Brown Forman Q4 2025 Earnings Call Transcript

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Provided by Quartr
June 5, 2025

Key Takeaways

  • Brown Forman matched shipments to depletions for the first time in six years and delivered 1% organic net sales growth in FY25 (five-year organic CAGR of 6%), despite a 5% reported decline after divestitures and foreign-exchange headwinds.
  • Premium whiskey brands led by Woodford Reserve drove results, with Woodford posting 8% organic growth on higher volume and positive price/mix, bolstered by international expansion and high-profile sponsorships like the Kentucky Derby.
  • RTD portfolio momentum continued as New Mix achieved double-digit organic growth in Mexico and prepares a U.S. launch this summer, while Jack Daniel’s RTDs also delivered double-digit gains.
  • The company recorded a $47 million non-cash impairment on the Jinmari brand amid weaker European macro trends and saw double-digit declines in its tequila portfolio as category competition intensified.
  • For FY26, Brown Forman forecasts a low-single-digit decline in organic net sales and operating income, citing sustained consumer headwinds, tariff uncertainty, U.S. distributor transitions, and a more than 50% reduction in used barrel sales.
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Earnings Conference Call
Brown Forman Q4 2025
00:00 / 00:00

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Brown Forman Corporation Fourth Quarter and Fiscal Year twenty twenty five Earnings Call. At this time, participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you would need to press 11 on your telephone. You would then hear an automated message advising your hand is raised.

Operator

To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Supirim, Vice President, Director of Investor Relations. Please go ahead.

Sue Perram
Sue Perram
VP & Director of Investor Relations at Brown-Forman

Thank you, and good morning, everyone. I would like to thank each of you for joining us today for Brown Forman's fourth quarter and fiscal year twenty twenty five earnings call. Joining me today are Lawson Whiting, President and Chief Executive Officer and Leanne Cunningham, Executive Vice President and Chief Financial Officer. This morning's conference call contains forward looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements.

Sue Perram
Sue Perram
VP & Director of Investor Relations at Brown-Forman

Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward looking statements. And, except as required by law, the company undertakes no obligation to update any of these statements, whether due to new information, future events or otherwise. This morning, we issued a press release containing our results for the fourth quarter and fiscal year 2025, in addition to posting presentation materials that Lawson and Leanne will walk through momentarily. Both the release and the presentation can be found on our website under the section titled Investors, Events and Presentations.

Sue Perram
Sue Perram
VP & Director of Investor Relations at Brown-Forman

In the press release, we have listed a number of the risk factors you should consider in conjunction with our forward looking statements. Other significant risk factors are described in our Form 10 ks and Form 10 Q reports filed with the Securities and Exchange Commission. During this call, we will be discussing certain non GAAP financial measures. These measures, a reconciliation to the most directly comparable GAAP financial measures, and the reasons management believes they provide useful information to investors regarding the company's financial condition and results of operations are contained in the press release and investor presentation. With that, I would like to turn the call over to Lawson.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Thank you, Sue, and good morning, everyone. Thank you for joining us today as we share our fourth quarter fiscal year twenty twenty five results. Throughout fiscal twenty twenty five, Brown Forman navigated the extremely challenging and uncertain operating environment by remaining focused on the long term, leveraging our strengths and executing our business strategies with a focus on improving our route to consumer in several markets, evolving our workforce to simplify and streamline our organization, allowing us to become more agile and efficient, and growing our portfolio of brands through sponsorships, media campaigns, innovation. That said, the fiscal year unfolded largely as we expected. This reflects the continued path to normalization following the significant multi year disruption related to our supply chain, two plus years of exceptionally high demand, and the impact of higher inflation and interest rates on the consumer and trade over the last two years.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

For context, in fiscal twenty twenty five, our shipments closely matched our depletions for the first time in six years. Our reported net sales decreased 5% in fiscal twenty twenty five, while organic net sales grew 1% after adjusting for the divestitures of Finlandia and Sonoma Gatraire in the prior fiscal year, the negative effect of foreign exchange, and the business model change for Jack Daniel's Country Cocktails. Putting our fiscal twenty twenty five results into the longer term view, our five year organic net sales compound annual growth rate was 6% reflective of our historic trends. Now let me share some perspectives on the fiscal twenty twenty five results through our integrated business strategy. I'll start with the performance of our portfolio and provide a few updates on our people, then Leanne will share more about our geographic performance and our investments along with other financial highlights and our fiscal twenty six outlook.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

From a brand perspective, Woodford Reserve was the largest driver of organic net sales growth. And if you look at the Nielsen takeaway trends for the top 20 spirits brands by value for the fifty two weeks ending in April, Woodford Reserve was one of only three brands growing. This reflects the strength of Woodford Reserve, but also the exceptionally challenging environment our industry is navigating right now. An increase in used barrel sales was the second largest contributor to organic net sales in fiscal twenty twenty five, followed by growth from New Mix and Jack Daniel's Tennessee Whiskey. Woodford Reserve delivered organic net sales growth of 8% driven by higher volume as well as positive price mix with Woodford Reserve Distiller Select once again leading the growth.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Woodford Reserve is also being discovered internationally with very strong performance in markets such as Japan and Turkiye as we continue to position this brand for global growth. Last month the Kentucky Derby was held in our hometown of Louisville and Woodford Reserve was once again the presenting sponsor. The one hundred and fifty first Run for the Roses was the most watched Kentucky Derby since 1989 with over 22,000,000 household viewers generating more than 4,000,000,000 earned media impressions for the brand. This event creates numerous opportunities for collaborations across spirits, sports, and fashion, enabling Woodford Reserve to engage with current consumers and make new fans of the brand. Innovation and premiumization also contributed to the brand's growth with the success of Woodford Reserve's largest product launch, Double Double Oak, along with continued double digit growth of Woodford Reserve Double Oaks.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

These craft and luxury expressions reflect our strategic approach to innovation which enable us to capitalize on growth opportunities in The U. S. Whiskey category. New Mix continued its impressive growth in fiscal twenty five leveraging innovation to capitalize on consumer trends of flavor and convenience. The brand had another year of double digit organic net sales growth, surpassing 11,000,009 liter cases and continuing to gain market share in Mexico.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

In addition, I'm excited to share that New Mix will launch two flavors, New Mix Paloma and New Mix Cantarito RTD in key US states later this summer. With 58% of The US Hispanic population originating from Mexico, this launch offers consumers the opportunity to purchase a brand that is currently only available in Mexico and reflects the authenticity, tradition, and culinary richness of the country. In fiscal twenty twenty five, organic net sales for Jack Daniel's Tennessee Whiskey increased 1%. As we have shared throughout this year, we're continuing to engage a new generation of legal drinking age consumers while remaining intently focused on retaining our core consumers through our McLaren, Formula One, and music sponsorships, an evolved on premise strategy, and a new media campaign. Jack's connection to Formula One and music are on full display in Jack's Garage, which is a bold grand platform that unites race and whiskey fans through the power of music.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

The momentum of this experience continues to build with the most recent Jack's Garage in Miami resulting in more social impressions than all of The US Jack's Garage events held in calendar twenty twenty four combined. Also raising awareness, the first members of the Jack Pack, a team of Jack Daniel's brand ambassadors, are now in place in key cities such as New York, San Francisco, and Los Angeles. This team is focused on growing our influence in the on premise channel through relationship building, targeted education, and brand advocacy. I'm also proud to share that our new global campaign for Jack Daniels entitled that's what makes Jack Jack launched a few weeks ago in markets around the world. This campaign is bold, iconic, and unmistakably Jack.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

It emphasizes the enduring craftsmanship and authenticity that distinguishes Jack Daniel's from all other whiskeys, stemming from our roots in Lynchburg, Tennessee, our signature charcoal mellowing process, and the unwavering standards set by mister Jack himself. Reinforcing Jack Daniel's status as a renowned and iconic brand, we believe the creative work will strengthen our position as a symbol of independence for current consumers and a new generation. Innovation also elevates Jack Daniel's relevance to existing consumers while extending the brand's appeal to new consumers and occasions as evidenced by the growth and success of the launches of Jack Daniel's Tennessee Honey in 02/2011, Tennessee Fire in 02/2014, and Jack Daniel's Tennessee Apple in 02/2019. Today, I'm excited to announce the launch of Jack Daniel's Tennessee Blackberry later this summer. Blackberry is a globally recognized, well established flavor trend, and naturally complements the flavor of Jack Daniel's Tennessee whiskey.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

In consumer testing, Jack Daniel's Tennessee Blackberry had high consumer appeal resonating with a broad audience. We've been strategic and purposeful with our innovation using consumer insights and trends to give consumers the opportunity to explore and discover within the Jack Daniel's family. I look forward to sharing more about the launch of this exciting new innovation in the months ahead. Before moving to our people, I'll share some comments on a few other brands that had an impact on the company's top line performance. Diplomatico delivered very strong double digit organic net sales growth led by France and Germany along with the travel retail channel.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Within the super premium and above price tier, Diplomatico is the world's third largest rum by value globally, sold in over 100 countries, and is known for its rich heritage and rum making tradition. In fiscal twenty five, we benefited from having a full year of growth from this brand, and we continue to expect Diplomatico to be a meaningful growth contributor over the long term. Organic net sales for Jinmari grew 1% with growth from Spain, Germany and France, partially offset by a decline in Italy, the brand's largest market as we transitioned to our own distribution. In the fourth quarter, we recognized a $47,000,000 non cash impairment charge for the Jinmari brand name and reduced Jinmari's contingent consideration liability by 43,000,000 The impairment and liability reduction reflect a decline in our financial forecast assumptions due to the more challenging macroeconomic environment in Europe where the brand has a strong presence. While the brand had a slower start than we'd planned, we continue to expect that Jinmari will contribute long term growth to our portfolio of brands.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

CorBel and our tequila brands partially offset our organic net sales growth in fiscal twenty five. As we shared a few weeks ago, Brown Forman and CorBel champagne sellers will end our sales, marketing and distribution relationship at the end of the month. We appreciate the years of partnership with CorBel as well as the Brown Forman employees who played a role in building CorBel into the respected and well loved brand it is today. To our tequila portfolio, organic net sales for El Jimador and Herodera declined double digits as the environment for the tequila category in The U. S.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Remained competitive and Mexico's economy continued to face a challenging macro environment, though their performance improved sequentially each quarter. We believe consumers desire brands with heritage, authenticity, craftsmanship, so we remain focused on sharing and celebrating Herradura's one hundred and fifty five year history, including its heritage as the world's first Reposado, which is the fastest growing expression within the tequila category. We also continue to innovate with the successful launch of Peridura Cristal in Mexico, which builds upon the accelerating Cristalino trend. El Jimador has also launched a Cristalino expression in The US. El Jimador Cristalino was priced above the parent brand and is the first expression within the family of brands to be bottled in its new premium packaging, further supporting the brand's premiumization journey.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

IWSR projects the tequila category will reach almost $20,000,000,000 in retail value in the next five years, with almost half the growth coming from outside The U. S. And Mexico. We continue to ensure that El Jimador and Aragura are well positioned to capitalize on the growth. Before turning the call over to Leanne, I want to take a moment to provide an update on our people.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

In fiscal twenty twenty five, we announced and implemented a number of strategic initiatives, which included a workforce reduction and cooperage closing. Collectively, these initiatives should deliver approximately 70,000,000 to $80,000,000 in annualized savings. As a result, we incurred $63,000,000 in aggregate charges, including the separate early retirement benefit offered to qualifying U. S. Employees.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Throughout our history, Brown Forman has continually evolved and adapted over the decades, and we believe these strategic initiatives will ensure the company continues to endure for generations to come. I wanna thank all of our employees for their resilience as well as their continued commitment to our brands, our business, and most importantly, to each other. In summary, fiscal twenty twenty five was a year unlike any other that I've seen in the past three decades. I'm often reminded that this great company has existed for more than a century and a half and has faced many uncertainties and unknowns. During these times, we remain focused on the long term and leverage our greatest strengths, our people and our brands.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

This has enabled us to deliver positive organic net sales and operating income growth in fiscal twenty five, which we believe is at the top of our industry. As Leanne will share, we're entering fiscal twenty twenty six with a healthy mix of realism and optimism as we anticipate that the year ahead will continue to be challenging. Despite headwinds, we believe that we have tremendous opportunities for long term growth. And while we cannot control the external environment, we will focus on what is within our control and on the strategic initiatives that will unlock growth for our business, our brands and our people. With that, I'll turn the call over to Leanne, and she'll provide more details on our fiscal 'twenty five results.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Thank you, Lawson, and good morning, everyone. As Lawson mentioned, I will provide additional details on the other two pillars of our corporate strategy, geographies and investment, along with other financial highlights and our fiscal twenty twenty six outlook. From a geographic perspective, we shared with you previously that we anticipated a return to growth for organic net sales and organic operating income in fiscal twenty twenty five, driven by gains in international markets along with the benefit of normalizing distributor inventory trends on a year over year basis. Today, the results we are sharing with you reflect those expectations. Our emerging international markets continued to lead our growth and collectively delivered a 9% organic net sales increase in fiscal twenty twenty five.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

This growth was led by continued strong double digit growth in Turkiye and Brazil led by Jack Daniel's Tennessee Whiskey. The sustained growth of the premium whiskey category positively impacted our business in these markets along with Brazil, which benefited from our geographic expansion strategy and the launch of an additional package size for Jack Daniel's Tennessee Whiskey. In Mexico, organic net sales grew 4% despite the challenging economic environment, While discretionary spending has been negatively impacted and consumers are trading down, our RTDs and the Jack Daniel's family of brands are outperforming competitors and gaining market share. As Lawson mentioned, new mix continued to deliver double digit organic net sales growth driven by increased distribution as well as a steady pricing and promotional strategy. Jack Daniel's RTDs, which include Jack and Coke, outperformed the RTD category and delivered high single digit organic net sales growth.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

As I mentioned last quarter, we are committed to the development and growth of our portfolio of brands in Mexico and further leveraged our own distribution capabilities. In fiscal twenty twenty five, we began the distribution of brands within the William Grant and Sons portfolio, including Glenfiddich, Hendrix, Valvini, and Monkey Shoulder. This distribution opportunity not only provided incremental organic net sales, we also believe this complementary portfolio provides us additional strength to achieve greater development of the combined portfolio, particularly in the on trade and the super premium segment. Organic net sales in the travel retail channel declined by 5% in fiscal twenty twenty five. Challenging macroeconomics in many markets in Asia more than offset the introduction of new brands and growth in global accounts.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Growth of Diplomatico and Woodford Reserve led by the launch of Double Double Oak were more than offset by the decline of our super premium American whiskeys such as our exclusive global travel retail offerings Jack Daniel's Bottled in Bond and Jack Daniel's American Single Malts which compared against its launch in fiscal twenty twenty four. Our developed international markets collectively delivered an organic net sales decline of 3% in fiscal twenty twenty five as growth in Japan was more than offset by declines in Italy, South Korea and The United Kingdom. In Japan, organic net sales growth was driven by our route to consumer change to own distribution on 04/01/2024. The transition to own distribution enabled us execute our pricing strategy and provided more clarity on customer and consumer performance. Similar to Mexico, we are also leveraging our distribution capabilities with the distribution of the William Grant and Sons portfolio of brands such as Glenfinic, Monkey Shoulder, Grant and Hendrix.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

By bringing together our iconic spirits portfolio, we are scaling our business in Japan and reinforcing our position with local customers, which further strengthens our position and underscores our commitment to long term growth and innovation in the third largest whiskey market in the world. We are excited that we launched our own distribution in Italy on 05/01/2025, signifying our dedication to unlocking the full potential of market. While organic net sales declined as we prepared for the transition to our own distribution, takeaway trends improved and we are gaining market share. We believe owning our distribution will enable us to deepen our collaboration with our trade partners, accelerate growth for key super premium brands like Diplomatico Rum and JinMari, and further strengthen the presence of our iconic American whiskey portfolio led by the Jack Daniel family of brands. In South Korea, the premium whiskey category continued to grow leading to an increase in competitive activity while Jack Daniel's Tennessee Whiskey faced a difficult comparison and Jack Daniel's Tennessee Apple compared against its launch in the prior year period.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Consumer confidence in The United Kingdom was negatively impacted by the macroeconomic and geopolitical uncertainty, particularly related to tariffs, resulting in a 6% decline in organic net sales. Double digit organic net sales growth of Diplomatico and Gentleman Jack was more than offset by the decline of Jack Daniel's Tennessee Whiskey, although the brand grew in value and gained share in the off premise takeaway trends. Turning to The United States, organic net sales decreased 2% with growth from Woodford Reserve, Old Forester and Jack Daniel's RTDs more than offset by declines from Jack Daniel's Tennessee Whiskey and Corbel California Champagne. From a takeaway perspective, three month rolling value trends for total distilled spirits are down approximately 3%, reflecting the continued macroeconomic and geopolitical uncertainties negatively impacting consumer confidence and spending. The slowdown is widespread across categories and price tiers.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Yet the higher price tiers are continuing to gain market share, particularly in the $40 and above tier within The U. S. Whiskey category. Lawson highlighted the drivers of Woodford growth, so I will share a few comments on Old Forester and the Jack Daniel's RTDs along with Jack Daniel's Tennessee Whiskey and Corbel. Despite the challenging macroeconomic conditions, our founding brand Old Forester continues to resonate with consumers with high quality and great tasting bourbon and one hundred and fifty five years of history and storytelling.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Old Forester delivered high single digit organic net sales growth led by strong performance of the super premium expressions, particularly our single barrel selection offering, which is bottled at barrel strength. Jack Daniel's RTD delivered double digit organic net sales growth in fiscal twenty twenty five led by the growth of Jack and Coke and Jack and Coke Zero. Flavor and pack innovation are important in the RTD category. To provide consumers with the flavor and pack innovations they desire, the limited time offering of Jack and Coke Cherry and the Jack and Coke variety pack featuring Jack and Coke, Jack and Coke Cherry and Jack and Coke Vanilla was launched in March in time for the seasonally stronger spring and summer months and is off to a good start. While trends in the second half were stronger than the first half, organic net sales declined for Jack Daniel's Tennessee Whiskey.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

As Lawson mentioned, we have taken action and are continuing to engage with current and new consumers through sponsorships, on premise engagement, our new media campaign and innovation to accelerate our trends. We also continue to make purposeful efforts to highlight our whiskey making craftsmanship and credentials through innovation and specialty launches. The latest release in the age series, Jack Daniel's fourteen year old Tennessee Whiskey, joined Jack Daniel's ten year old and 12 year old Tennessee Whiskey in fiscal twenty twenty five. '14 year is the oldest age stated whiskey from the Jack Daniel's distillery in over a century and sold out at the Jack Daniel's White Rabbit bottle in less than three hours. The success of these products created a halo for the parent brand with the launch generating 7 and 20,000,000 earned media impressions benefiting the entire Jack Daniel's family of brands.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

And finally, CorBel organic net sales declined in fiscal twenty twenty five in a difficult environment as the majority of the brands in the sparkling category experienced decreased sales. Turning to the distributor inventory levels in The U. S. The environment remains unchanged with distributors continuing to target the low end of their normal range. As you may recall, in our last earnings call, we shared the news of our distributor transition in California and that it was part of a broader review of our route to market across The U.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

S. To ensure our brands are well positioned to win in the highly competitive marketplace. We have now completed our review and we announced last week that we have named new distributors for 13 additional markets, a transition that will involve seven new distributor partners beginning 08/01/2025. This is the company's first significant change to our U. S.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Route to consumer landscape in more than sixty years. These carefully considered decisions underscore our enduring commitment to ensure our brands have the dedication, focus, investment and route to market capabilities needed to succeed in the increasingly dynamic U. Industry. Just as one example, as a result of these changes, we will gain incremental dedicated headcount focused on our brands. While these transitions will likely cause some disruption and volatility in the first half of this fiscal year, we believe they will unlock future growth.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

These decisions were taken with great thought and care, and we believe they will bring tremendous opportunity for growth in the years and decades to come. We would like to recognize and thank all of our distributors whose dedication and expertise over the years have been foundational to establishing Brown Forman's strong presence across The U. S. Their dedication and hard work have been instrumental in building the strong foundation upon which this next chapter of growth will be built. Moving on to the rest of the P and L.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

In fiscal twenty twenty five, our reported and organic gross profit decreased 72% respectively. This resulted in 150 basis points of gross margin contraction to 58.9%. We continued to benefit from favorable price mix, the Jack Daniel's Country Cocktail business model change and the positive impact from our portfolio evolution, which had been obscured by the transition services agreements related to Finlandia and SonomaCoutrere. These benefits were more than offset by higher costs and the negative impact of foreign exchange. As we shared in our outlook, we expected higher costs in the fiscal year due to the impact of inflation on our input costs and lower production levels as we work to return our finished goods inventories to more normal levels.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Operating expenses in fiscal twenty twenty five were lower compared to fiscal twenty twenty four largely due to a 6% decrease in organic advertising expense, particularly for JDWT and JDWT as well as the comparison against the launch of the JDWT in The United States in the year ago period. This largely reflects our advertising philosophy of aligning brand investment with depletion based top line trends and a 5% decrease in organic SG and A investment led by lower compensation and benefits expense. In total, including the restructuring and other charges that Lawson shared, reported operating income decreased 22%, largely driven by the divestitures of Finlandia and SonomaCoutrere in the prior year period. Organic operating income grew 3% in fiscal twenty twenty five. In addition, we received cash of $350,000,000 in exchange for our 21.4% ownership interest in Duckhorn and recognized $78,000,000 gain on the sale of our investment in Duckhorn.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

In summary, the above results collectively led to a 14% diluted earnings per share decrease to $1.84 Before moving to our fiscal twenty twenty six outlook, I will share a few comments about our fiscal twenty twenty five capital deployment actions. Our capital deployment philosophy balances ongoing investment in the business, including organic investments and acquisitions, alongside shareholder returns such as regular dividends, share repurchases, and special dividends. We approach capital allocation decisions with the core objective of sustainable long term value creation. An important aspect of this philosophy is to maintain flexibility and the strength of our balance sheet. In fiscal twenty twenty five, we continued to maintain our strong financial position.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

We increased our quarterly dividend for calendar year 2025 and paid quarterly dividends totaling $420,000,000 to stockholders in the fiscal year. We also repaid $300,000,000 of long term notes at the maturity date of 04/15/2025. Now turning to our fiscal twenty twenty six outlook. We believe the operating environment will remain volatile and visibility low due to geopolitical uncertainties and global macroeconomic conditions, particularly with regard to the tariff environment. This environment will create sustained levels of consumer uncertainty, we believe will lead to another year of below historical total distilled spirits trends.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

We continue to expect that the behavior of the consumer and the level of trade inventories will not change meaningfully during the 2026 fiscal year. We believe that the strength of our portfolio, the benefits of our route to consumer transitions and our evolved workforce structure as well as strategic innovation will help us to navigate the short term cyclical disruptions. From a geographic perspective, we have now moved beyond the unusual comparisons of the past several years and expect the depletion based trends in The U. S. And developed international markets to remain similar to fiscal twenty twenty five with the exception of Canada where American spirit products largely remain off the shelf partially offset by continued growth in our emerging markets.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

In addition, while we are working towards a smooth transition, we do expect some level of phasing disruption in The U. S. As we move to new distributors. Another cyclical driver of our fiscal twenty twenty six outlook is the year over year change in our used barrel sales, which was a key contributor to our fiscal twenty twenty five growth. We expect our used barrel sales will return to levels that are more typical in challenging and uncertain operating environments for our industry, which is approximately more than half of the fiscal twenty twenty five level, making it a significant year over year headwind.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

We will continue to execute our long term pricing strategy and expect to benefit from our revenue growth management activities and strategic innovation, while anticipating product mix headwinds due to faster growth of our RTD portfolio and agency brands. Based on the currently known factors, we expect a low single digit decline in organic net sales. In this challenging environment, we will carefully manage our cost and operating expenses. Our outlook for organic operating expenses continues to reflect investment behind our brands utilizing our long term brand expense philosophy. Due to the strategic initiatives implemented in fiscal twenty twenty five, we expect a reduction in SG and A related to our recently announced strategic workforce initiatives.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Based off the above, we forecast organic operating income to decline in the low single digit range. Our organic net sales and organic operating income outlook ranges are based on numerous scenarios with the greatest influence from weaker to stronger consumer demand in key markets such as The United States, changes in distributor inventory levels and currently known tariffs. We will continue to monitor, adjust and update if conditions or trends evolve. We expect our estimated capital expenditure outlook to be in the range of $125,000,000 to $135,000,000 We believe our fiscal twenty twenty six effective tax rate will be in the range of approximately 21% to 23%. In summary, we delivered organic net sales and organic operating income growth in an uncertain and volatile operating environment in fiscal twenty twenty five, largely in line with our expectations.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Despite the challenging short term conditions, we remain focused on building our business for the long term while navigating the current environment at pace by strengthening our portfolio brands for the long term and introducing strategic innovation, benefiting from our streamlined and simplified workforce structure, which will increase our agility in responding to this dynamic operating environment and taking greater control of our brands in international markets through own distribution as recently demonstrated in Japan and Italy, while ensuring in our largest and home market, The United States, that our brands are well positioned to win with highly focused and engaged partners in an increasingly competitive environment. We anticipate these strategic initiatives will have short term impacts on our business as we transition to new partners and ways of working, yet we believe they will unlock future growth and continue to build Brown Forman and our brands for decades and generations to come. This concludes our prepared remarks. Please open the line for questions.

Operator

Thank you.

Operator

And the first question is going to come from Brian Spillane with Bank of America. Your line is open.

Bryan Spillane
Bryan Spillane
Managing Director - Equity Research at Bank of America

Hey, terrific. Thanks, operator, and good morning, everyone. Hey, Lawson, stepping back, and I appreciate the commentary about just how volatile and difficult, I guess, the consumer environment is. And one thing we're trying to square here is how it's not uniform across all other consumer categories. You know, like, if we look at, I don't know, lodging, gaming, leisure I mean, there's a lot of other consumer categories that, when we go through the transcripts or we listen to companies describe the consumer, it's kind of normal, if not even a little bit better than normal.

Bryan Spillane
Bryan Spillane
Managing Director - Equity Research at Bank of America

Yet, if I take the commentary today, you would think we were in a recession, right? So can you just kind of, A, is that your observation as you're kind of looking at the consumer and trying to understand what's happening specifically to brown form and into spirits? I don't know, if you any insight you can give us to help square that circle? Because think, right, part of the reason why the stock is, you know, kind of erased over ten years' worth of appreciation is simply because I think people are seeing it more structural than cyclical. So any insight there would be helpful. Thank you.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Yeah, Brian, that's a good question. A difficult one. Mean, there are certainly a lot of consumer categories that are very weak. You're right, you cited a few that have done better than others. I know some big consumer products companies last couple days have released earnings and they've gotten hammered with weaker consumer demand.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

There's certainly an element to that in a lot of what we've been saying. The whole structural versus cyclical argument which we've been talking about for six quarters now I think, something like that. I don't think there's a lot of newness to necessarily add to that conversation. I've seen more and more people, it's the same big three, the GLP ones, the cannabis and Gen Z and we've been saying that for a year and a half now. And I know on the sell side that the world seems to be a little bit split on the extent of the pressure that it's putting on our category.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

We'd be naive if we didn't say that there isn't some pressure coming from those but I still would argue that it is the consumer and their wallet just doesn't have as much money in it. You're right, they're spending money on things like vacations and lodging as you said and other things like that but then when it trickles down and they go to the grocery store I think in some cases spirits has fallen out of the basket a little bit and that isn't obviously great but on the tailwind side of things are some things that are doing well. Spirits continues to take share from beer and wine so that dynamic hasn't changed. Premiumization is not at the same rate it was, but it's kind of stagnant a little bit, but I think that is good news for the most part. I think the consumers haven't, they haven't traded down necessarily and our portfolio stays up at the much more on the premium side of things.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

So I don't think there's a lot of new news that I can add to that conversation other than that we continue to pull the levers that we can pull and you are seeing a bit of a global slowdown. Oh, the other thing which I didn't mention on the structural cyclical thing that we haven't talked about in a little while, I do think when we look at Europe compared to The United States, Europe, although some green shoots may be in some big markets over there, but Europe has largely been seeing trends that are really the same as The United States, yet they don't have the cannabis issue. The GLP ones are not nearly as big. Healthy lifestyle, the other one are Gen Z. Think anecdotally everybody's seeing that out there and everybody's commenting on that.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

But the factors that are affecting the world really to me still sound a whole lot more cyclical than they do structural. That was a long answer.

Bryan Spillane
Bryan Spillane
Managing Director - Equity Research at Bank of America

All right, thanks Lawson. If we learn more I'll share with you, but it is we're perplexed by it.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Yeah, yeah.

Bryan Spillane
Bryan Spillane
Managing Director - Equity Research at Bank of America

All right, thanks guys. I'll pass.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Okay, thanks Brian.

Operator

And our next question will come from Nadine Sarwat with Bernstein. Your line is open.

Nadine Sarwat
Analyst at Bernstein

Thank you for taking my question. I have two, one on the guidance and one longer term. So first one on the guidance, can you flush out a little bit what's included in that top line guidance for fiscal twenty six, both in terms of distributor inventories and or underlying consumer demand? Are you assuming some improvements in the back half or simply more of the same? And similarly on the profit guide, just clarifying what does that imply?

Nadine Sarwat
Analyst at Bernstein

Tariffs, is that status quo? Are you baking in any form of tariff assumption in there? So that's the sort of tariff question. And then the longer term question is your fiscal 'twenty six guidance is now obviously quite far off the medium term growth algorithm that you've communicated at your last Investor Day. And I think if we reflect on what's going on with the stock today, that's probably a big portion of that is that growth being, at least for the moment, pushed into the future.

Nadine Sarwat
Analyst at Bernstein

So for those who are listening in who are concerned about that and reaching that medium term growth algorithm that you communicated previously, Has that algo changed? How are you thinking of the potential for the business to grow in the long term? Thank you.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

Nadine, thanks for your questions. I'll start with guidance and I'll turn it over to Lawson for our longer term algorithm. So kind of stepping back a bit as we think about F-twenty five largely in line with our expectations, we had sequential improvement through each of the first three quarters. And then in the fourth quarter, we had planned for that trend to continue, but then that's where we got into more geopolitical volatility around the tariff environment. We saw the drop in the consumer confidence.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

And that's on top of that kind of stretched consumer we've been talking about for several quarters. When we think about our fourth quarter and then how that leads into F26, that impacted The U. S. And a lot of our key developed markets, particularly Europe. But for our performance in the fourth quarter is kind of largely in line with the softening trends of TDS.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

So that's how we enter our fiscal twenty six. And so from an environment perspective, do think it's going to remain volatile and the visibility is going to continue to be low around the tariff environment, that's a big piece of that. We believe that through all of that continued uncertainty that consumer is going to remain at that sustained level that it is now. And so we're just really thinking about the behavior of the consumer and the level of trade inventories as we're thinking about the environment that we'll be operating in fiscal twenty twenty six is kind of largely the same as we entered into this fiscal year. But we have a lot going on as we talked about as it relates to our outlook because again during Lawson's prepared remarks, we are really investing in strengthening the portfolio of the brands and he mentioned what those were.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

We're introducing strategic innovation of Jack Daniel's Blackberry which we think is going to resonate well with consumers worldwide. We're going to continue to benefit from our recent route to consumers with Japan and Italy, and then also our streamlined organization, which can be highly agile in this environment. We talked about too on our call for us, expect kind of mostly developed markets to remain the same, but for American products off the shelf in Canada and that being about a point of our top line growth for F24 and F25, we're continuing to assume that our products largely remain off the shelf in Canada and that our growth is going to continue to come from emerging markets again for F26. So to your comment on tariffs, as we kind of said in our last call, we know it's highly volatile. None of us can predict what's going on.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

What we have included in our guide is what we do know as of this date. Largely that's coming through as the indirect impact from Canada, but then also the direct impact on some of our cost of goods and that's built into our guide. We talked about the disruption that we do expect. 14 distributor transitions in key markets in The United States, We are all working hard to make sure that goes seamlessly, but with that number of changes, we've just got to plan for some level of disruption. And then one thing I'd really like to touch on a bit more that's in that guide is our used barrels.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

So we know that there's been an increasing global demand for whiskey over the last number of years and that's created strong demand for our once used American white oak barrels. If you kind of look back over the last fifteen years, in a challenging operating environment such as 2010 with the economic recession and with the global pandemic, our used barrel sales typically come step down during environments like that and then in the following years kind of return to more normal buying patterns. So being in the environment that we're in as an industry, we would expect in F26 to step down more than half. And just so to help you all a bit, in F24 '10 ks we said that our branded and non bulk was about $87,000,000 and in our press release we said for F-twenty five on Schedule B it grew 18% and then we've just shared with you that in our guide we think that's more than half. Now another thing to take into consideration and it's to your point on leverage, the used barrels have a gross margin well above the company average.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

So as we see this short term cyclical kind of softening of demand for the used barrels, as it flows down through the P and L, it just has a greater impact, an outsized impact on our operating income. So with that, I'll turn it over to Lawson for the long

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Long term, the growth algorithm. So just to remind everyone sort of what that was or what we said at our last investor conference was sort of mid single digit growth in The United States growing around the TDS number, which historically been in that 4% to five range. A little bit higher on developed international and a little bit better than that on emerging markets. When we get to there, that sort of makes all the math work and we had literally achieved that for the most part over the last twenty, thirty years kind of timeframe. Obviously the last few years have been a whole lot more volatile than that.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

So having said that, when we talked about that kind of algorithm, if you remember, if you go back two years ago, TDS in The US was growing five or six even two years ago. Long term we have always said kind of a four to five grower market, well right now it's declining at four to five. So that algorithm doesn't work when the market is declining at that kind of rate. So when we're going to return to our old growth algorithm, I do think has a lot to do with not only The U. S.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

But in Europe starting to see some improved industry trends. Mean, and I think that's true across the whole industry. And we're obviously not the only ones that are not delivering against that long term algorithm. But if you're a believer in the cyclical nature of so many of the problems here, it's tough to predict when that's going to come back, but it will. Look, the fourth quarter had some weakness in it a little bit.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

TDS weakened a point or two more. So that contributed to sort of a little bit of surprise I think that everybody's seeing right now. But we still feel like, we are pulling the right levers that we've got the right brands in the right categories, all that kind of stuff hasn't changed. It's just the environment continues to be really difficult. Our

Operator

next question will come from Kevin Grundy with BNP. Your line is open.

Kevin Grundy
Managing Director at BNP Paribas

Hey, good morning, everyone. Thanks for the question. Two strategic ones for me, if we could. So, Lawson, a key competitor here has a new CFO, comes from the Coke system. There's been great progress on the soft drink side from a mix perspective, from a package mix perspective.

Kevin Grundy
Managing Director at BNP Paribas

And it seems like that may be something that a key competitor is intent on pursuing as a way not just to drive profits, but also to reach a more value oriented consumer and to drive improvement. And I was just curious to kind of get your thoughts on that. And then just unrelatedly, just on the pricing outlook here, if you could just comment, you guys have heard this before, just in terms of the amount of supply that's out there in US whiskey, coupled with the fact that demand is slowing, which is now reflected in your outlook, and the worry among the investment community is what that may mean for industry pricing and then ostensibly margins. So maybe just your updated thoughts on those two things would be appreciated. Thank you for that.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

All right, well, me take the pricing question first and then we'll come back into the RTDs. Pricing, look, what we have said before and we are still saying today is low single digit on a regular basis is the pricing that we want to see out of Brown Forman. We're always talking about The US, but come back to The US pricing for a second. Over the last thirteen weeks, TDS was down one point, we were down less than that. So that's not great, but it's not like the bottom is falling out and you get some mixed things in there too as RTDs have been strong.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Importantly though I think an interesting part of that is US whisky, suburbans for the most part or Tennessee Whiskey is basically flat. So for those that have expressed concern, know over the last few calls we've had conversations around industry supply and things like that. At least so far it has not flowed through to more promotional lower pricing. And I think in what we said last time and I'll say it again, the big players in American whiskey control or we have very large market share of the American whiskey category and it's the big players, it's the Diageo's and Brown Forman's and Sazerac's and Beams. And they seem to be professional on their pricing, whatever the word really wants to be rational, I guess that's a better word for it.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

They're being rational in their pricing environment. Tequila is the other category that everybody wants to talk about. It's down 2%. Once again, it's not like the bottom is falling out, but I think we all accepted that you were going to see some pressure on tequila pricing given the direction of the cost of agave. So but it's I don't want say pleasantly surprised, but I guess I am a little bit that the pricing environment has stayed where it is.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

And then I would say to the RTD comment that you were referring to, we've been in this business for over thirty plus years. We have over thirty million cases of RTDs already in our portfolio. But you would have heard in Lawson's prepared comments, it's something we continue to very much believe in. New mix, which is one of our key drivers of growth in Mexico, we've been able to take pricing, we have been expanding our distribution and through innovation we've been launching new flavors. In F26, we're also going to take new mix and extend it beyond Mexico and launch it into The US Targeted specifically to some areas as we begin the launch to give it good footing as we go forward.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

We think it will continue to resonate well with a lot of consumers. And then also for our Jack and Coke, it's about geographic expansion in F26 and working through launching new innovations in that space. You would have seen us do that in F25 with the variety pack, we had Jack and Coke, Jack and Coke Cherry and Jack and Coke Vanilla. It's just a space where we continue to innovate and grow so we agree the consumer right now in many places around the world is preferring convenience and flavor This is a good format to be able to deliver that to them.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

One thing I'll add to that too on the comment earlier about package and sizing and things like that, quite honestly is a little bit easier in the non alcoholic space. There's more flexibility than there is in ours, but just this one stat, I found it interesting. I had not heard this before. 80% this is in Nielsen, US, last twelve months. Eighty percent of the dollar growth in spirits has been through the $3.75 and the 50 ml, So the small sizes, that's unusual to say the least.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

And I think it just it goes further to talk about cyclical challenges of a consumer who's pinched and just goes to the store with a $10 bill instead of 20 and then they get the smaller size. We don't necessarily consider that a bad thing and that came up a couple calls ago maybe for some folks. It means they still want your brand, they just can't afford the whole, they can't afford a liter or whatever it might be and so they're taking smaller size. I think that, you know, is a sign and it's called an opportunity to that we need to get better at getting our small sizes out there and everyone particularly in The US is very aware of that, and they're going for it.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

One small data point about the consumer in The US, well our coupons are a small tool in our promotional toolkit and have the same consistent level on F24, F25 of coupons offered, we are seeing redemption rates increase. So again, looking at that consumer who's looking for the value and be able to afford the luxury they can while remaining brand loyal.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

And one, if I can, to Nadine's question from five minutes ago, I wanted to add one other point I think that's important that I forgot to say. And it's basically despite what's happened over the last twelve months and a bit of the volatility and the challenges and the slowdown in business, Our three year, our five year and our ten year CAGR for top line growth is the same number. It's all in the mid single digits. So the three year and the ten year are the same number. It doesn't feel that way right now because of what's happened really in the last twelve months, but it's coming off those elevated years post COVID.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

But I just find that interesting that three, five and ten would all be the same.

Operator

And the next question is going to come from Lauren Lieberman with Barclays. Your line is open.

Lauren Lieberman
Lauren Lieberman
Managing Director at Barclays

Great. Thanks. Good morning. So Lawson, just following on the heels of that and looking at those sort of average growth rates over multiyear periods, obviously, like by nature of the math, there's smoothing inherent in that. The trend line is less than encouraging.

Lauren Lieberman
Lauren Lieberman
Managing Director at Barclays

And notwithstanding everything you've already offered on views of cyclical versus structural, what about the what if? What if it is more structural? What if the category, let's say, TVS, rather than being down 4% to five we reach a new level and it's kind of like a it's more like beer. So let's call it down well, beer is deteriorating too. But let's just, for the sake of argument, say it's a down low single digit.

Lauren Lieberman
Lauren Lieberman
Managing Director at Barclays

What does that mean? What's the business planning? What's the break glass in case of emergency plan, if there is one? But just to what degree are you guys having these conversations about what is the future business model if it's not cyclical? Thanks.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Well, yeah, look, mean, that's a tough question. And we certainly talk about it, although I'd still argue, I think we've we still believe in the cyclical side of the argument. But to try to answer your question a little bit as to what would we do differently, look you take a page out of carbonated beverages and sodas, you take a page out of beer or some of those, means you're doing more pricing. If the volume is not there and they still deliver, I mean both beer and carbonated beverages have obviously lived on pricing and for the last decade really. So I think there's some changes there.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

I mean, think there's some resource reallocation. We're not seeing these headwinds in much of our emerging markets and they continue to grow. They continue to be the source of strength for our company and there's a long way to go in the world of emerging markets. As we've said many, many times, we've kind of barely scratched it. So I think that where the growth comes from is going to be a little bit different too.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

And then we look at our portfolio, mean, still we are as everyone knows, we are a premium based spirits company, Premium consumers, do believe are going to continue to be they're going to want brands like the ones that we have. And so I think we're relatively underexposed compared to some others that have a bigger, longer tail and a lower price portfolio.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

And just to build on that a bit, like with The US RFP that we just did, it was all about making sure that the brand that we have in a competitive market are with partners that have proven track record, strong capabilities, and a shared commitment to make sure they're going to continue to grow our brands. Have ensured we are going to have dedication, focus, investment, and building our brands. We continue to do that in other markets such as UAE where we are expanding our distribution and Turkiye where we have new distributors that will cover more geographies to Lawson's point emerging international. We're doing it with Italy and Japan and taking those brands into our hands especially with Genmari and Diplomatica where we have a lot of opportunity to continue to grow those brands. It's that and it's continued to find synergies where it's available and I hope through all of the product work that we have been doing over the last two fiscal years, F25 and what we have planned for F26, we are demonstrating that we are moving at pace with many strategic initiatives and we are being incredibly agile to make sure we're capturing synergies and opportunities.

Operator

And the next question will come from Robert Moskow with TD Cowen. Your line is open.

Robert Moskow
Managing Director at TD Cowen

Hi, I was hoping you could comment on a couple of things. One is, this is a very volatile global environment. And in a lot of markets, there's discontent about American brands. Have you done any like testing of how your Jack Daniel's brand is perceived in these international markets, if anything's changed? And then secondly, can you talk about your philosophy on A and P?

Robert Moskow
Managing Director at TD Cowen

A and P is down 6% in fiscal twenty twenty five. Would you expect it to be down again in fiscal twenty twenty six given the expectation for sales to be down? Thanks.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Yeah, well, let me take on the Jack one first. And we've had this quite literally over my career, it's come through numerous different times when there's a bit of anti American sentiment moving around the world. Historically, they've never taken it out on the brand. And we've got numerous examples of that back in the days of when Russia, when we were still selling in Russia that we didn't lose any momentum there with that. France is another one where over the years we've had different, there've been different anti American sentiments and it didn't really affect the brand.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Then in terms of how do we measure it, are we testing it and those kinds of things? I mean, that's one thing, I mean, almost if I could find one very positive thing to say today after everything that we're doing is we have made so many changes to the Jack Daniel's communications and consumer touching. All those plans have changed quite a bit, highlighted by the new advertising campaign, which has only been out for a few weeks. So you're not going to see anything in the data yet. But we are seeing now meaningful improvement in the brand health measures and there's probably nothing more important over the long term for Brown Forman than that.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

And so, we think we've made some smart moves there and the different programs that we're running right now. And so, when we do our consumer testing, we are not seeing anything flow through in terms of a knock to brand health so far. So we feel pretty good about that.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

And then from an A and

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

P philosophy, there's really no change in philosophy. There's just been volatility in that philosophy because, we plan our A and P in line with our depletion based expectations. Starting with COVID, as you've been following our story, depletions and shipments, have been a gap between those for a lot of reasons that we've discussed over many years. Those gaps have now closed. So we will continue to plan in line with depletion based growth and over the last and I think it's important to mention that over the last five years, we've increased our brand investment by nearly $100,000,000 So we believe the level of investment that we're making in our portfolios is adequate and that also we have to remember for our portfolio of premium plus brands, they're also supported by our people, which are coming through SG and A.

Operator

And the next question will come from Filippo Folorni with Citi. Your line is open.

Filippo Falorni
Filippo Falorni
Director - Equity Research at Citi

Hi, good morning everyone. Thanks for taking the question. So first I wanted to ask about the developed international business, clearly a material deceleration in Q4. I get the Canada component of it, but can you expand a little bit more in kind of the European weakness? You talked a bit about The UK, but just general the weakness that you see in other developed markets there.

Filippo Falorni
Filippo Falorni
Director - Equity Research at Citi

And then the second question, just a follow-up on the guidance. I know you guide on an organic basis. Just clarifying, does that include the CorBel exit? And if not, like just give us a sense of how much that should be an incremental headwind to top line and profit? Thank you.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

Yeah, well, I'll take the international question first. I mean, we can the international markets continue to drive a lot of the growth Think you all know that. Europe has been weaker for quite a while. There, if you go to takeaway trends in Europe, you just look at Spirits takeaway, they're kind of similar to what you're seeing in The United States.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

And so still very difficult markets. Kind of down in that low to mid single digit range. And so we will see how that plays out. We continue to take share in many, many markets across Europe and they continue to be an important part of our company and a big part of our company. But as we said earlier, I mean, emerging markets of, I'll call it Latin America and Mexico in particular are very strong for Brown Forman and continue to be highlight markets.

Lawson Whiting
Lawson Whiting
CEO, President & Director at Brown-Forman

We've been particularly Brazil, we've been talking about that for a long time. And we're seeing pockets of growth in other parts of Asia and other emerging markets. And so it's Europe that we need to get turned around. We've made a lot of changes and some routes of consumer changes there and expectations are that that will improve over the next year.

Leanne Cunningham
Leanne Cunningham
Executive VP & CFO at Brown-Forman

So, and then from a Corbell perspective or from our guidance perspective related to Corbell, in our organic results, our organic P and L, we will have May and June included in that, then excluded from that point forward and then from a reported perspective it will exclude Korbel from July 1 forward And that's about $94,000,000 on our S and S top line and then about $12,000,000 in operating income on the bottom line that will come out of the reported P and L.

Operator

Due to time, this will conclude the Q and A session. I would now like to turn the call back over to Sue for closing remarks.

Sue Perram
Sue Perram
VP & Director of Investor Relations at Brown-Forman

Thank you.

Sue Perram
Sue Perram
VP & Director of Investor Relations at Brown-Forman

And thank you, Lawson and Leanne, and thank you to everyone for joining us today for Brown Forman's fourth quarter and fiscal year twenty twenty five earnings call. If you have any additional questions, please contact us. As we close, National Bourbon Day is June 14. It's the day to recognize the official spirit of The United States. And on this day, wherever you are, we hope that you will responsibly enjoy a glass of Old Forester or Woodford Reserve with us. With that, this concludes today's call.

Operator

Thank you. This does conclude today's conference call. Thank you for participating and you may

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