Morning, everyone. I hope you are doing well. Welcome to the UBS Global Consumer and Retail Conference here in New York City. My name is Peter Graham. I am the U.S. Consumer Staples Analyst here at UBS. We are very excited to have joining us this morning from Brown-Forman, Lawson Whiting, President and CEO, and Leanne Cunningham, Executive Vice President and CFO. Brown-Forman is a global leader in the beverage alcohol industry and over time has one of the more consistent track records of any company in our consumer staples coverage. However, over the last 18 months, it's been very dynamic. Changes in consumer demand, you know, questions on, you know, whether there's long-term structural shifts within the category, tariffs. We hope to learn today how the company is navigating through this dynamic environment, but maybe more importantly, understand how the company plans to deliver on their long-term targets that were outlined a year ago at your Investor Day. Look, we have a lot of ground to cover, a lot of different topics of discussion. I have a series of questions that I plan to run through with the team up here. If you have other questions, I think you guys have received instructions on how to submit questions on your behalf. They will show up here on this nice little iPad, and I can ask them on your behalf. We will leave, you know, 5-10 minutes at the end here to kind of go through those questions if you have any. Before we start, I am required to read a legal disclaimer. As a research analyst, I'm required to provide certain disclosures relating to the nature of my own relationship and that of UBS with any company on which I express a view on this call today. These disclosures are available at www.ubs.com/disclosures. Alternatively, please reach out to me, and I can provide them to you after this chat here. With that, why don't we get started? I joke, but this was my last question. I think, given the news overnight a little bit, maybe, why don't we start with tariffs? I'll just turn it over to you to maybe give an update there. Yeah. Obviously, we woke up to the news this morning. It was only an hour or so ago that I woke up. Look, this is a situation that is, to say it is fluid, would be a massive understatement. It seems like things are changing, you know, very, very quickly. A couple of things I think that are important. We've been planning for this for quite a while. I mean, this has been in the new unlike what happened back in 2018 when it happened, like, virtually overnight. This time, there's been a lot of signals going on for a long time, particularly coming from the EU. Not totally unexpected. We have done some things to try to get us prepared for it, but it's, you know, it's a tough spot. of the good news or one of the better things I think that we got out of this morning's announcement, excuse me, was that nothing goes into effect till April 1. We have a few weeks to be able to try to get these parties together and resolve the differences on this particular tariff conversation. We will see what happens with that. That does give me some optimism that both the administration and then the other counterparties throughout over the last few weeks have been trying to resolve things, I think, you know, relatively quickly, and things seem to turn and move very quickly. We will see what happens here. That does give me some optimism that this can be resolved pretty quickly, that both sides want to make something happen. As we shared last week in our earnings call, from a financial perspective, we know people are really curious about it. Our fiscal year-end is April 30. What we guided to was that any impact from tariffs would be included in our fiscal 2025 guidance. As it relates to how things unfold, we said that as it related to our fiscal 2026 outlook, we would provide more information in June when we revealed our plan for fiscal 2026. Again, to Lawson's point, it is very fluid. We have been planning for this for much of fiscal 2025, because, as he said, unfortunately, we have had some experience with this before. We had the opportunity and time to plan. No, that's helpful. We'll leave it at that, 'cause who knows? It could change in the next, within this presentation. We'll see. Look, Lawson, I kinda wanted to shift just to thinking about the demand backdrop, right? You, you've been very vocal, you know, and upfront about some of the challenge we've seen on the industry over the last 18 months or so. Look, beverage alcohol, spirits, they're not alone in this. We've seen a lot of shifts in demand in terms of other CPG categories. You know, you've been very vocal that it's been more macro-related more than anything else. I know hindsight's 20/20, right? You know, but as you sit here today, maybe think about where you were when, you know, a year and a half ago when this demand slowdown started. I mean, has your thinking evolved at all, or do you still think this is largely a macro dynamic? The thinking has evolved. We'd be naive to think that some of the structural changes that are out there, you know, are not real. I'll still hang my hat harder on the macro environment. This is called cyclical versus structural, has been the argument, I guess, over the last 18 months. The one point that I come back to or just open up with, which I think is still a very relevant and pretty strong argument, I was speaking at a conference, Labor Day week, with one of your competitors. That was right after our first quarter had ended in summer of 2023. Things were still rocking in the U.S. spirits market. It was running around a plus 6%. For those that haven't followed this industry all that closely, I mean, over the last 20-25 years, this industry was between 4% and 5% every year. It hardly ever moved. That is why when you said earlier one of the more consistent performers, when the U.S. spirits market is running 4% or 5%, we delivered very, very consistent results for decades. Labor Day weekend, it is running at plus 6%. By Christmas, it was 0%, and then it was minus 2% for most of 2020 calendar 2024. You say, why or what would drive that rapid of a deceleration? That is where I come back to the GLP-1s are part of that big conversation. Cannabis is part of it, although I would say less of a part of it, and then Gen Z. I can talk a little bit about Gen Z a little bit later. Those are the big three. There is no way that those three, even combined, took the spirits market from +6% to -2%. I just don't believe that. That is way too rapid of a deceleration. It also, by the way, summer of 2023 was when inflation really started to pick up. You saw interest rates go up and mortgage rates and all that kind of thing. You just had a whole lot of factors coming together at one time that really slowed down the market. Now, where does it go? You know, where does it go from here? I do think take GLP-1s 'cause nobody knows where that's gonna go. The rapid increase in the number of people that are on it is certainly meaningful. I think we would be naive if we said that's not a long-term headwind, that it's gonna be hanging out there, and I don't really expect it to go anywhere soon. Spirits, in particular relative to beer and wine, seem to be a little bit farther away from some of those weight loss issues. Like, people, for the most part, don't drink it every day anyway. It becomes sort of a pleasurable luxury on the weekends. I think a lot of that audience is a very premium audience too. There's been a lot of folks saying, well, has premiumization gone away in the spirits market? That's another one I just don't think when you really sorta dig a layer under that those are really the factors that are driving some of the weakness today. One of the things that we've been talking about from the cyclical piece is that consumers are still consuming. Though they're stretched, their pocketbook is stretched because of the impact of the cost of living and inflation, they have been switching down to smaller sizes. They still want that affordable cocktail luxury at the end of the evening, but they're just switching down to a smaller size that's more affordable for them. That is why we think a far large part of this is cyclical and that it's gonna turn because they're still in the spirits category. They're still consuming. They're just stretched right now. The other thing we had said for quite a while, which I know is sorta losing its flame a little bit right now as time goes on, but I do believe during COVID when I'd said 4 to 5 for all those years, and then you had COVID, and it absolutely spiked way, way up, driven by lots of factors. It has come down, and there's give, give back right now. One of those give back factors that I do I also believe the two categories that have been the hottest in the U.S. in the last five or six years, even longer than that, have been spirits or have been American whiskey and tequila. Those are the two categories. Even though they're still the top-growing categories in there, they've come way off their growth rates. I believe 'cause particularly at the ultra-premium, man, there's a lot of people with bottles sitting in their cabinets at home. We haven't talked about that actually in a few quarters. How many people do you know that have some of the fancy bottles of tequila sitting on their back bar, and they're still there? Like, and nobody wants to drink it 'cause it's $100 a bottle, but it's a nice piece of decoration in your house. It is nice. It just takes a while to run through a lot of that consumer inventory. We spend all this time talking about distributor and distributor inventory movements, and then the same on the retail side of things. Consumer inventories are part of that story too. No, that's, that's super helpful. I guess, you know, maybe, you know, you kinda alluded to it, about it potentially being an opportunity for spirits. Maybe before we get there, right, I mean, when you think about all these different factors, GLP-1 and, and younger consumers drinking less, Gen Z, I mean, does it shift your view on that 4-5%? Do you think we get back to that level of consistency, or are we kind of at a maybe still solid growth, but maybe a little bit of a lower level? Yeah. I mean, I don't know. Yeah. Americans and really not even just Americans, but sorta the developed world, they like their alcohol. Per capita consumption of alcohol hasn't really moved in several decades. I'm not sure that all of a sudden something in the world has changed so much where we don't go back to that dynamic again. I mean, it's been, you know, sorta part of society. You can go back hundreds of years, really, on that argument. We will see. I don't really see in the long term, I don't necessarily see a significant change in that long-term algorithm. I would just add people spend a lot of time talking about the headwinds, but there is a lot of tailwinds too. You know, where spirits has been continuing to take share from wine and spirits, where with the premiumization trend is still there, there is a significant amount of legal drinking age constituents coming into the category. So there is a lot of tailwinds again. The The headwinds get a lot more attention, but there is tailwinds for us too. You know, and we here, I am already doing it again this morning. We talk a lot about the U.S. 55% of our sales are outside of the United States. Europe is muted. We said that last week on the call. Europe, Europe is, the trends are pretty similar to the U.S. actually. We are still seeing dynamic and really strong growth in a lot of emerging markets. That has been one, you know, that has been a driver of our growth this year so far, has been we have some emerging markets that are doing really, really well. Yeah. Leanne, I wanna go back to the point you were just discussing, right, just the opportunity. You know, we, we a lot of time we, we do talk about these as headwinds, as challenges for the industry. But I wonder how we should be thinking about it from an opportunity perspective, right? You, you touched on, you know, younger consumers, younger legal drinking age consumers entering the category. And so, you know, how are these maybe shifts in health and wellness impacting these younger consumers? I guess maybe to give an example or set another way, right, are these younger consumers, you know, kind of discovering alcohol differently? Are they skipping kinda the beer occasion, maybe going right into ready-to-drink beverages? You know, I'd be curious if that gives you an opportunity kinda to capture a younger consumer that maybe, you know, 10, 15 years ago kinda discovered the industry more for in, in beer. Yeah. I'll speak to RTD specifically just here in a moment. I would say that the Gen Zs with health and wellness, they're actually entering the full strength spirits categories earlier than some of the previous generations as well. They're coming straight in. With our RTD business, we've believed in the RTD business for over 30-plus years. You know, we had Jack and Cola that we launched in 1991. We had Jack Daniel's Country Cocktails in 1992. What you may remember more recently is in 2023, we have Jack and Coke RTDs. We have always believed that the RTDs, when our full-strength spirits can't get into an occasion or a sporting event or be at the beach maybe, that RTD can be. We've always thought of it as a marketing tool. It's just one we've continued to utilize. I think consumers find their way into the category a little bit more easily with the mega trends of convenience and flavor. We would even say premiumization with our Jack and Coke. We are seeing it as a way to get our brand, and we always call it the cans in the hand. We use it as a marketing tool. It is fitting the trends that they have. It is getting them into our family of brands. We just believe it is a way that eventually translates into growing our full-strength spirits. I do think not only are they coming into spirits earlier, but they are also increasing it in, through the RTD category. want to add on one thing to the Gen Z comment. That has been, I mean, in the popular press, the Gen Z is getting healthy, and it's everywhere. What some of the research that we have done, while yes, per capita is coming down a little bit in that generation, but you gotta ask why. Everyone instantly goes to the health thing. I would argue back to the economic inflation. If you're 21, 22, 23 years old, and you're maybe just coming out of college or whatever it might be, your pocketbook is in serious strain right now. It is very difficult out there. I think Leanne brought up the point about the smaller sizes as an example. That was kinda new news to me actually only in the last couple of quarters where I just hadn't realized that consumers and particularly younger consumers are buying smaller portions when they do it. Kinda makes sense a little bit. I think the other part that is interesting in some of the analysis that we've seen or done, it's that age I think it started at 35, but it was sorta in that range and going up from there. Per capita's going up, which nobody is talking about that. That, you know, those are wealthier consumers. They can afford. They're not worried about small sizes. Spirits consumption, as I said, per capita going up is, is a relatively new trend. Yeah. I mean, when you put it all together, do you feel like it's possible, you know, even with all these changes in the industry that you could capture more occasions? That is absolutely the work that we show up to work every day to do. Absolutely. We think we have consumers around the world. We've built, and Lawson will talk about this, I'm sure, 'cause he was the architect of evolving our portfolio. We've got great brands to introduce to consumers around the world. Therefore, we do believe we'll increase the occasions. Great. Maybe shifting to those brands. Let's talk about the portfolio a bit, right? There's been a obviously whiskey, tequila you just alluded to, you know, have been key components of the portfolio, key drivers of industry growth. You have made some changes. You know, you've added new things. You've gotten rid of others. Can you just walk us through the portfolio evolution? Are we now in a good spot? Do you see further opportunities ahead? Just when you think about your long-term growth targets, how did these changes impact that? Yeah. The change in the portfolio, if I real quickly go back to literally 25 years ago, something like that, we owned a lot of brands. I'll pick the year 2000. We had a big wine company back then. We owned Lenox China, and Dansk, and Gorham, and all these brands probably most of you have probably never heard of. Hartmann Luggage. We had a whole smorgasbord of different businesses and brands all under the company. Over the next 10 years or so, we got rid of all that. The only brands that we own today that we owned in the late 1990s are Jack Daniel's, Woodford Reserve, which we built, and Old Forester, which is the founding brand of the company. Everything else we got rid of, and then everything we have today, we went out and purchased. We have been pretty aggressive at getting out of these lower-margin, lower-growth businesses and buying brands like a Gin Mare or a Diplomático would be our two most recent. Certainly, you go back just a few years before that with Fords Gin, which has been a great brand. We have others, our Scotch brands. We have a bunch of brands that we have built in the last few years. The idea being we would accelerate the growth of the company, obviously. Yeah. Trading out a brand like Southern Comfort, which we owned for 30 or 40 years, something like that, but it was declining, and it was a really tough, tough brand to grow. Replacing it with a pick a Diplomático as an example seems like a pretty obvious move to make and an accelerator of growth rates. Now, kind of as we completed all this, the markets started to go down. I between say 2020 and 2023, in the summer of 2023, those brands, that entire rest of portfolio was well into the double-digit growth range. Our expectation's that's gonna get back there, but we gotta get through this sorta soft period. Makes sense. Maybe just double-clicking on Gin Mare, Diplomático, you know, just talk to us about why those acquisitions made sense. What about the brands themselves or geographies? I guess, you know, how have, you know, beyond just the industry, right, I mean, how have the brands performed relative to your expectations? Specifically as it, you know, we're now at the point where they're moving into organic growth. Yeah. How should we be thinking about that in the back half of our fourth year here and then into next year? Yeah. Look, both brands, as I said, were on a tear there for a little while as we got them. We wanted to get into those categories. We did not have a gin. Well, we had Fords. But Gin Mare is different. It is a very big brand in Europe. It is very small in the United States. Same with Diplomático. Very big in Europe and relatively smaller in the United States. The strategic argument there was, particularly when you go to Europe, Jack Daniel's dominates our portfolio, and has for a long, long time. This goes back even further. For many, many years, we did not control our own route to market. We basically partnered with industry competitors. Now, it is strange how this industry has evolved where Diageo and Pernod and everyone represented everybody else's brands. That is completely gone. There is very little of that happening anymore. We put our own route to market in place. We've got Jack Daniel's, and it's growing and growing nicely. We said, "How are we gonna get Woodford?" Woodford Reserve is the obvious example. We tried for years and years. The industry partners were not gonna do it. When we got control, we still really struggled to get the brand growing at a pace that we wanted to. A lot of it was because we had Jack Daniel's, and I'll just use Woodford as my example, use France as a good market as an example. We could not get anybody to focus on Woodford because Jack was so much bigger. If you're a sales guy, the honest reality is you're gonna revert to Jack every single time. It's an easier sale. It's much more volume. We were not developing the smaller brands. We came up with this emerging brands concept in the U.S., I do not know when it was, eight or nine years ago. We exported it to Europe. We needed some scale to build a second sales force in basically the U.K., Germany, France, Spain, you name it, all the big markets over there. Part of the strategic reason for buying those two brands was to get some scale where you could then put our tequila in there, or you could put Woodford in there, or maybe it was GlenDronach, whatever it might be. You have a real portfolio that salespeople can then go and use. That was the strategic reason to do it. The other part of it is for the company's perspective, Gin Mare and Diplomático are both very high-margin brands. They are expensive. I mean, these are brands that sell for $40, $50 a bottle. $40, $50 bottles of spirits, particularly those that do not age, you can imagine that has a pretty good return and a pretty good margin around it. Yeah, we think those can be good, really nice future growth drivers. No, that's super helpful. I mean, so Leanne, one of the changes that you've made over the last several years is just kind of in terms of route to market, right? And so, you know, where are we in that evolution? And maybe just, you know, for those that are less familiar, can you just talk about the advantages or disadvantages from having your own route to market? And then ultimately, really what informs your view on around when to make that change? Is it about scale, or is there something else that drives that? We've been on this journey for quite a long time now. If you look back in just the year 2000, only 25%, as Lawson said, of our business was outside the United States. Now we have over 55% of our business outside the United States. We have been learning and growing in that international space for about 30 years. A lot of times starting in because we didn't have the scale, starting with other partners to help grow our brands. What we have learned over time, as our brands have gotten larger, is that investing in that own distribution gives us consumer insights, gives us customer insights, gives us ability to bring our broader portfolio to the market, gain share, and just be more competitive, claw back more of the supply chain. Over time, we now have our top 10 markets, where we own, we have invested, and we own our own distribution, except for, of course, the U.S. and Canada where that's not legal. We continue to make that forward integration because we see that there's value and the ability for our brands to win, really importantly bringing our broader portfolio. With route to consumer, what Lawson was just talking about with Gin Mare and Diplomático now giving us more scale in Europe, you would see and we have just announced that we are starting up our own distribution in Italy because now we have the scale. Now we can go claw back that margin. We can grow our broader portfolio, and we can win to a higher extent in Italy starting on May 1 because we have more scale to do it. When you look at our competitors, on average, we are still below the competitors' average of own distribution in international markets. We still have markets where we can still go and capture that opportunity. We have a committee, and we have strategies around that. We have a good long-term vision about how we'll go and capture that opportunity that's still yet ahead of us. It is something we've been working on, really for about 25 years. We've gotten a bit more aggressive as we've gotten more scale and more capabilities and more experience at it. It is something we do continue to believe grows, delivers a lot of value for us. Great. Maybe just, you know, shifting the discussion back to the U.S. for a second, Lawson, but more from a category standpoint, maybe just would love to get your perspective on whiskey looking out over the next three to five years. Look, it's been a huge driver of industry growth, but we often get questions just on kinda when the cycle may end. I would just love your views on the industry. Maybe within that, right, I mean, you touched on it a bit last week during earnings, but just maybe, you know, some thoughts on kinda the supply versus demand dynamics or discussion that, you know, seems to be a key debate out there. Yeah. Okay. One, on the supply-demand thing, I'll hit first a little bit. I assume, 'cause it's been in the news pretty much nonstop, there are, I haven't counted, four or five really big distilleries in Kentucky that have, they're temporarily, but they're closing for six months at a time. All of our competitors, or many of them, have announced these closures. Some of them are even plants that were built, and they're not even running. They haven't even started running yet. There is this natural back and forth in our industry that has happened for a long, long time. It adjusts. If you'd ask me back to the summer of 2023 when things were still rolling, we were close to running, not running out, but running very, very tight. Literally, we always say we were literally barrels would hit four years old, and we would pick that barrel off the rack, and it would get bottled up later that day. A little bit of an exaggeration, but I mean, the world was very tight. Twelve months later, everybody's saying there's a sea of whiskey out there. The pendulum just went like that. It's adjusting, and it will adjust fairly quickly. I think it's important also to know that people like the I don't like the word craft very well, but craft brands in general, that word. I prefer my word entrepreneurial, led brands. But you know what I mean. I mean, brands that are generally owned, they have somebody owns one brand, and they're trying to get it built across the United States. That has been I mean, there's so many brands. I see different numbers thrown around all the time, but there are thousands of those that are out there. In total, they added up to about 3% market share at their peak. It never was not like beer, where beer got up into the teens. Craft, those here, I'm using it, craft brands, you know, never really got to the scale. And so people, a lot of the questions come out is that's what's driving this industry, you know, an oversupply of whiskey. That's really not what it is. It's the other 97% is the big four, five, six companies, and it's all the ones that you all would follow. I mean, and certainly a big part of that. Those big companies are, you know, look, they have shareholders. They're doing the same forecast we are, and they're throttling back pretty quickly. We're not in a position to throttle back. I mean, we've slowed things down, but we're not we don't have to mothball our clothes or anything for a period of six months. Back to your original question about long-term trends and the whiskey category and others, look, it's hard to know. If you talk about whiskey, the downtrend from 1970 until 2010, that's 40 years. And it was going down like that every year. And vodka over that time exploded. Get to 2010, that reverses a little bit. Vodka becomes a very, excuse me, tough category, and American whiskey takes off. That was 15 years ago. I don't I don't have a crystal ball to say when that's gonna end. If we had a 40-year decline, I see no reason it can't be a 40-year increase. It's still one of the healthiest categories in the business. It's still growing, just not at the same rate it was. Yeah. You know, three, four years ago. Makes sense. I mean, just one quick one on the supply and demand for maybe for both of you. Do you, you know, just given kind of, you know, the 97% that's controlled by the bigger players and yourselves, I mean, do you have visibility that they're all gonna act rationally? I guess if so, I mean, maybe this discussion is not as, I don't know, it's more of a or more overstated or the concern's more overstated than the reality. Yeah. I would just say, you know, we get this question a lot, and over a long number of years. With the aging process of our products, if demand is going, if we believe demand is going to grow over time, then you're always gonna be distilling more than you're dumping and bottling. We all have levers available to us. We are all constantly expertly managing our balance sheet, which means we're utilizing the levers that we have to, when we look over a long period of time, kinda get that supply-demand to come back into line. You do it by adjusting your production plans. You can also leave our products, which are distillate, in the aged barrels over time. And you know what? Sometimes you get a really great innovation at some point in the future by leaving that product in the barrel for longer. I would just say, do we expect people to act rationally? The large players, we've all been doing this for decades and generations. We've always kind of seen that to be true. We continue to believe people are gonna be rational because at the end of the day, we're all brand owners, and we all care about the health of the brands that we own. You know, let me add one little point on top of that. In the whiskey business, like in food, time is not your friend. I mean, time, food does have a shelf life, and as do the vast majority of consumer products out there. Whiskey is a little bit differently. It, and I'll take Scotch as the example, single malt Scotch, of which we own, they're not huge, but we own some pretty good-sized single malt Scotch brands, and they're older. Glendronach, in particular, starts at 12. There's a 15. There's an 18, and then even older than that. The interesting thing is in the market, at least this has been true for the last, I'll say, 10 years or so, that whiskey is growing in value with age. You actually, the price of a 12-year-old versus a 15-year-old, just to pick those two up, that 15-year-old's significantly more expensive. If you can get price increases greater than your cost of capital, then you're better off letting that stuff sit and let it continue to grow. That has been true for a long time. We have a fair amount of really old-aged Scotch, that's selling for great margins. You can do the same thing in American whiskey too. You don't have, it's not 12 and 15 years old for the most part, but you do have an asset that's appreciating, not depreciating as it gets older. No, that's super helpful. All right. Maybe pivoting to outside the U.S., and you kinda stole a line I had from my script earlier, but U.S. gets a lot of airtime here, but, you know, international is a very sizable business. Can you maybe just talk about the long-term opportunity for these categories and your brands specifically? You know, what markets do you see kinda the greatest runway for growth? And then when you think about the long-term growth profile of this business, what do you think's a reasonable expectation for markets outside the U.S? Yeah. As Leanne said a few minutes ago, we were in that 20 at one time when I started with the company, we were 85% U.S. and only 15% international. Even in my career, it has changed dramatically over that period of time. A lot of that growth, I'll say, over the last 20 years or whatever, has been Europe, developed Europe. Germany is the second-largest market in the world for Brown-Forman, and you can go around Europe, and those are all pretty big markets for us. What we've not done much with is basically Asia. Japan is a medium-sized market, but the rest of Asia, we're very, very small, very relatively small in the Middle East, which, believe it or not, is actually a pretty rapidly growing spirits market. People don't think of that all the time, but there's a ton happening there. We're very small in India, Africa. Where we have gotten some scale in the last few years is South America. Right now, I mean, that's where I think our confidence, we use Brazil all the time as an example, even with you. I mean, Brazil has been a brilliant market for Jack Daniel's over the last 10 years or so. That was one where we developed a model, which I think worked very, very well, which is go into one city, don't try to spread yourself over the whole country, get one city and grow it out of São Paulo. We have now gotten some big scale down there, both Black Label and then Jack Daniel's Apple in Brazil. I don't wanna say for whatever reason, but it is growing so fast, and it is very, very big. It's just a flavor that folks love in Brazil. I will say the rest of South America, kind of all the, you know, basically the entire continent, and then moving up into Latin America and Mexico is sort of one of our sweet spots, I guess, where we're seeing really good growth. Mexico is a very big market for us too with the tequilas and Jack Daniel's. That is an area where I would say we have high confidence that will grow and grow quite nicely over the next 10 years or so. We also know we need to get Asia going. There are plans in place, and there's lots of things we're doing to try to set the table there. I don't wanna say we haven't tried, but we've not put the resources in place over there to be able to get real good scale. That's gonna change. Okay. Leanne, I wanted to circle back to the company's objectives around making a double and a triple. I guess I was hoping to get some perspective in terms of how innovation is going to play a role in getting those targets. One of the questions I often get is just kind of on the innovation pipeline. Look, you've had tremendous success in terms of line extensions. You just touched on JD Apple here, but also new brand development. I know this, it's hard to call it new, but, you know, Lawson mentioned Woodford Reserve. You developed it from scratch, right? Just as you think about doubling whiskey and, and tripling tequila, do you need kind of home runs, I guess, like, like Woodford Reserve, or, or can these, you know, not to keep the baseball analogy, but, can you play small ball and kind of, you know, still hit those targets? Absolutely. What we have been trying to do is meet the consumer's needs and where they are. We would say, you know, you think about Woodford Reserve. That was a brand that came to life and was a Brown-Forman innovation during that 40-year period Lawson talked about of secular decline of brown spirits. Brown-Forman said, "You know what? We're gonna create a super premium American whiskey." Woodford Reserve was launched in 1996 in that down cycle and has become the number one super premium American whiskey. You know, we just continue. I know it's a bigger brand now. It's a more well-established brand. We continue to point to that as that was innovation. That was innovation at a time when people couldn't see through to find that opportunity. What we've continued to do is where's the consumer? The consumer loves the trend of premiumization right now. Jack Daniel's, we've just launched an age series that hadn't been out for quite a long time. We have a 10-year-old. We have a 12-year-old, and we just released a 14-year-old that gives us the ability to highlight our whiskey-making credentials. It gives us the opportunity to bring back a product that hadn't been offered for over 100 years. The consumers love to discover those things and experience those things. Again, it allows us the opportunity to let the consumer ladder up into different products inside of our trademarks. Other things that I would point to, going back to Woodford, is we would have something at the distillery because there's a lot of tourism. People love to come and visit our distilleries and find out how things are made and really experience the brand's essence. At the distilleries, we would have these limited series. We had a Woodford Reserve Double Oaked, and the consumer loved it so much that in 2015, we said, "We're gonna launch it as a permanent extension, and we're going to make it available." Right now, it's the number four ultra premium whiskey in the world. We did it again. We just recently launched Woodford Reserve Double Double Oaked because, again, it was a Distillery Series that people really loved, and they kept demanding, and we just saw the opportunity to continue to broaden that. We've done it as well when we got to Old Forester, the company's founding brand. Once we launched the Distillery Series and the Craft Series for them, and it gave consumers the opportunity to explore Woodford more fully and to ladder up into those more premium experiences, the brand is now over 500,000 cases. It is a way not only to meet the consumer's needs and the consumer trends, but also for it to help us grow the business through, you know, price, mix, innovation. Consumers right now, we know innovation's driving a lot of the growth because people are wanting to go through and find some of those new, new experiences, and we're just trying to meet them there. Yeah. You know, in terms of innovation versus core portfolio and where your growth driver's gonna be, and we've said this in numerous places before, but I mean, the Jack Daniel's franchise, it's so big. We aren't gonna be able to keep up with share, say, in the United States. We haven't in a long time, and we don't need to deliver upon sort of, I'll just talk sales, sales algorithms that we're trying to reach. As long as we continue to develop, continue to grow sort of even in the low single digits, the Jack Daniel's franchise, and then the innovations increase that or juice that up a little bit, we really believe the rest of the portfolio can grow at a much, much higher rate. I mean, I have aspirations for double-digit growth really for much of the rest of the portfolio. And if we can achieve that, even with relatively, call it low or low to mid single-digit growth on Jack, the rest of the portfolio can accelerate that. If we can continue to do that, then we're in a pretty good place that the growth rates are gonna look. No, that would be a that would be tremendous. Before I have a few more questions left, but we have a few minutes left here. I just wanna remind folks, if you wanna submit a question, please do so, do so now. Maybe, pivoting to, to margins and, and maybe just first Lawson on the strategic initiatives, you know, outlined back in, in January, right? You know, some changes in executive leadership, you know, some workforce reductions, you closed cooperage, etc. I know, you know, a lot of these decisions aren't easy, and it's also something you don't do very often. Can you just talk about these actions, kind of the timing of the $70-$80 million of savings? And, you know, within that, you know, how should we be thinking about reinvestment versus, you know, allowing some of these savings to drop to the bottom line? Yeah. For those that may not be as close to the story, we made some changes in January, both in our co, we had a cooperage in Louisville, and then we also had, you know, a broader population where we needed to make some adjustments. Let me hit the cooperage one first, and then I'll go back to the sort of broader SG&A. The cooperage, so we have over the last five years or so really made significant changes to how we make barrels. We used to be fully integrated because for 50, 60, 70 years, there was no one that could make barrels at the scale we needed. We still are the biggest in the industry, and we needed control over that to be able to make our own barrels. That is what got us in trouble, quite honestly, in the last 10 years was our costs got out of control in the way in making, making barrels. We had to make some changes to that. It is a relatively low-margin business, and there are outside players now that just were not there before, that are huge. We started selling our sawmill business. I cannot remember what it was. Not five years. Five, six years ago. And slowly we sold the Jack Daniel Cooperage about almost 12 months ago. This was really the final stage of us being in the wood business and by selling that second cooperage. We are out now. We are outsourcing that. There are players that can produce in much bigger, much bigger scale and, quite honestly, much lower costs. That was the reason that we made that choice is, you know, our gross margin, which has been well documented, took a hit from about 2015, 2016 until where we are today. Now we're fighting very hard, by taking a lot of costs out and by pushing price too. That has been, you know, that's been a big deal and a big part of the story in the last few years. The broader SG&A was more about just resetting a little bit and reallocating resources to places that, you know, are showing better growth than just inside the United States and particularly in Louisville. We did consciously make that change, and we're gonna take the, as you say, $70 million-$80 million in cost savings and be able to reallocate that. Now, one thing we've not done is given any guidance or really even internally decided how much of that we're gonna reinvest versus drop to the bottom line. We're working through that right now. It's actually kind of exciting. This is the, you know, as hard as doing restructurings can be, and we hadn't done one in like 15 years, 'cause we honestly didn't need to. We had had so much growth over those intervening years. It's exciting to think about some of the places that we can make new investments in. That can be brand expense maybe. It could be people. It could be a project. It could be a capability, whatever. It's motivating to me to think about all the different ideas and all the different growth opportunities that we can finally get after. It was very difficult in an environment, particularly when sales slow, your operating expenses, you're gonna be naturally tight on those. It was getting to the point where we were getting frustrated that we just weren't gonna be able to make some of these incremental investments. Now we can. Great. Maybe, building on the point you made around gross margin, right? And Leanne, I guess, you know, if you look at a model or whatnot, I mean, you can look at more gross margins where, you know, 10 years ago versus where we are today. I mean, that would seem to suggest there's a huge opportunity for margin recovery. But the business has changed. The portfolio has changed. The cost of doing business has changed. You know, I guess, you know, what's a realistic gross margin target just given these changes, right? I mean, can you get back to something in the high 60s, or is there something, something like low to mid 60s the right target? I'm just trying to think through, you know, given the changes, what's, you know, what's kind of a reasonable expectation? I think you hit it really in your question at the beginning is our business has changed. We've evolved our portfolio. It looks very different now than when it did back in that period of time. We don't have a target set. We know that we expect to continue to get margin expansion over a period of time. We're gonna be utilizing all the levers we have. We just talked about innovation and how we can continue to, bring to the world more premium products so we can get that price mix, working in our favor. We have revenue growth management. Our teams and our tools continue to progress and advance every day. How we're doing that globally is yielding positive results for us. It is the everyday cost efficiencies. We've been talking ever since I've been in this role about the cost of agave. When you look at our portfolio, not only do we have sizable tequila businesses, but we also have a large aged portfolio that requires a barrel. For us, wood and agave have been the two big drivers of some of that gross margin contraction over that time. Those of you that have been following the story of the cost of agave, which is the key ingredient in tequilas, it hit an all-time high. It's now come down. We're continuing to work through to get to that benefit because we have aged inventory. We have finished goods inventory. That benefit is still coming to us as we work through that. As Lawson just mentioned, from the wood perspective or the cost of the barrel, that's been one of our biggest challenges. Now that we have gone through the process to move to an outsourced model where we can still get the same quality of barrel and product that we need and still get the same level of innovation capability from the barrel perspective, that should continue to yield a benefit to us. Of course, it's an aged product, so it will be a period of time before we get to recognize the full benefit of those decisions that we've made. We are doing all of the things to continue to get our gross margin to expand back to something higher than where we are today. Okay. We only have a few seconds left, so why don't we leave it there? Lawson, Leanne, thank you so much for joining us today. We wish you and the team at Brown-Forman nothing but the best of luck moving forward. Thank you. Thank you so much. Peter. Okay. Take care.