We’re all anxiously watching market gyrations

“This leads me to my second topic, our outlook for fiscal 2016, which we reaffirmed today. Before I dig into that topic, I would like to add that while we are fortunate to have a business model that combines long-term growth with defensive characteristics, we realized that we are not immune to a further deterioration in the global economy. So, like all I view, we are anxiously watching the market gyrations over the last two weeks, particularly in the emerging markets.”

Our emerging market footprint is <10% of our total

“But for now, our emerging market footprint outside of Poland and Mexico is less than 10% of our total revenues. So our exposure is significantly less than the competition. Additionally, this approximate 10% is well diversified, spread over a 100 plus countries around the world.”

5 million cases of Jack Daniels is a lot

“One noteworthy milestone that occurred during the quarter was Jack Daniel’s Tennessee Whiskey surpassing 5 million cases in the United States for the first time in its 149 year history and to be clear here, I am referring to the parent brand Jack Daniel’s Black Label as most know it.

I’ve been reflecting some on this recent accomplishment. So I thought I’d share a few perspectives with you about it. First, I’ll simply note that attaining the 5 million case level in our industry is a rare event in its own right. This is a very high level of consumer acceptance achieved by very few brands.

Add to this the fact that Jack Daniel’s is priced the super premium price level, well above the price of most brands that have achieved the 5 million case level and the recent milestone is even more rare and impressive in my view”

Big brands have had a headwind

“The first factor outside is the difficulty the big brands have experienced both inside and outside our industry. As evidenced, consider that the largest ten brands by volume in calendar year 2010, in the United States have not only lost share, but cumulatively lost over 1 million cases in the last four years with six of the top 10 having lower volumes today versus 2010.”

There has been intense competition too

“A third factor has been the intensifying competition in the American Whiskey segment as new entrants in craft premium plus and flavored whiskey have exploded in recent years.”

149 years of Jack Daniels

I find it impressive the Jack Daniel’s is in its 149th year in the United States and sits today at all-time volumetric point. Aside these factors to illustrate that Jack Daniel’s is not just normal brand, I believe it to be a special brand and often the exception to the rule.”

Millenial’s social habits are changing

“if you just look at the behavior of Millenial’s , where they might have spent three or four hours at a bar for an evening, they may only be spending an hour and a half in the first portion of it is in their apartment on the couch with their friends and so, the brand selections that occur in those different environments are really important and I think that actually is a contributing factor to why the flavored whiskies are actually doing fairly well because they are convenient to pour and consume and don’t require a lot of mixtures et cetera. So, I think there is some changing dynamics that made be with us for a while.”

The last week has injected some uncertainty

“I think it’s more the uncertainty around where – what might go, what might occur going forward as a result of just the skittishness that we have seen over the last, I mean, literally week to ten days we are acting a little bit more I think to just the recency of some of these market sell-off. That I mean, I am not, at this stage see what happens, I am not obsessed with what’s going on out there”