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Lawson E. Whiting; CEO, President and Director; Brown-Forman Corporation
Leanne D. Cunningham; Executive Vice President and Chief Financial Officer; Brown-Forman Corporation
Susanne J. Perram; Director of International Relations; Brown-Forman Corporation
Bonnie Lee Herzog; MD and Senior Consumer Analyst; Goldman Sachs Group, Inc. , Research Division
Chris Pichet; Partner at Consumer Staples Research; Redburn (Europe) Limited, Research Division
Drew by Nolan Levine; Analyst; JPMorgan Chase
Eric Adam Serotta; Equity Analyst; Morgan Stanley, Research Division
Filippo Falorni; Vice-president; Citigroup Inc. , Research Division
Lauren Rae Liberman; MD and Senior Research Analyst; Barclays Bank PLC, Research Division
Nadine Sarwat; Senior Research Associate; Sanford C. Bernstein
Peter K. Grom; Head of Research and Equity Analyst; UBS Investment Banking, Research Division
Operator
Have a great day and thank you for being here. Welcome to Brown-Forman’s Third Quarter and Full Year 2024 Earnings Call (Operator Instructions). Please note that today’s conference is being recorded. Now I’d like to turn it over to your speaker today, Sue Perram, Vice President and Director of Investor Relations.
Susanne Perram
Thank you and hello everyone. I need to thank you all for joining us today for Brown-Forman’s third quarter and fiscal 2024 earnings call. Joining me today are Lawson Whiting, President and CEO; and Leanne Cunningham, executive vice president and lead financial officer. This morning’s conference call includes forward-looking statements based on our existing expectations. Numerous threats and uncertainties may cause actual effects to differ materially from those expected or projected in such statements. Many of the points that will determine long-term effects are beyond the company’s ability to control or predict. You deserve not to place undue reliance on any forward-looking statements and, unless required by law, the Company undertakes no legal responsibility to update such statements, whether as a result of new data, long-term events or otherwise. This morning we issued a press release containing our results for the third quarter and the nine months ended January 31, 2024, in addition to publishing presentation materials that Lawson and Leanne will momentarily review. The press release and presentation can be viewed on our online page in the segment titled Investors, Events and Presentations. In the press release, we have indexed a number of threat points that you deserve along with our forward-looking statements. Other vital threat points are described in our Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission. During this call, we will discuss certain non-GAAP monetary measures. These measures, a reconciliation to directly comparable GAAP maximum monetary measures, and the reasons why Control believes they provide useful information to investors regarding the Company’s monetary condition and the effects of operations are contained in the press release. of the company. press and presentation to investors. That being said, I would like to hand over the floor to Lawson.
Lawson E. Whiting
Leanne Cunningham
Operator
(Operator Instructions) The first comes from Lauren Lieberman of Barclays.
Lauren Rae Liberman
Honestly, despite all the clever comments, I’m still a little bit as to where the deficit actually came from, whether it’s in the quarter or at the beginning of the fourth quarter. Because you talked about a sequential improvement in the second half of the year compared to what was expected. The third quarter appears to have slowed sequentially despite a less difficult composition. I know you discussed decreasing holiday calls globally, again, that doesn’t help me literally for the fourth quarter. So if you could rank in order where the short-term negative awe spaces are, I think it would literally be helpful.
Leanne Cunningham
Thank you, Lauren. And I’m going to move forward and take a step back first and then narrow it down more particularly to your question. First of all, let me say that we think about our business in decades and generations, and I would like to direct you to slide 5, which when we think about the 2020s decade that we are in and the kind of the first three complete. years. Over the fiscal years, it can be seen that our compound annual expansion rate for this era based on biological net sales is nine%, which is particularly higher than our long-term expansion pace. And then approaching the era we’re in now, we’re beyond the first component of the F ’23, which was our most powerful expansion rate in the last decade. We talked about this on our last call and it was simply about replenishing our stock. And then if you look at last year, about nine months so far this year, and this year, that CAGR is 6%, which is in line with our long-term expansion alpashythm. So when we take a step back and look at the scenario in its broader perspective, so far this decade, we are off to a smart start and we are confident that our business is strong with strong expansion in gross margin and strong cash flow. of money. Array So just to set the level and then I’ll come back even closer to your question, you’re right, what we said was that during the era of big holiday sales, we weren’t expecting the softness of customer trends that have seen. during this vital era of Christmas sales, which has now limited the acceleration of our turnover. When we think about it from a market perspective, for us it was the US and the major evolved markets of the UK and France. And I’m obligated on this call that we’re making to communicate a lot about America. But while we’re here, I’ll talk about the UK, which we know the UK component has to do with our transition to Jack Daniel’s. and Cola to the Jack Daniel’s business in Coca-Cola, however, we actually saw a slowdown in customers and a very strong promotional environment during the holiday season. And then in France, we saw a slowdown in the consumption trend, an even bigger drop than we expected due to the slowdown in the whiskey category and certainly a sharp drop in this hike. And then what I would say, more or less, the rest is the slowdown in many of our emerging foreign markets, which has been slightly larger than what we expected in our forecast. One thing I can say is that you can see in Appendix D, or sorry, Appendix B, that when we reported last time, our shipments and stockouts for our entire portfolio were online. Now we see where we have been since the beginning of the year: our stockouts are ahead of shipments. Once again, this is another sign that we believe we are going beyond what we needed to do. But as we communicate about your point with the last quarter, as we shared on our last call, when we think about the momentum component, we know we have to take a look, the launch of Jack Daniel’s and Coca-Cola RTD in the United States , but if we consider the component as a whole, we have to compensate more than 5%. And where we can achieve this is, again, through the contribution of our newly acquired lopasses, Gin Mare and Diplomatico. We continue to see benefits in pricing management and earnings expansion, which equates to the strong gross margin expansion you saw in our results. And here too our operating expenses are increasing. It remains the same, where we had a phase in which our spending on lopass was higher in the first component of the year, now we are moving to moderate for the rest of this year. And G&A expenses are similar to higher expenses similar to reimbursements and benefits, as well as higher expenses similar to our own distribution investment in Japan, which is expected to come online on April 1. So all of this is incorporated into our forecasts. Array
Lawson E. Whiting
Let me give you a shorter version, Lauren. Christmas has been bad all over the world; I mean, we’ve had a lot of markets that have disappointed at Christmas this year, something we didn’t expect when we were thinking about the year ahead 3. months ago. So it’s strangely low.
Lauren Rae Liberman
It is ok. Then, just a little follow-up because it was a very thorough response. Both versions. The short and the long. But what does this mean for stock levels in the fourth quarter?Because I know, Leanne, you talked about adjustments rather than burnout, because as everything is getting better, we’re moving forward. But shipments, like shipments, were also low for Christmas, weren’t they?I’m just trying to put the two pieces together, because if you were hoping Christmas would be better, shipments went through, right?And the challenge is burnout. So I’m also a little surprised if I make sense. I was hoping shipments would have gone well, but the burnout would have been the challenge and it would be the hangover of the fourth quarter.
Leanne Cunningham
Yes. I think what we’ve noticed is that we haven’t noticed the orders coming in for the vital holiday sales season like we have, at the point where we historically do and being able to surpass the point where we were. Therefore, it did not happen as we had planned last November or December. And so when we think about it, again, we’re still in a little bit of a different position, which we’ve talked about many times as we’ve been rebuilding our stock. We continue to believe that our stock, from supplier to distributor, stores to customers, is online. And in fact, for us right now, it’s a conclusion for the client. And so we are again – this fluctuation in the number of takeout customers is less than we would expect, which is actually driving us to this. We will continue to see when we move to the United States in particular, we will continue to see the net replacement in dealer stocks coming back into line if we look from the first part to the third and the last nine months, that is, to come. much more online, and we said we hoped it would be moderated.
Operator
Next up is Bonnie Herzog of Goldman Sachs.
Bonnie Lee Herzog
In fact, you would possibly only follow up on the verbal exchange you just had. In terms of stock levels, I guess even more so at the customer level. Do you have an idea of your situation and to what extent?In your opinion, does the reduction of stocks in customers’ pantries have an effect on this category?And so what do you think about when it might be reversed?And Lawson, do you still think the expansion of the category will return?At mid-single-digit levels? And if so, how temporarily can this happen as well?
Lawson E. Whiting
Yes. Well, Bonnie, that’s a smart question because we’ve talked about this a lot internally over the past few weeks. I am referring to the problem of customer actions. And I think, and I believe, even if that’s the case, that it’s a difficult number to reach. In reality, there is no way to examine customers’ stock and determine what is still in the pantry. But my theory is that if you look at the last 3, 4, or five years, you can see the highest expansion rates. Leanne named just a few. But let’s focus on the 3 years, because it’s on page five of our: She’s looking for a 9% biological expansion rate in 3 years, adding this year. That’s smart: several things above any kind of general run rate for the maximum in our industry. Part of this amount deserves to stay in the client’s home pantry. Today, other people think that spirits are seen as intelligent, fast-moving clients, but that is actually not the case. It’s not like food or other categories that evolve much more quickly. Spirits, I call them in the middle when I think about the other categories of customers, I think food is the fastest, I think a training motorcycle is the slowest because once you move forward with this request, you’re gone. For a longer time I will buy some other motorcycle. The spirits are in the middle. Therefore, it takes some time to empty customers’ closets. We’ve said before that 80% of our customer base only buys 2 bottles a year. So they have a bottle in the cupboard at home that’s probably half full, and that’s just the deferred cost. The good news is that we believe that if you do the math, this is largely worth ending. And that’s why Leanne just said here, we plan to move forward, I mean, in the United States, I think we’re talking about that, but our sales rates will be much closer to what customers will currently take. This is the first query. Which is the other? It was. . . oh yeah. . . when will we. . . yeah? TDS is returning to the 4-5% norm, which has been the case for decades, not to mention the last few years and all the volatility. I know I’ve noticed some of our competitors say between 6 and 18 months, and that’s a pretty wide range. I think for us, that’s what we’re saying, we think next year we’ll start to get back to the overall levels because, in our view, this verbal trading of stocks will be largely over.
Operator
The following is from Andrea Teixeira of JPMorgan, you can continue.
Drew Nolan Levine
I’m Drew Levine, from Andrea. After what happened in the United States, you talked about some adjustments in the habits of customers in France internationally. I think we’re seeing a drop in trade. Can you tell us what you’re seeing in the U. S. , adding what would possibly be more demanding situations in terms of price localization or price drops?And then, what do you also see from the point of view in situ, if there has been a certain slow smoothness?
Lawson E. Whiting
Yes. So let’s look at, I mean, the decline of the industry: this is the United States. And I think it’s smart news, relative to what other people are probably expecting. But if you take a look at the insights, especially from Nielsen, over the last 3 months, you won’t see a drop in trading. And we still have the same dynamic where I’m simplifying a little bit here, but $30 and up goes up a lot – and let’s leave RTDs aside to get out of this when I say this, but $30 and up goes up to a particularly a number greater than 30 and less. And the thing is that we are not seeing a decline in operations in our own portfolio and, in fact, we are not yet seeing it industry-wide. So I think that just didn’t happen. And that. . . I think we were hoping to see it possibly be a little bit more of that. That’s why I sometimes consider this to be good news. And as for the pricing environment, which you didn’t particularly ask about, but I think it’s worth talking about for a moment because prices haven’t really. . . we’ve been concerned about, as you saw, the weakness from the customer, but in one way or another that would lead to more competitive prices, higher costs before Christmas, that kind of thing. And that didn’t really happen. And we don’t really see that in current knowledge. If you look at the TDS in spirits, it’s positive, like plus 1 or 1. 5, whatever. And the attractive thing is that we are moving to tequila in the United States even more quickly, and then to American whiskey in the United States, and both are equally positive. Therefore, there have been many hypotheses that tequila costs will begin to fall as costs drop. It’s just not noticeable. And if you look at the last thirteen weeks and you spend there, which would cover the Christmas season, any of those categories have seen their costs improve, not go down. And so, while I hear a lot of those anecdotal stories about brand XYZ, they were profound or whatever they were, and there are examples like that. But the costs for the most part remain the same so far, and I also see that as a very positive thing.
Leanne Cunningham
On the premise?
Lawson E. Whiting
On the premise. Don’t you have the site number in front of me?Sorry, we don’t have them. I don’t have the site numbers right in front of me. So I haven’t necessarily noticed a significant replacement in the areas of ones, but I’m looking to locate the point of knowledge. Let’s get back to you on the premises.
Leanne Cunningham
That’s when we talked about a 2-point acceleration compared to October 23. So we continue to see an acceleration there, with TDS and Brown-Forman now seeing sub-single-digit growth.
Operator
The next one comes from Chris Pitcher of Redburn Atlantic.
Chris Pichet
Just a query in terms of food shopping habits. In a way, he referred to that. But in the current environment, have you noticed structural adjustments in the way stores or wholesalers shop, given the interest rate environment and uncertainty. Does this creation make making plans more complicated for you?And then if I can Stay Up, only in Japan, you pointed out that this is one of the spaces that has been hit the hardest by the shrinking stocks. With a 100% drop in sales, it’s quite difficult to assess what the true underlying profit is for your new destination. Could you give us an idea of the extent to which the Japanese company continues to operate despite all those major distortions?
Leanne Cunningham
Yes. So I go back to the first component of your question, which is about purchasing habits. I think we shared with you on our last call how we are prioritizing rebuilding the markets that we have and rebuilding the markets. . stock from your distributor and store. This has replaced, in the short term, our classic and constant seasonality of shipping that we do, style purchases that we have seen. We’re still behind schedule to some extent, especially as we get into our emerging foreign markets, and we’re delaying the way we’ve rebuilt it and the timing and cadence is a little bit different. It makes it. . . makes it a little more difficult. But I think for us the most important factor was the return to this era of major holiday sales and consumers increasing their discretionary spending due to the effect on them of interest rates and inflation. And for Japan, when we look back on this activity, it has been a year of two components. One of them was how we replenished our stock over the past year. And I think we said in our ready comments that we had a backlog of orders to be fulfilled to be able to fulfill those that we were able to fulfill in the second component of last year. So, adding that to our consumer-facing update, here’s what it’s been like: we haven’t had to make any shipments to Japan this year. What do you think the activity is more similar as a function of exhaustion? And we would say that we have been in common contact with the team there as they continue to move towards this own style of distribution on April 1st. And in terms of exhaust, we’re still excited about the suitability of our brands in this market. Again, I would say that from a biological perspective, we are making an investment in the long-term price creation opportunity in Japan, and that deserves to become a driving force of expansion as we move forward.
Chris Pichet
Very temporarily – normally, a company – a country, a market would disappear if it wasn’t in the top 10 most sensible for a given period. Can we suppose that the fact that he has included Japan in this task would be one of the most sensible?10 markets for you in a standardized way?
Leanne Cunningham
Sí. La way we identify our 10 most sensible, and I think we have it in our Q, is set to April 30 of our last year. That’s why it’s there.
Operator
Next up is Nadine Sarwat with Bernstein.
Nadine Sarwat
First of all, just a matter of clarification. You said you think the U. S. market could return to its old 4% to 5% expansion over the next year. Can I explain what applies to next year’s fiscal year or next year’s calendar?And then my current question is something that I think a lot of other people are raising among investors, the issue of moderation, maybe younger consumers are drinking less by adding GLP-1 to it. This has been raised as a possible explanation for the weakness that we see in the minds of the United States. But, to be honest, in the case of alcohol in the United States in general, it may simply be a permanent change. I’d be curious to know your attitude on all those points I’ve indexed and where do you think it’s going from here?
Lawson E. Whiting
Yes ok. So, Nadine, a few things about this because it’s clearly a topic that we’ve spent a lot of time analyzing to get a better sense of it as well. If in the last five years, we were to catch up, we would have noticed that the TDS went from five% to four% to 3% to 2% to 1%, something like that. I would get into some of the things that you just talked about, wellness trends, hashish trends, GLP-1, all that kind of stuff, that would be an indicator that something is being transmitted structurally in the company that. . . that may just be permanent. But that’s not what we saw. We, as I think everyone on this call knows, I mean the four% to five% diversity with COVID has moved it in terms of volatility, but it’s been at that diversity for decades. And then suddenly we know that if we look at the TDS, it’s the same thing, we look at July of last summer and we see a very pronounced slowdown in the market, like that of LPG-1 or hashish, which does not pass. take a market place and move it through four or five numbers probably overnight. So I just don’t think it’s that. . . I don’t think those big macroeconomic considerations that exist are what have an effect on the market today. Now, over the next decade or two, will I need to take a look at this and perceive it on a larger scale? It may just be a headwind, yes. But more commonly it’s a healthier Generation Z type conversation. Cannabis has been around for. . . I don’t even know, over 10 years, whatever that is. We’ve taken a look at these 18 tactics as of Sunday and have never been able to locate a state where we’ve seen relief in alcohol consumption thanks to legalization, and that’s hard to do now because many sales are legal. But yes, I think generally these are short-term challenges, specifically in the United States, but it is also true in Europe, because Europe feels many of the same macroeconomic problems as the United States. And I think it is the mixture of what we have already talked about, but also of very complicated compositions. I think the client is weaker than, say, this time last year. But now I don’t know if the delivery time will be 6 or 12 months. I don’t have a crystal ball on this. But I think the macroeconomic headwinds that have an effect on our business are more short-term in nature than those major macroheadheads.
Nadine Sarwat
They gave it to me. And just to verify that going back to 4% to 5% next year, comment with next year’s fiscal or calendar year?
Lawson E. Whiting
I don’t know if in a way. . . I’m not making this up, but I mean it’s more of a return to the general in the next few years, call it, 12 to 24 months in our world, something like that. .
Leanne Cunningham
So, the only thing we’ve analyzed is that history rarely predicts the long term for many reasons that we know about. When we looked at the last time the client was really tense due to macroeconomic factors, we looked at the years 2000, 2001, 2008 and 2009. And they were followed by years of very strong growth. And those trends, when they were negatively impacted, were much shorter, contrary to what Lawson just said, it’s kind of the 12 to 18 months that we’re already in. So none of us know it, but that’s what history has told us.
Operator
Next up is Eric Serotta of Morgan Stanley.
Eric Adam Serotta
First of all, I hope you can expand on your comments on pricing and promotions as soon as possible. First of all, I suppose for administrative reasons, when did you set the values in the United States, i. e. for Jack Daniel’s?Those don’t see much value in the data, yet it turns out it’s more than just a one-time anecdote type or anecdotal reports about discounts seem to be more than unique. I know Diageo has talked about a building being promoted in the United States. I wonder if you have a broader relationship between what appears to be a broader theme of expanding promotions and what you see in the data.
Lawson E. Whiting
Yes. Well, as far as price history goes, I guess, when did it go into effect? This was the case if we talk about the United States, it was about 3 years ago. So I think we’ve chosen a slightly different path than our competition. We’ve communicated about it several times, but it’s pretty low and slow. And that’s what I need to continue long term and that’s what we hope to try even over the next 12 to 24 months. This is largely an American comment, but it applies to much of the rest of the world as well. Europe has also seen some pretty healthy value increases in recent years, which together is the reason why we – one of the main reasons why we have been able to increase our gross margin. That’s why I have very little interest in returning it. And so we’re going to continue to be pretty strong on that. As I mentioned earlier, I mean, I know anecdotally that’s the case, and I’ve heard the same things and noticed what some of our competitors have done. saying. But the truth is that it is not produced through data. So I don’t know how else to respond. I mean, we communicated earlier about the trade declines, there are some questions or lack thereof, I deserve to say. So it’s not going to materialize and market over the course of the year, and we don’t see it in terms of really individual brands that have suddenly become deeper. And by the way, I think it’s probably worth commenting on, and it’s a very high standard. So we personally haven’t looked into this in depth yet. But some of the brands that fell did not see a decent rebound in volume. I’m just not sure; I’m not sure the main challenge for clients right now is emerging values. Price elasticity is, as I said, low and slow; However, if you compare the value adjustments in the last 2 or 3 years with what supermarkets have done and what other categories of customers did where it was much higher, you saw much higher inflation in the food channel, let’s say , that the channel of spirits. And so, I don’t think, I’m not that invested in our price movements driving customers away from our products. I just don’t think, I think the real challenge will be missed.
Eric Adam Serotta
Super. Et then just ask. I look forward to hearing your thoughts on Brown-Forman whiskey inventories or those of the cask industry, which have evidently been a great investment cycle over the last decade, offsetting the last four decades. But maybe, hopefully, you can just give us some feedback on the existing inventory scenario relative to long-term demand, knowing that here you have a plan for multi-decade cycles?
Leanne Cunningham
So yes. I’m going to let you know about our whiskey stock on tap. And I think anyone who’s been following us for a while, you’ve probably heard us say that we have a very solid semi-annual procedure where we’re adjusting to the long-term perspective based on customer demands. And in doing so, we capture adjustments in trends, if any. So when you look at our barrel whiskey, we’re constantly tweaking it. When you look at our balance sheet, when they see progress for us. This is a long-term vision and represents our long-term growth expectations. And they’ll probably locate there, with paintings in progress, also on some brands, our aged stocks. “With the acquisition of Diplomatico, you would have noticed that was building up as well. That’s the case with a lot of things in the industry. I don’t want to speak for anyone, but many in the industry don’t use the same proprietary approach to do their job, but I know that from time to time they also look at their long-term demands in this cycle. So I think other people are adapting.
Operator
The following is from Peter Grom of UBS. You can continue.
Peter K. Grom
Thank you operator and hello everyone. I hope you’re doing well. So I guess I’ve already gone through a bit of the commentary about the trajectory of the front line. On the one hand, there is talk of a normalization of category expansion. And we would expect it to return to that mid-digit expansion at some point over the next 12 to 18 months. And that somehow would seem to mean that the 25th could be another tough year. But on the other hand, if it pulls back in dealer stock, it looks like it expects it to largely disappear after the fourth quarter. You’re already at that mid-digit rate of expansion. So I know we’re going to get to FY25 in June. But how do we deserve to think about the building blocks of their biological expansion prospects for the next 12 to 18 months?Should we focus more on the rate of expansion of this category?Or do we deserve to focus on overcoming the hurdles in dealer stock?
Leanne Cunningham
As excited as we are to start talking about our next fiscal year, we’ll tell you more about it on our next call.
Lawson E. Whiting
But I think he has made a vital point clear. If you take a look at this out-of-stock schedule or Appfinishix D, if you assume we’re there from a stock standpoint, the out-of-stock is much higher than shipments over the course of this year. We’re getting there. We get capacity compensation. I mean, there’s like the light at the end of the tunnel. We can’t get there fast enough, but we’re almost there.
Peter K. Grom
It is ok. That’s helpful. And then maybe just a little bit of gross margin tracking. I know a lot of things going on here, and Lawson, I appreciate the feedback on the progress we’ve made since the beginning of the year. But from a quarterly perspective, you’d have to go back to the price date to see a sequential decline of that magnitude in the third quarter compared to the second quarter. Was it simply due to a decrease in volume performance?Or is there something else that led to this kind of sequential decline?
Leanne Cunningham
So when we think about our gross margin and our outlook, we’re driven by a number of things. First of all, we have avoided interruptions in the source chain. And sometimes we incurred the most prices in our second quarter of last year. So these advantages continue to diminish as we move into the rest of the year. And then, just like we’re making an estimate from a stock valuation standpoint, we would have had upside in the fourth quarter of last year that we’re going to have to take into account this year. But all of that was incorporated into our full-year guidance, where you may see something of a difference between our expanding cash estimates, our operating advantage, and the leverage we were expecting. But we’re excited to get back to gross margin expansion and revel in the strong expansion we’ve experienced in the nine months to date. But again, as far as this last quarter is concerned, it will be more in line with the guidance that we’ve provided.
Operator
The next one comes from Citi’s Filippo Falorni.
Filippo Falorni
I have a query about the ready-to-drink spirits component of the category, especially in the U. S. UU. Si all categories of spirits are analyzed, excluding ready-to-drink spirits, the trends have been much more negative than they appear at first glance. . . So do you think this growth in ready-to-drink spirits is more structural?And have you done any work to calculate the effect on your volumes, given that you obviously sell less liquid in registered beverages than in whole bottles?If it continued to grow at this rate? And to maintain the margin component, you’ve talked in the past about the fact that ready-to-drink spirits have a more dilutive effect on gross margin, although more similar in terms of operating margin. Therefore, any mirrored picture of the margin implications would be helpful.
Lawson E. Whiting
Well, your first component was TDS. And yes, you’re right, the RTDs really spice up the TDS. If we remove them, the result is closer to stability, which, honestly, is close to stability: it’s been over 30 years since TDS went negative in the US, not since the beginning of the decade 1990, when adjustments were made to excise taxes. So based on natural TDS numbers in the US, the scenario is as bad as it has been in my career. So, undoubtedly, difficult situations lie ahead. Now, I think there is a big structural replacement in the RTD world. First of all, I want to say, they are gathering a lot of trends and customer desires right now. So I think it’s a very difficult category. But if we go back to the last 20 or 30 years and take a look at our industry, there have been so many rises and falls of other brands that we started talking about California Cooler’s 30 years at Brown-Forman, 30 years. A few years ago it went from 12 million cases to 0 in approximately 2 years. I mean there are ups and downs in this space. Jack & Cola is only a small component; Jack & Coke is a bit more in the sense that it’s already a well-established force. It is the largest slow moving bar in the world. It’s not a [fact] in my mind. There are other brands that we will see. We have noticed what has happened to mall-founded RTDs in recent years and this category has been greatly expanded through spirits-founded RTDs. That’s right: it’s definitely a volatile space.
Leanne Cunningham
And then, as for his. . . the liquid component and the margin component of your question, liquid, yes, there’s less liquid in the case of RTDs, of course, and then full power, but we plan to supply liquid at a much broader level. . geographic succeeds with this product. Again, I just talked about the procedure we use and the location of the mandatory liquid request, so that would be included there. And then, from a margin perspective, RTD’s gross margins are lower than our company average. Jack
Operator
Thank you. I would now like to give the floor to Sue Perram for concluding remarks.
Susanne Perram
Merci. Et, thank you, Lawson and Leanne, and thank you all for joining us today for Brown-Forman’s fourth quarter, fiscal 202 earnings call. If you have any further questions, please contact us. We look forward to seeing you in Louisville on Wednesday, March 20th for our fourth annual Investor Day 202. Presentations from company executives will discuss Brown-Forman’s strategic priorities and long-term ambitions. Details related to the live webcast of the presentation, as well as a Q&A consultation, can be discovered on the fourth of March. Press release about the event. And with that, this concludes today’s call.
Operator
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