Brown-Forman Corporation Class B (NYSE:BF.B) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Bourbon Category Growth Outlook
Vivien Azer – Citi: My first question has to do with the Bourbon category growth outlook. Where do you guys see the category growing either in next year or over the next three years?
Don Berg – EVP and CFO: Well, we don’t, Vivien, generally have – do category forecast as much as we do our brand forecast, of course because of the need to produce in advance. But I know right now as we look out we continue to see – I mean just using, I am just seeing the U.S. data for Bourbon over the last sort of 12 months, I mean that category is growing at a sales level at the start of close to high single digits and it was about 7% sales growth year ago. It looks like more like 8% this year, so that’s a nice continuation of that momentum. I am seeing of course a different story outside the United States for Bourbon’s less-developed but from a small base you would expect that the category would continue to develop around the world. I mean the largest contributor to American whiskey’s growth for the last, of course decade plus has been the expansion of the Jack Daniel’s brand. With all of the excitement around flavors and the excitement around – it was really nice expressions like the Woodford Double Oaked and things like that and the ability to innovate, we would expect that that momentum was are seeing today to continue.
Vivien Azer – Citi: My second question has to do with potential acquisitions. Just can you just frame out how you think about the need for potentially additional whiskey brands or exposure to other categories or is it kind of more of a geographic focus where you want more distribution footprint?
Don Berg – EVP and CFO: Actually it’s both. We actually do look at it along both those lines. When you think about the expertise that we have in whiskey, I was looking at whiskey opportunities as a natural for us. That kind of comes into play really when you think about anything along aged spirits where that kind of capability is required. We also like the whiskey arena because it’s such a great global category. When you look at how much breadth it has and how far reaching it is in all the different geographies and it tends to be very premium in nature. There just seems to be a very high consumer interest in those types of genuine, authentic higher-end brands, and so given, kind of where the consumer is at, given where we think our capabilities lie, it’s really natural for us to look at all the different areas of whiskey that are kind of growing in that premium, super-premium arena. We still tend to like vodka in terms of looking at it as a category in terms of global growth, but it does tend to be more of a regional play than a global play, so you have to take more of a regional lens to that and see, where you think those bigger opportunities might lie, and then we continue for a lot of the markets where we own our own distribution, if we think that there is some local opportunities that would help us in developing the rest of our owned portfolio, we’ll certainly take a look at those as kind of unique opportunities, but in looking at them, we’ll also look at them to see if we think there are some opportunity to go beyond that one individual market…