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Is there any reason to believe that may change? Some data suggests that the Jack Daniel's brand in the US has been consistently losing market share. What do you think? What would you attribute that to?

It has. If we go back to pre-2010, when we thought of the bourbon category, even though Jack Daniel's is not bourbon, the consumer doesn't really know or care that it's a Tennessee whiskey. The competitive set was three or four brands. Essentially, it was Jack Daniel's, Jim Beam, Maker's Mark, and Crown Royal, which are not all bourbons, but they probably accounted for 80% or more of the category. As consumer trends shifted back towards brown spirits, the craft portion of the industry became significant. We also saw stages where flavored whiskeys became very popular, like Fireball. Once Fireball became popular, Jack Daniel's, Jim Beam, Crown Royal, and Maker's Mark introduced various flavors. The big takeaway is that the competition today is extremely different from 15 or 20 years ago. The biggest challenge for national brands now is how to grow against a competitive set that's in the hundreds, compared to single digits 15 years ago.

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Going back to the longer-term pricing question, if you go back over multiple decades, whiskey and most spirits tend to go through cycles. They're not cyclical in the traditional sense but are cyclical in a circular sense, going through 10 to 15-year cycles, both up and down. Looking at the next 10 years or so, excluding craft distillers, what do you think the structural pricing potential for the business is, and what about volume? Do you have a sense of whether this cycle has run its course? You mentioned the line extensions and the partnership with Jack and Coke. When I look at the multi-decade history of the business, it seems like we've completed a cycle over the last 10 to 15 years and are now entering a new phase, possibly a maturation or stagnancy phase. Given that the category does not always have strong pricing power, how do you view this dynamic over the next 10 years?

I was responsible for revenue management at Brown-Forman for many years, analyzing competitor trends and behavior. It's a relatively price-sensitive industry, with elasticity rates in the 2 to 2.5 point range. Even a 2% to 3% price decrease can significantly impact volume. Rarely does anyone take a 5% or 10% price increase within a year. Instead, big players adjust their programming, either pulling back or being aggressive on price programming. This results in a 2% to 3% overall average price increase across the industry, with volatility in how companies achieve that growth rate over time.

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In the context of that, and correct me if I'm wrong, but Brown-Forman recently sold their cooperage business. What do you make of that in this context? Do you think it's related to these persistent inflationary pressures you've seen? And will it maybe partially offset that?

I think it is. If you look at Brown-Forman, all this is public knowledge, but they have always been much more vertically integrated than other big players in the industry. It's very difficult to make healthy margins across the supply chain in this industry. What's happening is you're getting to a situation with independent staves, which is now the biggest cooperage in the industry. Even though Jack Daniel's is a huge brand, you're still in a situation where the margins aren't the most attractive when you start vertically integrating in the supply chain. That's why many big players have stayed away from building cooperages. Brown-Forman even got into producing the staves for the barrels, which is another vertical integration down the supply chain. Many big players have not ventured into that. Due to economies of scale, barrel production is now centered on two or three main players in the industry, and that's where everyone is sourcing their barrels.

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