Family spirits

5/8/2014 - It’s one thing to be the board chairman of a multinational corporation that did $3.8 billion in sales last year.

It’s a new level of responsibility to share a name with the founder.

G. Garvin Brown IV knows both burdens at Brown-Forman, the spirit and wine company founded by his forebear George Garvin Brown. The company, best known for Jack Daniel’s Tennessee Whiskey, has managed to balance family and business since 1870.

On Wednesday, Brown and CEO Paul C. Varga brought that experience to Kellogg, accepting the 2014 Family Enterprise Leadership Award in front of an audience of faculty, practitioners and students.

“Ready for conflict”

Part of what makes the Brown-Forman story unique is how receptive the Brown family was to bringing in Varga, who had worked for the company since a 1986 summer internship, as CEO of the previously family-led company in 2005. 

“Typically that’s a situation that’s just ready for conflict of some kind,” said Professor Lloyd Shefsky, who founded and is co-director of the John L. Ward Center for Family Enterprises. “All of them were able to come together and say Paul’s the right guy.”

Brown and Varga are currently co-chairmen of Brown-Forman, with Varga holding the title of Executive Chairman and Brown Presiding Chairman. 

The two, along with several Brown cousins, previously came to Kellogg in 2008 for a Governing Family Enterprises session. The five-day program teaches family members and executives to take advantage of their differences to benefit the company.

“It’s great to be back,” Brown said. “When Paul and I walked through the doors today, we were reminiscing about being here six years ago.”

“They liked it so much, they sent more cousins,” Shefsky joked.

Family matters

Shefsky says family-owned businesses represent a powerful segment of the economy.

“They generate a majority of the GDP in the United States and 80 to 90 percent of the GDP in other countries,” Shefsky said. “They probably account for more jobs than any other sector other than government maybe.”

Brown-Forman’s 144-year history exemplifies one of the strengths family-owned businesses tend to possess, Shefsky said.

“They tend to be long-lasting for a reason. They tend to be long-term thinkers — they’re not as concerned with the quarterly result as the quarter-century result,” Shefsky said.

Mixing drinks

One way Brown-Forman has kept the long-term approach has been in the acquisition or creation of new product lines.

They add products that will preserve the core brand – like the new Jack Daniel’s Tennessee Honey in the American market or pre-mixed Jack Daniel’s and Cola popular in Australia – but avoid what they see as market blips like the flavored vodka trend of a few years back.

Of course, the distiller’s long history gives a certain perspective to market shifts and jolts.

“Is it as bad as Prohibition? No? Then let’s not worry about it,” Brown joked to the audience.