Brown-Forman (BFB) Barclays 17th Annual Global Consumer Staples Conference summary

Industry trends and consumer behavior

• U.S. per capita alcohol consumption has remained stable for decades, with recent volatility attributed to inflation and higher interest rates rather than structural shifts like GLP-1s, cannabis, or Gen Z preferences.

• The spirits market saw rapid growth post-COVID, followed by a sudden slowdown, which is viewed as cyclical rather than permanent.

• Spirit-based RTDs are seen as incremental to the category, mainly sourcing from beer and malt-based RTDs, with little evidence of cannibalization of full-strength spirits.

Inventory management and supply chain

• At-home consumer inventories built up during the pandemic are now being worked down, with expectations for normalization and some refilling over the next 12 months.

• Distributor inventories are at or just below the bottom of their target range, with close collaboration to maintain supply chain stability.

• The industry is managing aged whiskey supply prudently, with major distillers adjusting production to match projected demand and smaller brands facing more challenges.

• Proactive steps are being taken to mitigate tariff risks, including moving finished goods to Europe and diversifying supply chain options.

International and brand growth opportunities

• International sales now represent a majority of business, with significant growth potential in Asia, Africa, the Middle East, and South America.

• The Jack Daniel's portfolio, including RTDs and super premium expressions, continues to expand globally, aided by cultural relevance and organic marketing wins.

• Tequila brands Herradura and El Jimador are focusing on increasing distribution and awareness, with Herradura emphasizing authenticity over celebrity endorsements.

• Promotional activity in tequila is increasing at the lower end due to falling agave costs, but high-end brands remain less affected.