it's a chance to audition for the next job.” The trick while you're doing those auditions, is to nail your current job.”

Then if you bear with me, when I had the pleasure of introducing Lawson Whiting as our new CEO at a meeting at Brown-Forman six, or seven years ago, I described how the word trust and as a family how to trust a CEO. I think the definition of trust, and this is what we'd all try and build with our stakeholders, our shareholders, number one is obviously sincerity, does someone sincerely believe what they're saying?

Number two is the ability to deliver on that sincerity, i.e., you actually do what you said you're going to do. Then finally, can you do that repeatedly? If you can deliver repeatedly on a sincere thought with good actions, then guess what? People will trust you. Certainly, that's what I was articulating that I'd seen in and seen with Lawson Whiting and before him, Paul. I think, anyway, if I had some tips, just do your own staff work, know how to build trust, and take care of yourself with something like Headspace.

Aaron Strauss: I got to tell you, that was profound, Garvin. We talked to a lot of CEOs, owners, and investors and I think you just nailed it. It's hard to articulate that. People throw terms like trust around, and it's hard also to make ourselves vulnerable in the fact that people just assume someone very successful is almost carefree or nonchalant. 

But to the extent of the responsibility comes the pressure, and it needs an outlet, and it needs a thoughtful person to articulate it. So I want to thank you for that personally. It means a lot to me and also to folks listening. I also just want to touch on how you're involved in a lot of different philanthropic and also sustainability initiatives.

I know you're the founder of the Dendrifund, which focuses on the sustainability of wood, water, and grain, the contributions to inner city schools, to the Brown-Forman Foundation, the creation of the Bourbon Caucus to protect the bourbon industry in Kentucky and Tennessee.

I know there are countless, countless others. We can't possibly talk about all of them, and also all the volunteer work you've done, you're involved in McGill or the Maxwell School of Public Policy. Maybe we could just pick one of those that you're passionate about.

We can talk about how you've kind of juggled a lot, but at a certain point, you had to make a transition to say, “More of my time is going to be just given back generally.” How do you pick where to spend the time in philanthropy? What are some of those passions?

Garvin Brown: I'm lucky that it was actually Brown-Forman who started Dendrifund after the sale of Bonterra Wines, which had been made with organic grapes. Paul Varga had the idea of using a small amount of cash from that sale to start a sustainability foundation called Dendrifund which today focuses on wood, water, and grains in the bourbon belt, White Oak Initiative because we're worried in 80 years we're not going to have enough white oak to make barrels, rye, grains, which are great for soil health in our region and also a key ingredient in our products.

Then, obviously, our quality of water, which our limestone water source is critical to bourbon. What's so nice is that all those initiatives, the White Oak Initiative, and the Rye Initiative, have a bipartisan appeal across the aisle in the States of Kentucky and Tennessee.

I'm just delighted to report that thanks to the work of Dendrifund and others, a bourbon caucus has been created in Washington with Democrats and Republicans coming together on these issues around sustainability for the bourbon belt. I'm a director on that board and it's been a fun way for me to stay in touch with the region, with Brown-Forman, my cousins in retirement, and grateful for it.

Then I love McGill University as a proxy for a way to stay in touch with my hometown of Montreal, a city to which I owe so much and for which I have so much heart where I met my wife. My daughter is at McGill right now in her fourth year of university. I'm delighted to stay in touch with McGill via that democracy chair.

Then more recently, I mentioned earlier that my wife was Jewish, more recently since the horrific attacks on civilians in Israel on October 7th, 2023, I've pivoted some of our own charitable giving in coordination with my wife to Jewish philanthropy. I've actually, if there's any silver lining out of that day, and we're probably far too close to it to know what that overlining can possibly be, but in my nuclear family, I'm delighted to say that the Jewish culture and religion have blossomed in a way that they wouldn't have beforehand.

My wife and I are enjoying a new life together in the Jewish community, which I hope to be able to report back on a few years from now that we've helped make good progress, helping that community flourish in North America and other places and doing what we can to fight what has been an unforeseen spike seemingly in antisemitism, not seemingly, it is a spike in antisemitism that's taken all of us aback.

Between the new initiatives of my wife and ongoing love for Montreal and McGill University and then being able to work with my family on things like Dendrifund, I consider myself really lucky post my normal corporate life to be able to have all these interests and to have the ability to engage financially and also with my time.

I lost my dad when I was 42. He was 67 years old. I'm 55 and my dad's dad died at 56, maybe he was 57. You have to make hay while you can. I think I've done what I can in corporate life. Being able to use my skills and financial resources, hopefully, more than 12 years, hopefully, I can help different communities in the next 12 years and beyond.

Aaron Strauss: Amazing. Well, Garvin, you certainly made a lot of proverbial hay to date even just taking the time for this call and sharing a lot of insights that most people wouldn't ever be able to obtain. It's been fantastic and I think that really represents where you are in life, that giving back and that energy you have.

I'm really thankful to have met you, really thankful you have taken the time today. I'm really excited to continue to watch all the great things you're going to continue to do and lead in your own way. With that, I guess we'll wrap up here. But again, I really want to thank you. It's been a fantastic conversation. Really, I learned a lot.

Garvin Brown: Thank you so much, Aaron. It's been a real treat to chat with you today. I'm honored to be with you and I'm grateful for the time.

Aaron Strauss: Thank you for joining The Dealmakers' Edge. Don't forget to follow us on your favorite podcast platform. Give us a five-star rating so more people can follow the conversation.


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