Brown-Forman Corporation (BFB) Earnings Call Transcript & Summary

All right. Good morning. Welcome to day 3 of the Deutsche Bank Global Consumer Conference. Thank you all for being here. Thanks, especially to Brown-Forman for being here, Chief Financial Officer, Leanne Cunningham. We're going to host today's session entirely by way of Q&A. So hopefully, we cover a lot of ground. We'll cover some near-term topics as well as some longer-term strategic topics. But Leanne, thank you for joining us.

Thank you. Good morning. Good morning, everyone, and thank you for your time this morning.

Let's start high level, and let's just level set on why premium American whiskey and super-premium spirits, which is obviously your target market is such an attractive place to operate. And why it should be attractive for long-term investors even through -- what I think we all acknowledge is going to be increasingly uncertain disruptive and probably recessionary environment.

So I'll start with the first part of your question. And oftentimes, this morning, I'll refer to IWSR. Just now I'll refer to it as the most current data that's out there for 2021. And I think you've heard this probably over the conference a little bit this week is spirits category continues to gain volume share from beer and wine. And so we have a good long-term growth trajectory that's available to us. We have been around for 152 years, and we have always consistently been able to find opportunities for long-term growth. And as we look ahead, we continue to think that we see the opportunity for the category and for the industry, but also for our brands. And with the trends that are there now with -- the consumer trends of premiumization and flavors and convenience, our portfolio is really well aligned with those consumer trends. So we've got a strong portfolio in American whiskey. We'll talk more about that as we go along. A strong portfolio in tequila, which is one of the hottest growth categories that are out there. And then RTDs which everybody has been hearing a lot about lately. But from an investor perspective, I would also add, this industry and Brown-Forman's place in it is we have very attractive and healthy growth margins. Gross margins that generate really strong cash flows, which give us the ability to invest fully back behind our business, returning to investors and shareholders while just continuing to pursue other opportunities for -- that would create long-term growth. So -- just a lot of -- it always has been an attractive category and it just continues to be as we look ahead.

And how do you assess the risk of demand degradation potential trade down, trade out as pressure builds across the consumer? And how much of that is embedded in your fiscal '23 outlook?

So this has been in the news a lot lately, and there's a lot of chatter about trading down with the economic outlook. But what we have said recently, just last week, we issued our full year results for fiscal 2022. And we continue to say that we -- as everyone is, we are closely observing and monitoring trends. And -- but at this point, we are not seeing any down trading at this point. And even as we have taken price over the last year plus, we haven't seen a negative impact in volume. We're keeping a close eye on it. What I'd also say is we've taken a lot of time to evolve our portfolio over the last decade. And as we've done that, we've exited things that were consumer durables. We've exited wine business, except for Sonoma-Cutrer. And for those of you who know anything about Sonoma-Cutrer, it really does act like a premium spirits brand. And we've focused our portfolio and reshaped it into -- with the acquisition of Casa Herradura, which has all of our tequila brands in it, which is el Jimador and Herradura. We did that back in 2007, and here we are with today, tequila being one of the hottest categories that's out there. We've also acquired Fords Gin and Slane Irish Whiskey. And so we're preparing those brands to be our next generation of growth brands. Because at Brown-Forman, we have a very long-term perspective, and we're working on building forever. And with doing that, you always have to have your strong brands for today and then your emerging brands coming in for the next generation.

You joined -- officially joined the executive leadership team a year ago in 2021. Now that you're on that team, do you have a different perspective on how decisions are made within the ELT? And are there things that you believe the company can do better, the execution team can do better in terms of agile decision-making, if we're going to continue to live through ever-changing dynamics?

Yes. So I have -- I did join the executive leadership team a year ago. I have grown through the company over the last 25-plus years. And what I would say is the executive leadership team and Brown-Forman's way of working throughout the entire company is very similar because it's very much focused on long-term perspective, thoughtful decision-making, and including very diverse perspectives of everyone around the table. And I would say the ELT functions very similarly to the way the rest of the teams in the company do. Now we are focused on a lot of strategic -- more strategic at the enterprise level. And so I just thought I would share that for us, 1 thing that unites us all is -- and I'll just tell a short story. George Garvin Brown, our founder, we have actually our first sixth-generation family member in the company, founded it on the promise of that there would be nothing better in the market because he created the first sealed bottle, bourbon, to put the safe quality and the consistent quality product out there. We still use that mantra, and nothing better in the market throughout everything that we do. And the way that we do it and keep it modern and keep it evolving is we're always trying to figure out how to be better and how to do better. And so in all of our strategic decisions it's about how do we be better for our people, how do we do better for our brands and our investors and our communities. So we're thinking holistic across all of those things and always pushing ourselves to be better and to do better. And then from a strategic perspective we make decisions based off of our portfolio. Because it's about keeping Jack Daniel's Tennessee Whiskey, healthy, strong and relevant to consumers worldwide. It's about continuing to be the leader of American whiskey. It's about continuing to increase the focus on our emerging brands and our super-premium brands. And from a geography perspective, it's about continuing to deliver balanced geographic growth and have the most optimal route to consumer models for each market that we have as well as investment in people. But integrated into all of that is our ESG, which is about being sustainable, responsible decision-making, our communities and our people through diversity and inclusion. So all of that is integrated, and we're using that framework to help guide us in the decisions that we're making.

Okay. Great. And in terms of speed of decision-making, has the company become faster, more agile as it's had to deal with an increasing array of challenges?

Yes. I would say that we work -- and we spend a lot of time with the words transparency, so making time -- making sure that we're taking the time to be transparent with the information and with our company to make the best decision. And we talk a lot about being agile. And so we are in a nice place and a nice size where we can have thoughtful decision-making, but we can be agile in adjusting to the changing environment.

Great. So clearly, the foundation of the portfolio is Jack Daniel's Tennessee Whiskey. Let's just give us a health check on that brand. And as we talk about it, it's -- I'm thinking both the core No. 7 brand, but also the contribution you see from flavored RTDs, Gentleman Jack, other extensions because you've been premiumizing that brand quite extensively of late.

So just for a quick health check on Jack Daniel's Tennessee Whiskey. Again, I mentioned that we just finished our fiscal year. So -- and as of April 30, and Jack Daniel's Tennessee Whiskey grew plus 23% on an organic basis. So just to put that into some kind of volume perspective for you that it's 1.5 million incremental cases from the prior year to this year. So Jack Daniel's is healthy and it's strong, and we would say it's one of the most iconic brands. We'll probably get into that here in a little bit. But it's one of the most iconic brands out there. I would also be remiss to say, Jack Daniel's is one of the largest on-premise brands in the world. And during COVID, when it was impacted by the lockdowns and the closure of the on-premise, I do want to give the rest of our portfolio a little shout out because it is strong. And it was able to, at a time when Jack Daniel's was negatively impacted by the closure of the on-premise, the rest of our portfolio was able to deliver growth for the rest of the company. So at the company level, the company still grew even when Jack Daniel's was hampered by the restrictions. Then I'll go on to the rest of the family. The rest of the family of brands grew double digits, also for our fiscal year. And so that includes our super-premium, Gentleman Jack, and Jack Daniel's Single Barrel. And then from an innovation perspective, I would layer in that we're continuing to work to offer our consumers a space to premiumize inside of the Jack Daniel's trademark. And we launched in this past year, a limited series, which is Jack Daniel's 10 year old, which was the first age statement that we had released in quite a long time. And it was named kind of best whiskey -- best Tennessee Whiskey by Whiskey magazine. And then we're just recently launching some new innovations. Just last month, we started the launch of Jack Daniel's Bonded Tennessee Whiskey, which before that had been a limited series that could only -- consumers could get if they were at physically at Lynchburg, Tennessee on the tour. But now we're going to bring that to the world because there's been strong demand for that as well as Jack Daniel's triple mash. So those are going to be new products. Those are going to be permanent extensions. And then again, it will allow our consumers to trade up. And then I'll touch quickly on the flavors. The flavors are currently 10 years old. Because we launched Jack Daniel's Tennessee Honey in 2011. So from 2011 to today with 3 flavors, that has added an incremental 3.5 million cases to our portfolio in that 10-year period. I'll pause and talk about Jack Daniel's Tennessee Honey for a moment, which is over -- a little over 2 million of those 3.5 million cases. And consumers really enjoy that taste profile. And that brand actually is twice as large internationally as it is in our U.S. business. And then I'll jump to Apple, and Jack Daniel's Tennessee Apple, we launched it 6 months before the pandemic. So its entire lifetime has been inside of a COVID environment. And even with that, it's been able to reach nearly 700,000 cases in the COVID period. And we -- and we've been investing behind it, but we feel like it didn't kind of get its fair shot coming out of the gate. So we're really excited even with the constraints that it had, how it's been received by the consumer. Its growth, both domestically for us and internationally. It's been really strong. And then RTDs, again, it's a hot category. People have been talking about RTDs. I'll share maybe a little bit more about that in a moment, but I mean, we've been in that business for 30 years, and we've always believed it has been a great opportunity even though the conversations really heated up in the last couple of years.

Right, which -- you probably anticipated in my next question, which is the -- you added this week a Jack and Coke RTD with the Coca-Cola Company. I guess what's the opportunity for that product, especially because I think you already had a Jack and Cola product in the portfolio. So just -- I'm assuming this product replaces the existing. How is it going to sit within the portfolio?

Yes. So we were really excited about the news that we were able to share this week. But again, I'll go back to -- we've believed in the RTD business. way before the RTD business was as hot as it is now. And there's reasons for that. And part of it is because the RTD gave Jack Daniel's the opportunity to be in a consumer's hands in places where our full strength product couldn't always be. So we call it the brand -- it's a brand in your hand. And so we have a 20 million case RTD business that we've been growing over these 30 years. 8 million of those are -- it's called New Mix tequila. It's largely in Mexico. But then the rest of it is Jack Daniel's RTDs. And in that, 10 million of those cases are internationally, and then we've got some in the U.S. So, it's been something we've been focused on a long time. We believe in it. Again, not only for what it is, but how it helps consumers connect with the Trademark in places other than where our full strength can be. We do have a sizable and cola business already because we knew our consumer had been putting Jack Daniel's Tennessee Whiskey and Coca-Cola together for decades, for generations. And when that wasn't an opportunity 30 years ago, we put and Cola and created a really great product for our consumers. But now today, we have the opportunity just to take it to the next level. And this is new in the fact that we have 2 of the most iconic global brands that are going to be on 1 can. I don't know if you all have seen the picture of the can. But I think that it is something that is outstanding. And so as we're able to take that to the consumers, yes, we have a strong business now. I think it's going to give us the opportunity to premiumize the experience, to provide our consumers with the perfect -- perfectly mixed Jack Daniel's and Coca-Cola cocktail that they've always enjoyed. But I think it's going to also partner 2 really strong corporations together in a way that we can utilize each other's strength for -- to even enhance the business that we have. So if you think about it, the RTD category is about $39 billion per latest IWSR 2021. Of that, Jack Daniel's & cola is about 2.5%. We believe that can be bigger. Inside of the RTD category, there is the cocktail and long drink, and that's about $11 billion of the $39 billion, and Jack Daniel's has about 9% of that. The last layer, the & Cola is $3 million of that. And we believe that and the Jack Daniel's & Coca-Cola can, can grow that segment and even take a bigger share of the entire RTD category.

So it will replace the & Cola?

Over time as we're rolling it out. We have built this business over 30 years. We're going to be thoughtful in how we roll out. We're going to -- what was announced was we're going to start in Mexico. That's a place where it's a strong RTD market. Jack & Cola has been strong there for years. So we're going to be transitioning that product first -- and then there will be more markets to follow. But it will be a transition over a period of time.

Okay. Great. You mentioned a couple of your forays into Scotch and Irish whiskey and gin and super premium initiatives, inclusive of tequila and whiskey as well I guess what is -- and I think you're ahead of -- in most of those cases, you're ahead of expectations that were initially set. Where do you see the most headroom across the super premium initiatives? And what are you most focused on today?

Yes. So really, we'll spend a little time here on the rest of our portfolio. And like I said earlier, this is -- there's more strength in that space in our portfolio than there had been previously because again, and during the pandemic, it was able to deliver. And it was largely able to delivered by some of the brands that we've been building over a long period of time, one which is Woodford Reserve. And Woodford Reserve in its 26 years has grown double digits every year since its inception, and it's grown to be the #1 super-premium brand in the world by volume and value. And we created that brand 26 years ago with our capabilities in distilling and American whiskey. So Woodford Reserve continues to be really strong. Old Forester, our founding brand, is growing double digits. It's healthy and strong. Then when we think about the -- and I would say both specifically for Woodford Reserve, it is incredibly early in its international journey. It is just taking root in some of the developed European markets. So its runway for growth is incredibly long and it's incredibly well received by the consumers. Then we go into our tequila category, just to talk about hottest category, fastest-growing category that's out there. In 2007, we acquired a beautiful portfolio of tequila brands that we felt like it was meant to be because Brown-Forman was founded in 1870. Casa Herradura portfolio of brands was also founded in 1870. So we feel like we've got genuine, authentic, strong tequila brands in our portfolio that have the right to win in this tequila growth -- fast growth of the category right now. But then I would also say one of the things we're really focused on is we genuinely believe Tequila can be a global category and that it's going to transcend beyond North America. And I think we're already seeing that. And for us, we believe the el Jimador brand has the right attributes, the right qualities and the right price point to begin to continue to expand tequila globally. And then we're always building for the next generation because if we want to be a company that wants to be around for generations ahead, which we are, then we're always trying to find what are the brands that are going to produce that next generation of growth. And that's why we were so attracted to the single malt scotch brands that we acquired about 5 years ago. They're beautiful brands that are well received by the consumer. They're also a really long aged product. So we are trying to work to get our inventories at a higher level so we can even take them more broadly across the world. And then we have Slane Irish Whiskey, which again, the Irish Whiskey category has been growing quite nicely. It was impacted by the pandemic, but we'll be able to, I think, get that restarted now as well as Fords Gin. So just a lot of opportunity in the rest of our portfolio for generations to come.

Great. We were talking about this a little bit before the session started, just the volatility that you experienced in distributor inventory. It's been a big topic throughout the pandemic, big topic in probably recent quarters. I guess where are you now, overall? And where is there still the most room to catch up, whether we think about it by brand or bottle size or geography?

So for Brown-Forman, one of the things that was unique for us was the impact of the European and the U.K. tariffs on American whiskey. So that began kind of a little bit of volatility in our distributor inventories. And then when we got into the pandemic, the volatility really continued, but to a greater extent. In the supply -- in the world of supply chain during the COVID pandemic, what impacted us kind of disproportionately was the strong consumer demand that we were seeing for our brands. As we began to enter back into a more normalized environment, we were constrained by our glass supply. And for anybody who's been listening to our story, our partner was having issue with their yield and the quantity that they were able to supply to us. So we began working very closely with them to improve both. We also very quickly began to expand our supplier base. But again, for anyone who knows about glass manufacturing, that takes a period of time. So during that period of time, when our glass supply was constrained, we prioritized Jack Daniel's Tennessee Whiskey because we knew the on-premise was going to be opening, travel and tourism was going to be coming back. And we also know, strategically, one of our key items is to keep Jack Daniel's Tennessee Whiskey, healthy, strong and relevant to the consumer. So we prioritized that. As time has passed, we have been able to increase the level of glass supply and therefore, get more inventory back into the system. The challenges are easing. We do expect to see some of those challenges also in this fiscal year that we're just entering, but to a lesser extent. And so really, what that would say then is for the products in our portfolio that were impacted because we prioritized Jack Daniel's Tennessee whiskey. We believe there's catch-up on Jack Daniel's Tennessee flavors, Gentleman Jack, Single Barrel and Woodford Reserve. And so as we look to F '23, we'll have less of an impact and more of an opportunity to replenish those inventories because we do believe where we sit right now that our distributor and our retailer inventory levels are below what they were pre-pandemic. So we know we have not only that to catch up on, but then the really strong consumer demand that we're seeing is it's -- we're catching up.

Okay. Geographic expansion was -- going back to your Investor Day, it was a priority, has been a priority, continues to be a priority. How -- but Russia was one of those priority markets, right? So as we think about the world today, inclusive of events in Russia, how has -- how have those geographic expansion priorities shifted? And has it made you think at all differently about where you utilize your own distribution versus third-party distribution?

So I don't think any one would be surprised, but we have a strategic framework by which we think about our route-to-consumer models. And we look at every market to say what do we believe is the most optimal model for our business to be in. And for us, Russia was one of those markets. And if you've heard us say at the end of fiscal '21, it was about 1% of our business. But we really did see when we would run -- using Russia as an example of that market through our strategic framework. We believe that there was a lot of opportunity that we could capture by having our -- not only Jack Daniel's but our full portfolio in our own hands to be able to grow in that market. So it met the hurdles. We were beginning to advance it forward. With the Russian invasion of Ukraine, we have suspended our business there, and that we have stopped activity on that. But if you also listen to our Investor Day of '21, we shared with you that we had about 65% of our business where we could in our own hands. If you look at where we are from relative to our competitors, their percentage is more in the 80s, and we're at 65%. So we continue to just kind of do our analytics and run each market through the rigor to try to figure out where -- what's the most optimal path. And for us, I mean, we've just recently done Belgium, Luxembourg. We just did Taiwan. So we are looking at those markets because we do still feel like there's more opportunity there for us to capture. It's just identifying those in the right time.

Okay. You mentioned tariffs earlier as part of the contributors to volatility of late. We've now seen tariff relief, first in the EU, now in the U.K. I think U.K. benefits should start to accrue in your P&L essentially now, immediately. The EU benefits because of distributor retail timing -- or sorry, inventory timing really haven't -- even though they preceded, the U.K. really haven't benefited you that much. So to me, the full benefit is really a fiscal '23 topic. Can you confirm that? Talk about how it's going to flow through your P&L now? And then most importantly, perhaps, is how much of those benefits drop to the bottom line versus become a source of reinvestment?

So unfortunately, we've had to talk about the topic of the EU and U.K. tariffs for the last 3 years. And when they first were placed on the American whiskey brand, of course, our portfolio was the most impacted of all of our competitive set. And we said very quickly, we weren't going to pass those along to the consumers because we really wanted to invest in the consumer momentum because we had a really strong business, and we didn't want to negatively impact the momentum that we had. And we believed that surely this would not last as long as it did. So we have been incredibly excited for this day to have finally come that as of January 1, the EU tariffs have been removed as of June 1. The U.K. tariffs have been removed. During the course of the 3-year period, as we would work together and get questions, it's like what will you do when. And so that day, again is here. And we've always said that we're going to take some of that and reinvest back behind the business, and we're doing that. And we -- and on our last call, we shared that we were going to be investing some of those dollars back into our business in where we believe has the greatest opportunity for the return, which is Herradura in the U.S. to focus on the hot category trend in the U.S., and growing points of distribution and more marketing behind our Herradura brand. So we make sure we get our share of that fast growth. We've talked about increasing our focus on premium whiskey internationally. Jack Daniel's Honey, Jack Daniel's Apple in Europe is really resonating with consumers, and we want to continue to invest behind that growth. And then, of course, as we always would, and you would expect for me to say, Jack Daniel's globally that we'll be investing back behind that. So there will be some of that, that falls to the bottom line, but also it's an opportunity for us in F '23, and it's built into our plan to have that step up in F '23 to really support the growth opportunities that we would think that are out there with a really nice return planned.

Okay. And we're about 10 minutes left, somehow we have haven't talked about cost inflation or supply constraints or pricing. So let's do that now. So on the inflationary and supply side, you mentioned glass, but you also had -- you've had wood cost inflation, you've had agave inflation. So let's talk about just where you are relative to those headwinds? And then also, maybe you can address what the company is doing to navigate in terms of pricing, productivity, revenue growth management.

So from -- we'll start with cost inflation because I know you all probably haven't heard enough about that this week. But just -- in any typical year, we would plan for inflationary cost increases. And for -- as we look ahead to F '23 for -- what we would call our normal low single-digit inflation that we historically have planned for, something that's been a little bit different for us and our portfolio is as you mentioned, wood and agave because so much of our portfolio is an aged portfolio. So we had been seeing increases over the last 4 to 5 years in our wood cost as it relates to making of the barrel in which we age our products in. And then also the really hot tequila category. Two things happened with the supply of agave. One, we got into some low planting years because, again, I agave, you can think of like an aged product because once you plant it, it has to age for a period of time before you can harvest it to use it to make a tequila. So we got into a couple of low-planting years and then we got into a really strong consumer demand. So there are pretty normal cycles for agave costs, costing as you look over time. But this went way above the peak that it ever had before. So for the last 4 to 5 years, Brown-Forman has had higher inflation in our cost. And therefore, we've talked about, our margin has been contracting. So now when we're going into a period of inflation, we've got wood costs that are normalizing, agave costs that have kind of come down below its peak, but they're normalizing, and we have the positive impact of tariffs coming off. Going back to -- we've also had the opportunity in this environment to take price. And so one of the things that we've talked about is through price mix and through tariff removals, we will more than offset the cost of inflation as -- for F '23 as we currently have it planned. And we believe that we will be moving back towards -- and it happened in our fiscal '22. We think we're going to continue on the trajectory of margin expansion even at a time with the inflation that the world is talking about now.

Okay. So we talked about this a little bit with respect to the tariff benefit, and how you're thinking about those essentially proceeds. But just in general, how is the company balancing investment needs, not only against some of those initiatives, but digital capabilities and supply chain improvements. There's a lot of things you've been investing in with bottom line of free cash flow delivery. So what's the trade-off there? And how do you think about it?

Yes. I mean from how we're investing back behind the business. We continue, like I said, to invest back behind our brands, especially as tariffs have been removed. We have invested in our integrated marketing and communications team. It's a digital -- it's an investment in our digital and e-commerce capabilities. And we think, again, that's a great investment that's going to return value. We -- actually, that was one of the biggest initiatives that we had invested in over a period of time, and in a short period of time. So we now believe we've got some really great resources that will be able to help us advance that area of our business and connecting with the consumer, getting our product out there in the e-commerce channel in a way. But then we just continue to fully invest back behind our business. And from fully investing back behind our business really means that we have distillery expansions, and we have warehouse expansions, both for our American whiskey portfolio, but even now for our tequila portfolio. So we're investing back behind our business in many ways, but again, to what we talked about. We've got the cash flow to be able to do that while also returning to shareholders.

And as have you -- has your capital allocation priorities changed at all? How are you thinking about, including portfolio construction?

So yes, -- the way we think about our capital allocation philosophy is fully invest back behind the business. You've heard me say that, that is always going to be our highest priority. And with our return on invested capital, that is absolutely a wise investment for us to make. For those of you that don't know our story, we are a dividend aristocrat. And our second priority is to always pay an increasing level of regular dividends. Our third priority is always looking about where we can make acquisitions that will deliver long-term growth. And we're very selective about what we believe the brands that will grow in our hands. So acquisitions would be the third opportunity for us. And then fourth would be returning to shareholders during periods of time, which we did it in fiscal '22, which was returning through a special dividend, or we would also do repurchases. So that's always been our capital philosophy. And I just mentioned about how we think about the investing back behind, our ability to provide and support the long and strong consumer demand we're seeing because we have been increasing our distilling capacity and our warehouses in Tennessee, with our Kentucky bourbon distilleries and GlenDronach, our single malt scotch. Those investments have already been underway over the last 10 years as well as now we'll be focusing on expanding our tequila facilities with the strong consumer demand we see in tequila and our needs for expanded capacity to be able to meet their needs.

Okay. Great. A couple of minutes left. You mentioned ESG earlier probably -- just given the importance of plays at Brown-Forman, maybe it deserves just to go back there. Just -- can you go a little deeper in terms of the prioritization of ESG, and the role that sustainability, diversity inclusion, all play in how Brown-Forman defines, really executes its growth strategy?

So I would say everything from our first bottled bourbon to corporate responsibility that if you look back to our annual reports 20, 25 years ago, we were doing this -- we've been doing this work for, I would say, since the beginning. And -- but it moved from the first bottled bourbon to corporate responsibility to now as we refer to it, ESG. How we refer to it inside of Brown-Forman is living a spirit of commitments. And we have a spirit of commitment, and we're committed to the earth. We're committed to our people. We are committed to our communities and our neighbors and we're committed to responsible decision-making. And in that, I'll start with our commitment to the earth. I mean there would be things in there that sound like our ambition is to -- as it relates to greenhouse gases, half our emissions by 2030. And by 2045 be net-zero. There would also be ambitions in there that say we want to use 100% renewable energy. Today, we sit at 84%. So -- and then from -- I'll go to our commitment to people, which is where we are -- diversity and inclusion ambitions was set. And where we sit today is 41% of our executive leaders of the company are female. 49% of our professional and leader of the company are female, 20% of our population is people of color inside of the United States. And we're also focused on making sure that our charitable giving and our supplier spend is also diversified. Our commitment to responsible consumption would be all about having helping to promote a mindset of responsible consumption. So those are the examples of how we are living our spirit of commitment at Brown-Forman as it relates to ESG.

Great. Any closing thoughts in terms of your key priorities? We talked about a lot. There's a lot of uncertainty on the horizon. But just any closing thoughts in terms of your priorities, and what you want investors to take away for the company's priorities over the next 12 months.

Yes. Over the next 12 months, I mean, it's all about, in our 153rd year, creating another chapter in our story that sits on a solid foundation of long-term growth that positions us well not only for the next 12 months, but for the generation to come. I hope it will have in there, delivering at a higher level against our spirit of commitments, not only to our people and our brands, but also our community and our investors. And that would also include stronger price positioning, stronger gross margin expansion, and delivering a solid bottom line that lets us continue to invest in everything that we've talked about today.

Great. Leanne, thank you very much.

Thank you so much.

Thank you all for joining us. Thanks for Brown-Forman.

Thank you.

Thank you.