Okay, we're gonna get started. So next up, we have Brown-Forman, and we're very lucky and grateful to have Lawson Whiting, the company's President and CEO, and Leanne Cunningham, Senior Vice President and CFO, with us again this year. So thank you both so much for being here.
Great to be back.
Okay, so Lawson, I'm gonna start with you with kind of a bigger picture question. What are you seeing in terms of bev alc macro trends, between beer, wine, spirits? So it's kind of great to get your perspective on the broader industry trends. And then also, how do post-pandemic consumer trends kind of compare to what we were seeing pre-COVID and even during the pandemic?
Yeah. So look, that's always one of my favorite questions because it's a pretty good answer. I mean, spirits, I think, pretty widely known, has been taking share from beer and wine for almost 20 years. I think it's probably been going on for that long now. Now, like a lot of trends, we used to say this, whatever was happening before the pandemic accelerated during the pandemic, and then I think a lot of that is returning to more of a normal state. We've been saying a lot of that, too. So you've got the US spirits market sort of back in that mid-single-digit range. But the, as far as trends and where, you know, what, what has happened, I mean, one of the most important trends, and once again, this is something over 20 years, not necessarily recently, has been the premiumization trends.
That is one of the major drivers of our portfolio reshaping efforts of the last decade or really couple of decades, where we have changed out our portfolio significantly to capture that premiumization trend. So, you know, it's interesting. Our portfolio, for those that maybe has followed us for a long time, the, when I started in the late 1990s, the only brands that we owned back then that we own today are the two brands we created, Old Forester and Woodford Reserve, and then, of course, Jack. Every other single brand we owned back then, we sold, and we've brought in a whole new portfolio of brands into the, into the fold, and, you know, most recently with Diplomático and Gin Mare over the, you know, about 12 months ago. In fact, what did we say?
It was this day, 12 months ago, that we announced the Gin Mare acquisition, which I had forgotten that that was what we did here. So premiumization is certainly very important, and RTDs are extremely important too. And that's been true for a long time, but that is one that has accelerated greatly in the last year, as the spirit-based RTDs have really taken a lot of share, I think, from malt-based RTDs, maybe, and a little bit more from the beer industry. So yeah, there's a lot of favorable macro things happening right now.
Okay, great. And then, you know, as you said, you've remained really active over the last year in terms of reshaping the portfolio, Gin Mare, Diplomático, and the sale of Finlandia as well. So this continued shift towards premiumizing the portfolio. How do you think about the portfolio as it stands today? Are there other kind of white space opportunities or non-core brands that you see as opportunities to make further adjustments?
Yeah, I mean, look, in terms of reshaping the portfolio, there isn't really anything left in our portfolio that isn't growing and isn't premium or above. So there's very little, if nothing, to do on that side of it. But we'll continue to look at acquisitions. I mean, you know, the big obvious one would be vodka, being it's just the scale of that category. But I think probably many of you know, vodka is not a very profitable category. You've got the U.S. business dominated by one behemoth, huge brand that has taken share from virtually every other vodka brand in the country. And then European vodka is not very profitable. It's a very, very competitive price point, so we're not particularly interested in that. But we really, we'll focus on brands as opposed to categories.
If there are brands like a Diplomático, for instance, where I just think it's a fantastic brand name, and it brings a lot of strategic benefits to us too. But we'll see if other brands show up on the market, but I'm really not seeing a lot of white space where I think we're gonna be real aggressive in the acquisition world.
Okay, so when we move to core, so Leanne, so much work has been done on Jack Daniel's in recent years. I guess, what kind of setup does that give you in terms of the right to price in the U.S.?
Well, first, build off what Lawson was saying with the evolution of our portfolio, the focus of our organization really is on value growth. And from a value growth perspective, we are always focused on pricing and then all the opportunities we have available to us through revenue growth management. And with that, we continue to invest in our capabilities and find, across all of our labels, opportunities to continue to generate revenue, specifically for the Jack Daniel's family of brands. And for Jack Daniel's specifically, we've also invested a lot behind that brand. You'll hear us almost every quarter, talk about the incremental investment that we've made behind Jack Daniel's. We've even created partnerships that will help us. Like, Formula 1 was a global platform that we have invested in to help connect Jack Daniel's to new consumers and expand their loyalty with us.
Our partnership with Jack and Coca-Cola to be able to create a halo effect and be able to expand the awareness of our brand. We feel like our brand is healthy, our brand is strong. We feel like it gives us the opportunity to take that price, as well as effective growth management, revenue growth management, and all the elements of it.
Okay. And just to press a bit more on the U.S. market more broadly, I mean, how do you feel about the current environment here and underlying spirits demand domestically?
So I would say the U.S. market, it's competitive, and for all my years in this industry, I don't think I've ever sat in a room where we have not said the U.S. market's competitive. So I think it's always been competitive. I think it's gonna continue to be competitive. I think what we're talking about right now and what's built into our full-year guidance is it's normalizing. And yes, for Jack Daniel's and some of our other brands in Q1, we are having to lap the rebuilding of the inventory that we did last year when we had some supply chain disruption. As we lap that, we feel like that the market's going to continue to settle in kind of where it has been before. Is that in that mid-single-digit growth range, which was much more aligned to our long-term growth algorithm.
The conversation that came up this morning in our meeting rooms, I think in pretty much every meeting, was: Is the consumer down trading, and what is happening within those dynamics? And, you know, I do think it was interesting. During COVID, tequila took off, and the luxury tequila took off. And, you know, $100 price points for bottles is not. It's a very small business, but it, I don't know, probably doubled or tripled over that timeframe. I'm not sure that's gonna stick around for... You know, I don't. I'm not sure there's enough there, so you're seeing the luxury end of things cool off a bit. But if you look at the different price points, which you can obviously do with either Nielsen or NABCA data, you've still got ultra-premium growing faster than super, which is growing faster than regular premium.
So, the delta might not be quite what it was over the last couple of years. It's shrinking a little bit, but you're still getting premiumization. You're still getting up trading in the spirits market, and you still... I will go down in my career saying, "You wanna be in super-premium and ultra-premium price points for a lot of reasons, not the least of which is consumer demand.
The only other thing I'll add to that is, when we look at TDS, and we look at the fastest-growing categories, and then you compare it to our portfolio, the fastest-growing categories are American whiskey, tequila, and RTDs, and we think our portfolio is really, well aligned with what we're seeing as the fastest growth categories in the U.S.
Okay. So how are you thinking now about the role of craft whiskey? You know, it felt like craft was all the rage, you know, a few years ago, and the pandemic kind of brought this shift back to big brands across CPG, right? Not even just in spirits. And then you had all the work you've done with Jack Daniel's, you know, to kind of stem some of that momentum. So do you think we'll have smaller challenger brands start to reemerge in the conversation?
I mean, I think we're always gonna have smaller challenger brands in the conversation. I actually don't really like the term craft, 'cause I think you can talk about craft distilleries, which just kinda means small. But there's also craft brands out there that we and all the other major spirit suppliers are involved in, too. So, you know, I mean, I would, you know, would argue Woodford Reserve 20 years, you would have called it craft, and now it's a big, big, powerful brand. And so, but as far as those small players, and it's hard. I mean, it's hard enough developing new brands. It's really hard when you're spread out all over the United States.
They very often went down the path of provenance and place as their sorta hook, which works fine in your area code, but it doesn't travel very well. And so, so many of those brands went under during COVID, as they had to shut their tap rooms or their little distilleries down. So, I do think, you know, there is... I think someone estimates right now that using the old term craft is about 3% of the market. That's pretty small, and I'm not sure, I don't know what the number was 10 years ago, but it hasn't been a real, you know, it hasn't d. The growth has not come, like I think a lot of people would have said 5 or 10 years ago.
Where the brands that have done well, the newly developed brands that have done well, is some from Brown-Forman. It's from our, you know, the big competitors who have put in new brands and done very, very well. So, it's, you know, you ask about where's, you know, capacity, who's got the capacity? It's still the big brand, the big companies that own it. If you're talking bourbon, basically, everybody owns a distillery now in Kentucky. So that level of competition has certainly increased, but I'm not trying to put down the craft suppliers, but it's a tough, it's a tough world they live in, and there hasn't been a lot of share gains that they've made.
Okay. So back to a big brand. Let's talk about Jack and Coke. So 11 markets so far. I guess, what can you tell us about reorder rates, you know, kind of anything other specific comments you can make on recruitment of new consumers, like how the RTD is helping support or evidence of, like, a halo effect, as you kind of talked about with the joint advertising with Coca-Cola?
You want me to take it? Well, look, yeah. No, this is, this is a big brand idea. It's very hard. It's only been in the market for three or four months in the United States and even less when you leave the U.S. So there's not a lot of turnover data that we can glimpse so far. But we do know that, I mean, one of the main reasons to do this, besides the underlying profitability in and of, in and of itself, this is a chance for the Jack Daniel's full-strength brand to continue to grow around the world in places that we previously really couldn't get to. So what I mean by that is, we're doing the sales in the United States, Germany, and Australia, and The Coca-Cola Company and their bottlers are doing it everywhere else.
Which for us is, you know, obviously, the size and scale of their distribution platform is many times bigger than us. And so, you know, I used Africa as an example. While we would be down in South Africa, we're really not even available in the rest of the country. We don't have. We have some volume, but it's small. The Coca-Cola Company is huge there, and they're able to put this into their distribution system and bring it basically everywhere. And so a product, you know, full-strength Jack Daniel's is not very affordable to so many of the emerging markets part of the world, but the Jack Coke in a single can is. And so, we're gonna. We're on the back. We're on their backs, their bottlers, and they're bringing it, you know, to the world. So...
I think it's, you know, it's a pretty exciting proposition and something where even, you know, the ability that we call can in the hand. So if you've seen that can, it's fully Jack Daniel's. It obviously says Coca-Cola on it, too, but I mean, it, you can't mistake that can for anything other than a Jack Daniel's product. And that's like its own form of advertising. Which also part of this too is, besides the free markets I talked about, where Brown-Forman is selling at the Coca-Cola Company, the advertising expenses and things are on their books, not on ours. And so it's one more level or one more tier of advertising that we're getting on our core brands. But to say we're not paying for it isn't really technically correct, but it's not gonna show up on our P&L.
There's a lot of excitement.
Okay. What would you say in markets like Germany, UK, US, how would you sort of the role of the brand? Because the halo effect and the opportunity for recruitment is very clear in the markets you went through. So what do you see the evolution of the product being? Let's just stick with the US for sake.
Yeah, well, in... Let me do the Germany, Australia real quick.
Sure.
Just because-
Yeah.
It's been there for 30 years.
Um.
Both full strength and RTDs grow, you know, in tandem with each other, and they sort of work off each other a little bit. So, it's been a, you know, it's been a great brand building model for a long, long time. Very little cannibalization. I think that's important. The occasion is so different that you just don't really... We've never really had that as a big deal. So, in the U.S., it's a little bit different. Spirit-based RTDs are almost a new thing. I mean, until a couple of years ago, it was a very tiny category, mostly because spirits are taxed so much higher than beer. Just the relative price points became challenging. And so, but I think consumers have figured out how good these things taste.
A spirit-based RTD has a very different profile than a, than a malt-based one, and I would argue that it tastes better. I'm sure others would probably make the opposite argument there, but, you know, it tastes really good. And so, I think that brings a big advantage and something where we can continue to take share, and grow, and grow our U.S. business.
Okay. So I guess you've talked in the past about sort of your view on RTDs overall in the portfolio, and just given sort of macro concerns on the consumer, and now seeing that you're launching Jack and Coke at the same time, you've got Diplomático and, and Gin Mare. So you've got the, playing both ends of the spectrum on pricing. I mean, is this a time to be revisiting the broader perspective on RTDs for other brands that you think, you know, it could be a good fit as a reason to, to keep pushing on that end of the pricing spectrum?
Well, I think, look, RTDs, you know, they're big business, and we've gotten, you know, tens of millions of cases now spread out around the world, so it's gotten quite big. I don't. We didn't create Jack and Coke to be a time when the economy slows down and consumers have a little bit less spending money, maybe, and we would pick it up that way. That really was never written down anywhere that I can remember. It is more about satisfying a consumer demand that is out there in a product and in a format that people were making on their own anyway, and so we just give it to them in a can. So I think, you know, that really is the...
Now, the fact that if we haven't seen a lot of consumer trade down or anything like that, as we talked about that a second ago, but if we pick up some volume because of that, you know, I'll take it. But I don't. I'm not as interested in that side of it. I really want it to be more about building a business that's different than the core spirits business that we have, and making it big and making it profitable and all the other things that we talked about around the world, so.
Okay. Woodford, so you mentioned it earlier, right, and how it's scaled, but it, you know, continues to be one of the biggest drivers of organic sales growth for you. Volumes, I think, double-digit CAGR since it was first came to market 25 years ago. So can you talk about the longer-term runway you think there still is for this brand?
Yeah, I can pipe in.
Yeah.
I'll start it with the strategic side of things. We, yeah, so Woodford, as I said, was created in 1997, and it's had double-digit growth every year. So it's now 1.7 million cases, and most of that's in the U.S. So it's one of the most successful brands that we've ever created, and, and it does very, very well. But there's another side of it that I think is interesting. It's a little bit longer story, but we, when we leave the United States, Brown-Forman is largely a Jack Daniel's company. We're trying different things, and Gin Mare and Diplomático are changing that dynamic a little bit, but we've been trying to grow Woodford Reserve outside of the U.S. for a while, and we've only had mediocre success. It's getting there in a, in a handful of markets.
But, what we did with Gin Mare and Diplomático, besides them being great brands in and of themselves, they're very European-centric. They hardly even sell in the United States. So, but now we've got some scale on a non-Jack Daniel's brand outside of the United States that we can separate. I, I use France as an example. Jack is very big there. I don't... We had, and so we were trying to do Woodford alongside Jack, and it really, you get your salespeople all mixed up because they're all about, you know, they have their goals. It's a lot easier to deliver a goal through selling Jack Daniel's than it is trying to build a brand from scratch with, with Woodford. And for decades, we used Bacardi as our distributor in Europe, and they would only do Jack Daniel's. They wouldn't do the rest of the portfolio.
So we didn't really have a good setup to be able to do anything else. And what I want to see happen, and that's, I think we called it a bull case this morning, is if we can use Gin Mare and Diplomático to create a platform, that you can then take our single malt Scotches , you can take Woodford, you can take different countries will probably have a different blend of brands that we put in there, but these are dedicated teams now that are not distracted by something like Jack.... It's a very different proposition to bring that to life, you know, to continue to grow that versus developing a Woodford from scratch. And so, we're gonna put that, we call it the emerging brands portfolio.
We're gonna put that system in place in basically developed world of developed markets, not so much emerging markets, which still lean heavily into the Jack Daniel's family. But I'm optimistic that we've now got a—we're setting ourselves up for success, where before we really weren't.
Yeah, and I would just build on to what Lawson is saying, you know, we've made so much investment in our route to consumer over the last 10+ years. So we have so much strength in that space now to have our brands in our hands. Then Gin Mare and Diplomático could allow brands like Herradura and Woodford to grow at a faster pace and globalize them at a faster pace than what they may have done on their own. And we also believe that the strength of Woodford Reserve and Herradura will help Diplomático and Gin Mare grow in markets where Herradura and Woodford have more strength. So we think the portfolio now is really complementary, and that there's energy when you combine these super premium plus brands together.
Great. Let's actually switch to tequila. You mentioned Herradura. The expansion of facility would seem to be a pretty strong sign of conviction that the growth, there's still lots of growth for the category. So what cases are the kind of latest consumer preferences that you're seeing? Same question on trade up and trade down, but yeah, just let's start with broad trends in tequila that you're seeing.
Well, the one for Herradura, it's a little bit different between Herradura. You know, anecdotal, we'll watch this happen. The consumer has learned to love a really high-end tequila soda on a squeeze of lime . It's a great drink. It's a great summertime drink. You want to have a good tequila if you're gonna do that. And, I mean, I, my friend said, at least it's a—it's been a boom in the last couple of years as a way to consume tequila, margarita, because that was, that was what tequila was so known for, for so many years. And so by opening up with a drink at a higher price point, the, the brands, you know, that are well known out there, that are in that, you know, I'll say $45- $50, $55 price point, there's an enormous sense of just value right there.
There's billions of cases in that space now. So, it's been a boom, really, for a lot of spirit suppliers. El Jimador is a little bit different. That plays. It's still a 100% agave product, but it plays at a lower price point. That does feed a little bit more into the margarita occasion. But El Jimador is a big brand for us and an important brand. And, you know, we've spent a lot of time since, I mean, we acquired these brands 15 years ago. It took a while. We have driven the volume way down in Mexico because it just simply wasn't very profitable, not even earning its return on capital. And that's one thing Brown-Forman will do.
We literally took hundreds and hundreds of thousands of cases out of the system by just driving the price up year after year after year, to get it to where now it is a reasonable business. In the United States, it's closing in on 1 million cases at the point. So, El Jimador's had a heck of a run.
Wow! Okay. Just, I guess, on the Herradura facility also, just, you know, are there efficiencies to be had from that expansion as there are kind of any sort of productivity work?
Absolutely. So as, as we've seen such strong tequila category growth and the growth of our brands, you know, we've been pushing our facilities to find efficiencies before we even got into the expansion. So we have been seeing some efficiencies there. We go into the expansion, definitely looking for an additional capacity through the infrastructure, but then also from our processes. So when we think about Herradura, and the facility, it very similarly to Brown-Forman, was born in 1870, 53 years ago. How you make tequila really hasn't changed much over that period of time. And so we're gonna continue to make it the way that we've made it, but we're gonna utilize technology, because technology has advanced along the way.
So we're investing in technology that's gonna help as we modernize the ovens in which you bake the piñas and get the juice out of it. So we do believe there will be efficiencies in that, and then we're also expanding it in a really modular way, so that as the brand grows, we can grow the infrastructure that supports it without just having to have a significant step change. So that way, our capital can grow in line with the brand.
It'll be interesting, interesting to see how the category develops outside of the United States, North America, really. U.K. has a decent tequila business. Australia has a decent tequila business. That is actually the number one brand in both of those countries with 100% agave products. So we're, you know, we're moving in the right direction. There is really strong consumer demand and, and with a lot of consumer products category, something that starts in the U.S., does very often tend to spread out around the rest of the world. And that, I mean, if the category begins to internationalize, that's the word, then, you know, that's a big opportunity for not only for us, but I mean, the industry to really continue to grow the category.
Okay. A little shorter term. So Leanne, with earnings last week, you reiterated the guidance for organic sales, 5%-7% growth and operating income, 6%-8% growth. That suggests a pretty significant acceleration for the balance of the year. I think it'd be helpful to just talk a bit about the macro assumptions that underlie that reiterated guidance.
Absolutely. So it does imply acceleration from where we are. And some of the biggest drivers for that is, and we've talked about that, and we're looking really forward to next year, maybe not having to talk about this, but as we got into supply chain. This time last year, we had gotten back into glass supply, and we had the ability to ship the orders that we had in-house. So last year, this time in first quarter, we were, had very strong shipments of Woodford Reserve, Gentleman Jack, Jack Daniel's flavors, all to rebuild all of the supply chain, retailer to distributor inventory. And so in the Q1 of this year, we had to comp that.
And so as we move through this fiscal year, we will get to the point in the back half of last year, we got to more normalized distributor inventory levels, so our shipments will normalize. So the number one driver there is just to say we're going to be lapping—we're going to get through the lapping of that inventory rebuild. That will be one. The second is price increases and our revenue growth management initiatives that we have in place for this year will continue to deliver growth. And then, as we talked about, Gin Mare and Diplomático right now are in our reported results only. When we get to the second half of the year, they'll move into our organic results. So they will contribute to that acceleration. And again, for the reported, for the first quarter, that means they drove 2 points of growth.
So these are exciting brands that have the scale to have a material impact. And then just as we go down, we also know that last year we got into costs associated with supply chain disruption because we didn't want to interrupt the momentum of our brands, especially during the important holiday selling season. So there were logistics constraints around the world, and everybody was living through those. So we did things like air freight, as you would expect that we would. We were outside of our normal shipping lanes to make, at a higher cost, to make sure our product got there on time. And just by the nature of the world normalizing from a supply chain logistics perspective, we're going to be more optimized, and we'll have the absence of that this year, which is helpful.
Then as you think about our operating expenses, it's what we've been sharing with you is, expect brand expense to largely be in line with our top line growth, and our SG&A will be a bit elevated this year from what our historic average is, because we're investing in our route-to-consumer, specifically in our demand Japan model. But, we expect all of that in total to deliver that operating income. So we do expect that acceleration, and that's kind of what we see as the drivers of those.
Great. Just a quick follow-on question on the promotional environment, just kind of, you know, key developed markets and a risk of, you know, promotional activity stepping up.
Yeah, people have been asking, particularly with, with tequila, because you've had such a rapid decline in agave prices, what is going to happen to the price environment itself? You know, I don't know. I can tell you up to this point, and really through this past summer, there has not been an increase in promotional activity. We've not been dealing back the price increases that we've taken over the last few years. And so, you know, I'm obviously hoping that it's going to stay that way. No one wants to see that real aggressive promotional environment come back again. You know, the, the brands that are doing very, very well at that higher price point, brands that are in that $40-$50 price range, are not brands that go on high promotion anyway.
So, all I can say is we haven't seen it yet. I asked our European country managers, because I was getting ready for this and wanting to see if they had seen anything, and they had said the same thing, that there really has not been any increase in promotions yet. Just where it goes, we will have to see, but it isn't there yet.
Great.
And then just sorry, I forgot to ask, Leanne, just specific visibility you have into key inputs like wood, agave, glass, when you talk about some of the lapping dynamics in the guidance, but on the input cost side.
Yeah, so from a gross margin perspective, we did just report our first quarter, and one of the things that we said in that was we had 90 basis points expansion, and that was really driven by our price increases that we had across our portfolio, and it more than offset our costs. So when we look out for this year for, as it relates to our cost, we've talked a little bit about agave from the perspective of we have been waiting for that supply to come in to normalize against the demand, elevated demand that we've seen.
We've been talking about this since December of 2021, I believe, and we're finally here, that it's now taken its first big down from kind of that MXN 28-MXN 30 pesos to that MXN 16-MXN 18 pesos per kilo. And for us, when you think about our portfolio, that's a significant impact. But how we will see that impact over time is, as you would expect, we have finished this inventory that we have to work through and kind of by SKU, it's different for every one, but I would say 3-4 months of inventory that we need to work through.
And then for our aged expressions, such as Añejo and our Reposado, which is about half of our tequila portfolio, we'll have to let that finish aging for the liquid that's in there now, and then that will be bottled and have to be sold through. But our Blanco expression, or the non-aged expressions, we'll get to those more quickly, and we think that's going to come kind of in the back half of FY 2024, our fiscal year that we're in now. And we're also going to see this benefit because we got the penalty over a number of years. We're going to get the benefit over a number of years as that comes back, as we work through our inventory. So we know we'll be seeing a benefit from that in FY 2025.
From a wood perspective, to make the barrels that we have, the cost of the commodity continues to be high. But we've made a lot of strategic changes in our supply chain for that specifically, and we're starting to see benefits of that. So it's definitely less of a headwind for us than it has been over a number of years. And then just to go through a couple more, glass, what we're seeing is it will be slightly up this year on a year-over-year basis because of inflation, but much less so this year because the natural gas prices have come down, diesel prices have come down, so that's helping on that input for our products. Grain, which for us is largely corn, that is below its peak, and we think that's gonna be kind of steady where we are right now.
And again, for us, the one thing we talk about is FY 2024, which is our year we're in right now, is definitely the absence of those supply chain disruption costs. So all in all, just say, we believe our cost trends, after a number of years of agave and wood challenges, are really starting to trend in the right direction.
Yeah, it's been a strange 5 years in a lot of ways. But one thing, the demand for the products was elevated. I mean, we've had a 5- or 6-year CAGR, I think 7%-8%, somewhere in that range. So top line growth, solid, but we had gross margin declining through all that window, and that's painful. You know, going from, we did, we peaked at 68, which was sort of, I don't want to say it's officially high, but up a little bit to get it up that high. Came back down to more like 59 at the end of last year. Now it's starting to move in the right direction again. Life is a whole lot better with an expanding gross margin than a declining gross margin in terms of your ability to reinvest.
We get that cycle of, you know, strong demand, decent profit growth, you reinvest, and you try to continue to get that compound, compounding annual cash flow. Well, that was challenged by that gross margin decline, and we have put a lot of effort into finding ways to turn that around. And this past quarter, we finally got it started to show through in the numbers, and hopefully we look forward to more of that going forward.
Great. Just a few minutes left, and so I wanted to end on the topic of owned distribution. So how's the transition in Japan, and I guess Slovakia, for that matter, going? At the 2021 Investor Day, you'd shared that there was a slide that showed that your own distribution was lagging the industry average around 80%-82%. So what's the long-term goal, you know, for that?
I can, I can start with, you know, we—that, that would still remain the truth, is that we have the opportunity available to us to continue to forward integrate and take more of our distribution into our own hands. I think the thing is, you know, we talked about on our call, Slovakia, which we just completed this year, and then on April first, we'll be going live in Japan. We continue to have a strategy of, one, to capture the value that we believe that's there, and doing it in a strategic pace and order that's available to us while optimizing the investments that we've already made.
Japan's an interesting market, and a lot of people looked at us funny, going, "What, what? Nobody's investing in Japan anymore." It is a big whiskey market. It's a huge RTD market, and we think Jack Daniel's has a real chance to, to be big there, and then we can also bring in Woodford. We've got our single malt Scotches . Our portfolio lines up very well for that market, and it's a very premium market also. I mean, they obviously have very big super premium and ultra premium price points. And so for a lot of reasons, it is a very attractive market, one that we're willing to make the investment for.
It's an expensive market, so it's an expensive organization to build up, but I think we feel pretty good that it'll be, in the long run, will be a very, you know, attractive investment.
Okay, great. We are exactly out of time. Thank you very much for joining us again this year. It's really a treat to have you with us.
Thank you.
Thank you. Great.