Ladies and gentlemen, Jay Koval, Vice President, Director, Investor Relations.
Good afternoon, everyone, and thank you for joining us today for Brown-Forman's 2014 Investor Day. We couldn't be more excited to have you here today as we lay out our plans to further develop our leading portfolio of American whiskey brands around the world and drive the next decade of outperformance. We've got a full afternoon planned, so let's quickly review our safe harbor language and then look at the agenda. Today's investor presentations contain forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated in these statements. Many of the factors that will determine these future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward-looking statements, and the company undertakes no obligation to update any of these statements, whether due to new information, future events, or otherwise.
On this page, we've listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K, 8-K, and 10-Q filed with the Securities and Exchange Commission. Each of you in the room should have today's slides in front of you. And for those of you who weren't able to join in person, the meeting is being webcast, and our slides have been posted to Brown-Forman's website under the Investor Relations tab. With that, let's turn to our agenda for the day. Paul Varga, our Chairman and CEO, will kick off the meeting, and presentations will run until roughly 2:30 P.M., when we'll have a quick break for you to check emails and use the restrooms. After the break, we'll return for additional discussion and presentations before having Jane pull it all together with some numbers.
We're targeting to open up the floor to Q&A at roughly 4:00 P.M., and then we'll wrap up at 5:00 P.M., so you can enjoy some of our great brands during the cocktail reception. Before I turn the floor over to Paul Varga, I wanted to share a video that summarizes what an exciting time this is for Brown-Forman to be the leader in American whiskey.
It's just this very simple thing. It's beautiful spring water, grains, corn, malted barley, rye, which is then put into a brand-new white oak barrel, then aged through the hot summers and the cold winters. Many years later, put into a bottle and sold. Then we open the bottle, and we pour a little into a glass, and we sip on it. Somehow, all that has led up to that moment when we are sipping that whiskey somehow means something.
It is super cool, super hip. Everyone wants bourbon.
For the first time since Prohibition, Jack Daniel's is going to be building a new distillery.
The bourbon boom continues in downtown Louisville with yet another major announcement.
Brown-Forman plans to invest some big money.
$30 million in revitalizing history.
I see a set of brands that really feel right in the hands of Brown-Forman. They've all got a sense of place. They've all got history and tradition. They're all open to innovation. These are really special things in the world. I know I'm not the only one that feels that way. I'm glad to be one of the ones that feels that way.
Ladies and gentlemen, Paul Varga, Chairman and Chief Executive Officer.
Well, good morning, everyone, or good afternoon now. It's our pleasure to welcome you to a conversation that I don't think needs a lot of introduction from the theme that you saw there in that video. I think if you look at the backdrop I've got here behind me, and of course, in traditional form for our industry, barrels and bottles of bourbon, which set the theme for what we're going to talk about today. We will talk about, in fact, Brown-Forman Corporation, with a specific focus because of the many questions we receive from you and others about what's happening with American whiskey. We thought we'd spend the majority of our time today to actually talking about that. You saw on Jay's agenda that you'll hear from not just me, but a number of my colleagues in the leadership ranks of Brown-Forman today.
We always enjoy hosting you, either as small groups or as individuals, whether it's here in New York or some other facility. Sometimes our own production operations are in Louisville, Kentucky, at various times. This is another such opportunity for you to get to know Brown-Forman, but I hope you'll get to know more of the people that sometimes you don't get to see through your individual visits and experience with the company. You saw that you'll hear from 10 of us, but there are more than 10 here today. During the breaks, and particularly afterwards at the reception, you'll have an opportunity to talk to all of us more closely.
There's particularly two people that I wanted to introduce who weren't on there, who don't have formal speaking roles, but will be around for the remainder of the afternoon, who I just think you all might enjoy getting to know. One is Chris Morris, who many of you would have seen or met before. He's our master distiller and is really chock-full of information as it relates to the making of our products. One of the reasons that we think that this revitalization is going on in American whiskey is because of what's in the bottle. Chris, better than anyone, can be articulate on that topic. As well, Campbell Brown, who is one of the Brown family members, the founding family and controlling family behind Brown-Forman today.
Campbell Oversees our Midwest division in the United States, so he's very current on the United States business, but he's also really integrally involved in the work of the Brown family and its engagement with Brown-Forman. Campbell and Chris have both worked all over the world for Brown-Forman at various times, so they're intimate in terms of their knowledge about the company. I just want to make sure you're aware of them, in addition to all my colleagues who you'll hear from. There's a nice section at the back of the presentation book that you have that have bios of all the folks that you're going to hear from. I just found it useful to read about them and find out things about even my colleagues I didn't know.
Interesting to have that as a reference point as well. I'm just going to start us out and hit, I would call it maybe skimming over what you will hear over the next couple of hours from the representatives of Brown-Forman here today. I know this is like playing your ace in a game of cards right off the bat, but I thought I'd just share one slide we've used. This is a representation of the company's total shareholder return relative to a number of competitive benchmarks we utilize and have been doing this over many, many years. What you'll see it is the company's TSR relative to these benchmarks over one, three, five, and 10-year horizons.
While it's not even an ambition of ours to always be number one, no matter what the period, it just so happens through October 31st, as it was, I believe, very close to it at the end of April, that the company compares very favorably on this metric to very relevant benchmarks, we think, for our company, which includes the public company competitors around the world that we track, a composite for the competitive set. We also look at the S&P 500 and consumer staples to see how the corporation is tracking. When we look at this, we're of course are thrilled about the progress of the company. We also wonder, like you might, and this is what today will be about, is why? Why has Brown-Forman consistently performed well against these wonderful benchmarks, and why has it been so consistent?
I thought I'd take you through just a few summary slides as to why I believe that the company has continued to do as well as it has on these metrics. It starts with some representation of the business generally. I always feel like for any business or any investment we make or that you might make in us, that you consider, is it an attractive business? On this particular chart, what I'm going to plot for you here are simply two things that we hold very high in terms of priority, which are the returns on invested capital and our operating margin. I think using a two by two, as we've done here, what you'll see is, I believe, see the efficiency with which we produce profit for the capital that's outlaid or for the sales we generate.
First thought I'd show is using the benchmarks of the S&P 500 and consumer staples, you see pretty nice margins overall on average for the S&P 500 and for consumer staples, a little lower, but a higher ROIC. When you compare our industry overall, what you'll find is that the industry has a much higher operating margin, so obviously much more efficient in the production of profit from its sales, and on par with the S&P 500, with the low consumer staples on the returns of capital. On Brown-Forman's front, because of the nature of what you're going to hear today about our SKU to American Whiskey and to this magnificent Jack Daniel's brand predominantly, Brown-Forman is at the higher end, the highest end, against these benchmarks of both operating margin and returns on invested capital.
It shows that we, at the start, have a wonderful, we consider to be, business model and a business worth investing in and perpetuating. Just because you have this doesn't mean you can grow it. We all can think of wonderful businesses that at times have a difficulty growing. I think the second attribute that I would highlight that underpins our TSR is looking at our track record of growth. In fact, if you compare it to these same benchmarks, this chart here will compare when we stopped the clock in April 30th, our FY 2014 growth, and we'll compare it to the S&P 500 consumer staples in our industry set, which were low single digits, and Brown-Forman, as we completed last year, had operating income growth just over 10% at 11%.
Just to be fair, because one year doesn't always make a story, when you look at these same metrics on a five-year basis, you'll see that Brown-Forman has a solid advantage relative to all these benchmarks. You have an excellent business that has a track record of excellent growth. The combination of those two factors should be enough, typically, to make you want to invest behind your business. I think a third attribute that we always add in is the degree of risk undertaken in order to achieve those rewards. You might always find this to be an attribute, particularly of family-controlled companies, but it certainly is an attribute of Brown-Forman.
Again, against the same competitive set and using two metrics for risk here, one earlier that as I showed, the returns on invested capital, which are very nice for all three of the benchmarks, Brown-Forman in the low 20s compares very favorably. Very capital efficient, less capital risk associated with us relative to a number of these benchmarks. Then additionally, just on the borrowings of the company as it relates to debt to EBITDA ratio, you'll see just the efficiency with which Brown-Forman has lower risk as it relates to the balance sheet. When you put all these things together, I think from a just pure financial metric and ratio standpoint, it underpins the story of Brown-Forman.
I think what I would like for you to hear today, and you'll have an opportunity to ask lots of questions about this, is can we continue this? Is there opportunity ahead of us to continue this track record of doing Really growing at a relatively low risk and excellent business. It doesn't mean that there's not a lot of competition, not a lot of bumps along the road, but our track record, we feel, is pretty good. It's a wonderful time to talk about the corporation and the industry. This differential performance, we would've discussed some of this on just even last week when we released our mid-year results for this fiscal year. I think that what the difference that we would describe really falls into three buckets.
One being our skew toward the very attractive American whiskey opportunity that we're here to talk to you about today, and within that, our skew within American whiskey to what we consider to be one of the world's great trademarks of any kind, which is Jack Daniel's. The fact that our company is, in fact, more skewed, not only to this category, but more dependent on Jack Daniel's than many of our competitors are dependent on their leading brand. We really are, in some ways, we've become a very concentrated company, particularly after the sale of our consumer durables and our wine business a few years back. Second is the global breadth and diversity of our business now today, after spending the last 25 years or so on a globalization effort.
I would say that, of course, the benefits of being as broadly distributed and broadly appealing as Brown-Forman through the Jack Daniel's trademark is today, is it gives us larger populations to whom to sell our products. It gives us longer runways for growth, which is important for an enduring company. Very importantly, when you have a hiccup in one country, such as this year's, the issues that we've been public about, and you would've seen related to, let's say, Russia or Poland, you can have other countries pick up the slack and continue the growth of the company. The diversification that comes from this breadth has been really important to the company as well.
Then finally, particularly, when you're as concentrated in American whiskey as we are, and it becomes a basis for innovation, particularly on Jack Daniel's, you can have, if you have a relatively small portfolio compared to your competition, when you have successful innovation, it will show up in your results more prominently than it might for other companies. In the cases of here, Tennessee Honey, or you see Gentleman Jack or Woodford Reserve Double Oaked on a smaller basis. Even last week, we announced the rollout from an earlier market test on Jack Daniel's Tennessee Fire, the possibilities and opportunities for these flavored extensions.
We really think the combination of our concentration to American whiskey, the basis for innovation that that provides, and the impact of that innovation, as well as the global reach and diversity of our company, are the three primary things underpinning our differential performance versus our competition. It would be erroneous on my part not to say that the people at Brown-Forman aren't also part of the difference. I mean, if you think about it, we uniquely have our trademarks, and we uniquely have our people, and those are the two things that a lot of companies in the brand-building business bring. I know it's a cliché to say that the people make the difference, but here, when I talk about people, I'll talk about two things.
One, the employees of Brown-Forman. We've got a cross-section here today of a few of us. I'll give you one sort of interesting set of statistics from the agenda that you just saw. The 10 people that are going to talk to you today, they have a combined 165 years of experience at Brown-Forman. They've worked at greater than 20 companies before joining Brown-Forman. On average, our executive group at Brown-Forman is still in its early 50s on average. One of the things that I think is nice about that, you get experienced people that still have runway to utilize that experience on behalf of the company against the opportunity we're going to describe today. I think the people and the continuity, and it's not just the people that are in this room today.
You can replicate this if you go to virtually every continent where we do business today. I think the other thing, you'll see them represented in some ways in these photos, you might recognize some of them, is the family that is behind Brown-Forman. We consider this to be a significant advantage. I mean, a significant advantage. This would've been represented here, just in the last year, where we saw our largest volumetric competitor in the American whiskey business sold. The family and their commitment to the enduring growth and prosperity of Brown-Forman and being able to take that longer view, particularly in a business that ages its products, is a huge advantage we feel for Brown-Forman Corporation. We'll talk at various times, throughout the day about the family.
You will see, as we make some of the transitions between speakers today, you'll see videos that describe the company and the American whiskey opportunity and represented the voices, and many of them are actually Brown family members who are the people articulating their feelings and sentiments about the company and the opportunity. I'm going to close by really just saying, in summary, when you think about us or when we think about ourselves, it's probably putting us both in the same shoes, we think that the corporation is a unique investment opportunity today. You've seen just a summary of just what I've talked to you about, but it really does go to the portfolio that we have concentrated in this area of an American whiskey with a global opportunity.
We think that, we've said this before, particularly as we have globalized the company, we think that the concentrated nature of our portfolio and the focus of our people, particularly behind the Jack Daniel's trademark. When I think of our global competition, I do not know of a single competitor who is so exclusively concentrated with their focus and attention on a trademark like Brown-Forman is around the world behind Jack Daniel's. They have much larger companies. They are oftentimes dividing their attention between any number of categories and brands because of the size of their portfolios. We really feel it's an advantage to be this laser-like focus on American whiskey and very much in many instances, the Jack Daniel's trademark.
We think another very important part that you'll hear from Alex Alvarez today is we take for granted sometimes because we've been in the business so long that we've got all these assets: the production and manufacturing assets, the integration into barrel making. These are a huge advantage, particularly today for our company as we seize this opportunity. Also think, you've got an experienced group of people, not only here in the room with you today, but around the world for Brown-Forman that can bring this to life, supported by a wonderful family who wants this business to go on and on with the sort of re-returns and success that I've highlighted for you here today. That's the background of what you're going to hear. You're going to get into it in much more detail. Again, it's our pleasure to welcome you here.
Now I'm going to bring up our Chief Brands Officer and somebody many of you will remember from his Investor Relations days, Lawson Whiting.
Thank you, Paul. Good afternoon, everyone, and welcome. Good to be here again. I know I've seen a few faces here I haven't seen since I was in that job, and that was 11 or 12 years ago. If you're still around and you've been with this company for a long time, I hope you've enjoyed a great run with us and look forward to today, talking more about why we think the future is just as bright as some of the things we've done in the past. Brown-Forman really does have a leading American whiskey portfolio, and one of the things we're going to try to talk to you about today, and all the different presenters are going to talk about is, why?
Not only the results and commentating on what you have seen, but why we really believe that this portfolio is so great and why we think it can continue to grow into the future. I'm going to focus my comments today on both the categories and why the whiskey business itself is a good business to be in and why we have so much confidence in it. I'm also going to talk a bit about, say why consumers are increasingly attracted to the category. That's something we're going to try to put some more color around as to what is it that's driving this new generation, if you will, of consumers into the category. Lastly, I'll focus comments on both Old Forester and Woodford Reserve, two of the most important brands within our whiskey strategy.
I'm going to hand it off to John, who's going to come and talk more about Jack Daniel's and everything that we have going on there. Now whiskey is the growth leader in spirits, as we would say. If you want to be in the spirits business, whiskey has been the largest category in terms of growth, both on percentage and absolute cases, over the last 10 years. Much better than brandy, rum, and certainly better than tequila and gin. It's been a good category to be in on a global basis. Once you're within whiskey, the price points, we can look at both standard and premium plus, and then there's also obviously the value categories and others. But if you're going to be in whiskey, the best place to be is premium plus.
That's where most of our portfolio at least starts, and we go up from there. We're excited that we're in a great category called whiskey, that is big. We're in a category, or at least price points, that are very attractive and showing sort of mid-single-digit growth rates across three, five, and 10-year periods. These are really sustained periods of true organic underlying volume growth across a long period of time. Then also, we like whiskey, we like premium plus whiskey, and then within all the whiskey categories, we really like U.S. whiskey or American whiskey. If you just look at that, you can see incremental cases over the last five years. U.S. whiskey has delivered the most case volume growth of any of the other categories.
Scotch, which is multiple times bigger in aggregate than U.S. whiskey, is still exciting and growing, but it is not holding up to the pace that the American whiskey brands are growing. Certainly Irish has been an attractive category and others also, but U.S. whiskey has been the best place to be over the last, say five years. That was the last five years. I'm going to back up and do a little bit of history over the last about 50 years, what we often call the golden age, and then into the dark ages. If you go back, this starts in 1952, if you can see it on the screen, when whiskey was the predominant category in the United States, much bigger than all the other white spirits categories combined. It was the golden age. There were lots and lots of brands.
A lot of brands that obviously don't exist today, but they've gone away. There were a lot of brands that got very, very big, and it peaked around 1970, and then it moved into what we call the dark ages. The dark ages, where a lot of brands went from million case brands to nothing, or million case brands to 50,000, things like that. We owned a couple of them. Honestly, Old Forester and Early Times both got caught up in that. It was a very difficult time. If you look at the top, say the top 10 spirit suppliers back in 1970 and then who they are today, the vast majority are gone. They've either combined or merged with somebody else or sold out altogether.
And I do think it's always interesting is how did Brown-Forman make it through the dark ages when we were such a, and have always been, largely a whiskey-based company? It was simply the power of the Jack Daniel's trademark that in 1970, the brand was actually relatively small and had about a 2% share of the U.S. whiskey business, or whiskey sold in the United States. It had about a 2% share, and it's about 10% today. While Jack Daniel's was able to transcend the different categories and compete, and compete very successfully with the vodka brands and tequila brands and others that were growing through those times, a lot of other whiskey brands in this country went away. Taking a look a little bit. That was a 50, 60 year sort of window on how whiskey has developed in the United States.
Let's look at the little bit shorter term. It really started to turn around 2010. We'd been in this pretty long period of decline as a category, and then it started to slowly build up again, and we saw accelerating percentages of growth all the way through. This is IWSR through 2013. And if you look at any of the consumer takeaway data in the United States right now, those types of numbers are continuing through 2014. We're really, really excited about the shorter-term growth, or the recent results, I should say, in this category. Plus 6% in volume growth is tremendous figures. Now, if we take that 6% and we split it up, it's about half flavors and half more traditional, mostly Kentucky bourbons and Tennessee whiskey.
It's been a very balanced growth over the last few years, and we're quite excited about that because we think it really does provide or bode well for the future. If we talk a little bit why. Why is this generation discovering whiskey? Then importantly, how long can it go? Or how much confidence do we have that these trends are going to continue? I'd cite sort of three big buckets of reasons why we do believe that this generation is discovering whiskey. It starts with taste. We believe we have authentic and interesting brands and premiumization. Let me tell you what, sort of within each of those, what we believe or what I believe. First of all, taste. Flavors do broaden consumer appeal. We know that we are bringing in new consumers into new occasions, and it's just an easier taste to acquire.
As much as I love to drink a nice bourbon on the rocks, we know that younger consumers, in particular, struggle with that in some cases. We're making it easier for them in a lot of ways and making flavors into a broader appeal. That is important, and we know that through all sorts of research that millennials over-index into these flavored brands, different multicultural consumer groups over-index into these brands, and so do just millennials in general. We know we're bringing lots of new people into the franchise. The other important part, I think, or one of the other important parts is authentic and interesting. Interesting may be a sort of a general word, I guess, on why we really believe in this category.
I think it can best be described as because one of the questions we get is, what about beer and craft beer? Now you've got 50 different, or all 50 states have their own craft distilleries, and they're growing, and there's lots and lots of them coming up every day. What makes us think that what has happened in beer over the last, say, 10 or 15 years is not going to happen in whiskey? I would submit a couple different things. One, I think if you go back 10 or 15 years and look at beer is, by nature, it is meant to taste the exact same every time. It comes to you either in a can or off a tap, but it is meant to be the same temperature and generally have the same taste every single time.
You have a couple of brands who might put an orange slice in there or a lemon or whatever, but largely, it is pretty much the same thing every time. I do think that they were open up for innovation and competitive reactions or people trying to get into the beer space because they could, and because consumers were looking for something a little bit more interesting. We have a different situation. I do think whiskeys are a little bit different. One, you've got the natural barriers to entry, which others are going to talk about today. Just the general nature and the capital-intensive nature of getting into whiskey makes it harder for people to get in quickly, and particularly if they're looking to make a true high quality, say, a bourbon in this case, and want to wait four or five years, it's a very expensive undertaking.
There's some natural barriers there. Just as importantly, I think that whiskey actually is interesting in that you think about the media. The media is covering it like crazy. Think about bartenders. Bartenders love to talk about whiskey these days. They love to make great whiskey drinks. If you're a mixologist, if you're in Manhattan and you're at one of these sort of high-end restaurants or bars in town, serving beer doesn't really check your mixologist credentials, if you will. Where making an Old Fashioned really does. I think that interesting element to it is a bit of a barrier to keep from lots and lots of brands coming and encroaching into our space, if you will.
Because consumers still find it to be such an exciting place to be, and the on-trade continues to find an exciting place to be, and the media and everybody else is covering it, we really do think we've got a bit of a defensive, not a defensive nature so much, but we really do believe we can defend our turf. It's a better way of saying it. We do think our future is a little bit different than maybe what's happened in beer over the last few years. I don't want to say we're naive to it, and we're not watching it and thinking about it and talking about it a lot, but we do believe that we've got some very defendable positions here, and we do think we'll continue to be successful.
The other factor is just premiumization in general, which is happening across lots of consumer products categories, but it has been happening in spirits for a number of years, but is really happening in whiskey now. If you look at the growth rates of the brands that are up there in that super premium and ultra premium space, the growth rates are phenomenal. I think that brings excitement into the category. There's something to graduate to. There's different profiles. We call them different grains that you can play with, different ways of drinking the whiskey that just keeps it exciting and interesting and new. I think we put those three factors together, and we really do believe that we've got a long-term runway in front of us. How do we play in this space?
This is a graphic, a two by two that we've used internally a number of times to talk to even our own employees. Thought we would bring it out in front of you because it is a little bit of a different way to look at the whiskey business. Price is on the Y-axis, and then we've got grains off to the right and flavors to the left. Basically, we all know it starts with Jack Daniel's Tennessee Whiskey in the center of it all, and then we look at our portfolio as we go around this wheel. Excuse me. As you look at sort of in the lower left box, they tend to be less expensive products that have a little bit more flavor. They're bringing lots of people into the category, different occasions, different ways, and formats that you can drink the products.
You've got your Honey and Fire in there, then moving up, sort of if you just kind of go around like a clock up towards the upper right, you've got all our super premium and ultra premium products, most of which are growing at very, very rapid paces right now and are great businesses to be in. We look across our portfolio, and you've got Southern Comfort in there and Early Times and some other brands. Old Forester and Woodford Reserve are also in there. In total, we feel like we've got this space pretty well covered, but there is still white space in there too. Whether you go to the upper left, I do think that there's potential opportunity for flavors at a higher price point, and we may go play there, or we may go bottom right.
People have avoided sort of that space for at least the time being, because when you talk about different grains like a rye or wheats and things like that, there's not enough of it out there. There's not a lot of people selling it at real cheap prices, but there's certainly a lot of consumer interest in these different grains, and we think that there'll be long-term opportunities to play there too. Now I'm going to talk a little bit about a couple of brands. One, first Old Forester, and then into Woodford Reserve. Old Forester is the founding brand of Brown-Forman. It's been around for a long time, and it was one of those brands I mentioned earlier, the Dark Ages, that started to decline back in 1970, and we unfortunately got caught up in that. This is actually a graph. Get it to go.
This is what Old Forester's trends have looked like over a 40-year window. Not something we would typically show at a conference like this. To show that a brand went from a million cases down to 100, you'd think, "What? Why? What are you doing?" About two years ago, the tide started to turn. Given this is our founding brand and how much we, as a company, are associated, particularly in Louisville or in Kentucky with it, got excited again on this brand, and it started to turn. We saw decent growth last year, and it is just accelerating again this year. Interestingly, actually, one of the fastest-growing markets for this brand in the entire country is Manhattan. The bartenders in this city have taken to this brand in such a way that gets us very excited in terms of the long-term potential for these brands.
When I talked about the Old Fashioned earlier, but the Manhattan, other sort of high-end cocktail drinks that these mixologists are making, they're using Old Forester for it, and it gets us very passionate, gets the company very excited about it. You would've seen that opening video before even Paul came up, some of the news reporters talking about building a new Old Forester home place and distillery in downtown Louisville on Main Street, for those of you who've been there. We bought this property, or almost, and we're going to build a new distillery, something we haven't done like this in a long time.
We're going to build something that's just going to be out of this world, fantastic consumer experience, and I do think it shows, we're putting $30 million behind this thing, at least, to develop what is a great consumer experience and interaction with this brand and sort of take it back to the next level. We'll see. We're going to try to get it back eventually to its million case mark. We'll see. That's a long way to go, but we're quite excited about the prospects for Old Forester. Now, Woodford. Woodford Reserve is a brand that I'm sure you all have seen by now. It is one of the hottest brands in the entire industry. It is something we are all very proud of. The company is really rallying behind it and excited to see the type of growth that we're seeing.
I'm going to show you a short commercial here. Just take a little break, then we can talk a little bit more about where this brand is going.
When I see people drinking bourbon, I know their type. They open their house during the holidays for those of us unable to return home. When I ask them what I can bring as a sign of my gratitude, they'll reply only with, "Yourself." We love you Woodford way.
Woodford Reserve is a brand, as I said, very passionate. Inside of Brown-Forman, you've got a lot of people that really love this brand. It has been growing rapidly in the last few years, it took a while to get there. I think this is a brand-building model that we have learned a lot from ourselves. We started actually building the distillery back in 1994. We sold the first case in 1997. It takes a while. It takes a while to properly seed, get it in the proper way, particularly at these price points. It takes a while to get it into distribution and get consumers to really know it. It took a while to get to 50,000 cases, then 100,000, and then the base starts to get bigger. It snowballs a little bit. We get to 200,000.
Last year, we crossed 300,000 cases, we're well on our way to 400,000 and above. A lot of excitement, a lot of passion for this brand. At the price point that it sells at, it makes a great margin. It's a terrific brand and something we really want to see growing and doing well going forward. I'm going to show a little clip here. Just take a little bit of a short break on something that ran on Saturday Night Live a couple of weeks ago. A few of you may have actually seen this. This is one of those things where, as a brand builder and a brand company, when these things happen, we're all high-fiving in the back room, getting excited about it. This has been a fantastic little video.
Offer to have a glass of Kentucky bourbon with future Senate Majority Leader Mitch McConnell. This evening, that dream took place.
Okay. Now we're having fun. Yes, Hillary Clinton? This is Publishers Clearing House. I want you to know you've won an all-expense paid trip to getting whooped in 2016, red paw print. You know what? I guess there's nothing getting done in the next two years, huh? Mm-mm. Not a damn thing. Well, you know what? That's great, we can do this together. Live from New York, it's Saturday Night.
That thing, I've watched that thing 25 times now, I still laugh every time I see it. It's much longer than that. We obviously cut it down for this conference. That type of PR, one, it's great for the brand just in terms of the visibility that it gives. It does show you a little bit about how, when they had the chance to essentially pick any brand for the opening skit on Saturday Night Live, they chose Woodford. Once again, confident and feeling good about it and really looking forward to the growth of this brand over the next few years. The last slide, just thought I'd lay out kind of our vision statement that we've been using with a lot of our own people to kind of kick off the rest of this day.
Be the global leader in American whiskey, led by our Jack Daniel's trademark, accelerating our existing portfolio growth around the world and entering other attractive whiskey categories where we don't participate today. We want to lead the global growth of American whiskey, and we have every intention of doing that. We focus first on our organic growth opportunities, really led by the Jack Daniel's trademark. We know that is driving the boat these days, and we will continue to focus on that organic Black Label, really, growth to start with, quickly followed by innovation. We're working hard at innovation, as a lot of others are too, we've got obviously Jack Daniel's Honey and Fire and others that you're going to hear about today.
The full portfolio of whiskey brands all are looking at a lot of different innovative products, and we're pretty confident we can be successful there. The third bucket would just be acquisitions. We've been public about our interest in other whiskey categories around the world. We still are interested in it. Jane's going to talk a little bit more about it later on today. Just know that we are looking to continue to grow in attractive business models, and we think whiskey in general is an attractive business model. Excited about it. Looking forward to the rest of this day. I hope you all get a really good feeling of what we're trying to do in the whiskey business. With that, I'll have John Hayes come up.
It's really hard to grow up without being impressed by Jack Daniel's.
If asked, what's the secret of Jack Daniel's success? Almost everybody would answer, it's in the bottle. It's the product.
It is real. There's nothing phony about it. You know what you see is what you're going to get. That's it. You're dealing with real life in Lynchburg.
It is a real distillery, there was a real man named Jack Daniel. There is a cave spring, and all the water comes out of that, and you can see the fermenters and everything, and it's a little small town.
When you look at some of those guys who were involved in the very early days of Jack Daniel's, their personalities is kind of what became the personality of the Jack Daniel's brand.
Jack Daniel's has become this great global icon, and we don't know that it would've been without Brown-Forman.
Jack Daniel's has always been a special place. I think the important thing that we do in Louisville is appreciate Jack Daniel's and don't try to change it.
Ladies and gentlemen, John Hayes, Senior Vice President, Managing Director, Jack Daniel's.
Good afternoon. Always a pleasure to be here and start after something like that, representing this great brand, Jack Daniel's. There he is. Sorry. Today, I'm just going to go through a little bit on setting up front where we've been, of course, a little bit about where we're at today, but more so for you, I want to leave you with is why is this brand so successful? If I can accomplish that, we'll be good today. The first thing, just in numbers. You go back to 1956 when Brown-Forman acquired Jack Daniel's from the Motlow family. Back then, it was about 200,000 cases sold in just a handful of states, most in the southern United States.
You fast-forward all these years later, in 2015, it is now about a 14-million-case brand, if you include our RTDs and equivalent cases, and sold in over 170 countries around the world. You can see our growth rates, which have been very nice and consistent over this period of time. Taking it back into the last 10 years now, our net sales growth for the family has grown a little over two and a half times at a 10% CAGR. That same growth rate you saw, again, accelerating a little bit, whereas our volume has more than doubled with a CAGR of about 8% right now. You see we've got a nice blend of volume and then pricing over the last 10 years. You can see our famous Old No. 7 brand growing at 5%, our RTD business about 12%, Gentleman Jack 14%, and Single Barrel 9%.
Then one that didn't exist until about four years ago, which has been one of our great success stories, of Jack Daniel's Tennessee Honey, which is now over 1.2 million cases, and I'll talk more about that a little bit later on. This gets into a bit of what Paul was talking about of our diversification. Jack Daniel's Old No. 7, as I said, delivered this 5% volume CAGR, where the rest of the portfolio has grown volume nearly four times faster. You can see that our diversification within here has gone from being predominantly about 94% Tennessee whiskey back in 2004. We've had a nice expansion of the rest of the portfolio where, although Tennessee whiskey, of course, as I said, growing at 5%, the concentration is now down to 83% here this year on volume.
You take that into our geographic diversification. The world's biggest market, our home market, over the last 10 years, the United States has grown volume at a 3% CAGR, which again, during that time and the great recession that we had within here, it would've been more than what the spirits category had been, as well as this, of course, is not taking into account the pricing that we had going on throughout that time. While of course our international markets have been a tremendous success for us, have grown four times faster with a 12% CAGR. You can see back in 2004, the United States represented 54% of our business.
The bulk of the business outside of the U.S. is what we refer to as the other developed markets, which are essentially our Western European markets, Australia, New Zealand, and Japan. Our global travel retail business is what would be in that bucket. What we're describing as emerging markets is essentially everything else. You can see in 2004, we just had 7% of our business in the emerging market world, and now, that's up to 18% with still plenty of long runway to go for us. As a competitive environment, you can see back in 1985, going back, these are, by volume, the top 10 brands of family of brands back in 1985. We can see BACARDÍ Rum, at that time, was the largest selling spirit brand in the world at 70.5 million cases. Jack Daniel's number 9 at just below four million cases.
You go to 2013, which is the latest numbers, five of those brands in 1985 are gone. Not gone, but they've fallen off of the top 10. Jack Daniel's has risen to number 4, behind Smirnoff, Johnnie Walker, and Bacardi. Remembering these are their full family of brands, and for us, this includes our full-strength spirit brands, does not include our ready-to-drink business. Importantly for us, of course, where we're selling value as well as volume, the Jack Daniel's family is now, as measured by IWSR, on retail value sales, the third-largest family of brand in the world, closing in on number 2 quite rapidly. That sets the stage. Why? Why is this happening? First, as my friend Ted Simmons said, in the video, for us, it's in the bottle.
This is a brand of whiskey that is a unique, very well-made, crafted whiskey in Lynchburg, Tennessee. More importantly as well, the brand has a very powerful equity that I'll talk about that is translating extremely well all around the world. Of course, it is global. It's the largest premium plus whiskey brand in the world, and as we have found, it is very extendable. When we sort of wrap this up, we talk about in terms, well, what if you're a fan of ours? Why do I drink it? Some of that we put down into just purely accessibility. The first within the brand is around the world, can I find it?
Right now, I challenge that with, I think we may be, if not one, number 2 in any bar around the world, you most likely are going to find a bottle of Jack Daniel's. We are very accessible. We're there. If you want to have it, we're there. A lot of that as well is now through our route to market, and just all the great work that we've done out in the market. The second thing you might ask is it affordable? Well, yes, it is a premium price brand, but Jack Daniel's is still within reach for many consumers around the world, whether it's in the pricing that we have, feature pricing that we may do in small sizes.
In Africa right now, we're doing tremendous business in our half bottle sizes where they may not be able to afford the full bottle, as well as in our RTD business where you can buy an individual serving or, of course, a drink in a bar. We've found that Jack Daniel's can be very affordable in a premium way for people around the world. Of course, is can I drink it? For some, we talked about, Lawson talked about, is for some, they love the taste on the rocks or with water, like many of us do. For many, that still can be a challenge. We found the brand through mixability, in particular with Coca-Cola.
Jack and Coke around the world has been a tremendous force for us in the can I drink it category, as well as our ready-to-drink business, now more recently within our flavored whiskey business, is just allowing people to, that may not like the taste of full-strength whiskey, are finding new ways to drink the product. Lastly is, do I like it? That's where I probably spend more time on is, people love this brand, and they take it personally within the brand. We believe it's more within this equity. It's a very BRL brand. They can call it by name. The name Jack translates very well around the world and makes a personality for it, and quite honestly, has become almost a friend for many people around the world.
With that, I want to move in to just show a little bit of video of how this comes to life through popular culture in the U.S., and then exported around the rest of the world.
I get no kick from champagne. Tell me why should it be true that I get a kick out of you?
What is your one go-to item on the plane?
Probably Jack Daniel's.
We'd love to send you an entire barrel of Jack Daniel's.
Tennessee whiskey to offer, Mr. Clooney. Thanks, Jill Meyer at Jack Daniel's.
Happy birthday to your dad, just a couple of days ago.
Yeah, 75 years old. I gave him a case of Jack Daniel's.
Aw.
It's things like that which make me glad there's Jack Daniel's in this cup. Not being attacked, ladies and gentlemen, there is Jack Daniel's in that cup.
You want to do a couple shots? Let's go. Jesus, I hate the elderly. Ladies and gentlemen, your next state senator. Michael Jordan dunk it. Poker on the track, baby. Jack Daniel's drunk it. A shot of Jack, straight up. Make that two. A shot's not enough. Thanks. Hiya, Tommy. Two Jacks up, please. I need a Jack and Coke. I need a Jack and Coke now. A Jack and ginger. That's caramel coloring. We're just hanging around, burning it down. Sipping on some cold Jack Daniel's.
What's for Christmas? What's under the tree? Oh, it's an empty bottle of Jack Daniel's.
You could say Eric Church hit Nashville like a shot of Jack Daniel's.
When some rules were put out there.
Makes me wonder. I reject you first.
I heard you didn't know about our shot glasses, so that's my gift to you, is our shot glasses.
Well, thank you.
Sure.
Andy, what am I supposed to do with that?
I asked you to shoot.
I'll have a Pabst and a shot of Jack. Yeah. Anybody ever do that?
He was never a spokesperson.
No
For the company, he was never hired to do endorsements. That was just his favorite drink.
That's the nectar of the gods, baby. From Lynchburg, Tennessee, that comes from.
Irish whiskey or Scotch whiskey?
I like Jack Daniel's.
The story of Jack Daniel's is the story of America.
Same.
Those are the famous people, and they adopt the brand either personally or visually through their movies because of what that brand says about them. This then translates into people all around the world, and our whiskey and our story has drawn them. It's almost like we have this secret weapon right now of millions of Jack Daniel's fans around the world who have adopted the brand and have become somewhat almost salespeople for us, in telling the story about the brand. To them, Jack Daniel's is more than a whiskey. It's an attitude, it's an emotion, and it's a connection. There's a desire in this world to find substance, and in a world of passing fancy and reality TV, they're looking for something real, and Jack Daniel's gives them that realness because Jack is real.
After everything that you've seen on some of these videos here, it's still this uncompromising spirit of every day we make it, we're making it the best we can. For our friends, Jack is consistency in a world of change, and it's interesting because they're Sorry, I got this. They're bonded by Jack. Put some of these up here. These are some things we've grabbed off of Twitter and Facebook here, just from the recent few days now. They're bonded by Jack, even though they'll probably never meet the people that they're communicating with. For them, Jack Daniel's is a proud badge that essentially begins to define who they are as well. We really are taking these fans and moving them to be more than just drinkers of Jack Daniel's.
They become what we call loyal advocates of Jack Daniel's. You can see it on this digital world. We've got over 15 million fans on Facebook that we communicate with quite often. We've got millions of people on our internal database. It's interesting, our digital people will track daily. They can track that there's more than 8,500 conversations happening around the world of people talking about Jack Daniel's. If you go onto Instagram, there are today something in the neighborhood of 1 million photographs that people, not us, have taken about Jack Daniel's around the world. I don't think there's very few brands around the world that would have this sort of a connection with their consumers, and I think that's one of the big reasons for the success that we have.
Going forward, our key strategies, I'll touch on these briefly, but of course, for me, I get asked, Paul, to say, "Just don't screw it up," would be one thing. Doing what we've been doing all these years of continuing to reinforce this unique specialness of Jack Daniel's is what we intend to continue to do. We also are being very thoughtful and disciplined on balancing the value and the volume growth of Jack Daniel's. A lot of this has to do with our pricing and our pricing power. I'll touch on that. Some things around our portfolio innovation, being very thoughtful within that. I'll talk about that. Of course, geographic expansion.
Lastly, I won't get into today's strategic investment, but of course, behind the brand itself, our people, which Kirsten and others, and then Alex, of course, will talk about a lot of the capital investment that's going on at Jack Daniel's. First, on reinforcing the specialness. Many of you might recognize on the left is a famous black-and-white photography advertising we've been running since the 1950s in many places around the world. Still do in the U.K. today. That's a picture of an ad last month in the London Underground. We continue, where it makes sense, to use that great story and that great advertising, but realizing, of course, the world is ever-changing. On the right is an ad from China that we've now launched with our Jack Daniel's No. 27 Gold along this Master Your Craft.
Of course, a very different look, still saying the same thing about the brand, but we're being much more, I'd call it, open and aware to making sure we're relevant to consumers around the world. That means you can't be the same in its message content and form that you may be in the United States or the U.K. if you're talking to somebody in China or in India. Two examples of that are, I'll show one commercial here, which is running right now for Christmas time. It's our fourth year of running it, and we run it in many countries around the world, and it gets great emotional connection around the world around Christmas time.
It's not what's under the tree that matters, it's who's around it.
A great story. It tells a story in Lynchburg of how we make our whiskey and marry that with an emotional truth about the times at the holidays, and it's been very effective for us around the world. Now, an example that I'll show next is, we had a great run in South Africa for many years, but about six years ago, we declined quite rapidly and did a lot of work on why. Frankly, they appreciated all the story that we'd shown them, which is similar to the black and white ads or these ads, but it wasn't really connecting as relevant as it needed to. They still loved what Jack Daniel stood for.
Through an insight of just finding out for young South African men and women in the new age of South Africa, it was about that people knew who you were and they knew your story. That was an insight. We said, "Well, let's spin our story, and instead of us telling you our story, allowing the consumers to tell our story." This is that example.
After establishing what would become America's oldest registered distillery, Jack Daniel became
Famous. He went from humble Tennessee bars to the dressing tables of the biggest names in the business. Even Frank Sinatra was buried with a square bottle. Others said round bottles were easier to make. Jack said, "We're not like everyone else. We make Old No. 7 might have been his lucky number, but luck had nothing to do with it. He did things his way, the best way he knew how. What's your story? Make it worth telling.
A different look, still telling the same story, and we're pleased to say that our business, since we launched this about six months ago, we've seen a dramatic turnaround in our business in South Africa. That's showing an example that we're being very open to connecting our message in different ways around the world. The second area we talked about was the volume and value and the pricing power of Jack Daniel's. You've heard Paul probably talk about in the past what we call rarefied air. I wanted to show this as a little different take on demonstrating. The numbers you'll see here are brands that sell at least a million cases and have at least an average global retail price, as defined by IWSR, of $25 a bottle. You'll see that there's only 18 brands that make that list right now.
We were great to see that number 18, our own Jack Daniel's Tennessee Honey, made the list this year. You can see many names, great names, seven through 18. You jump up to, between the 3 million case mark and the 4 million case mark, it jumps up that takes you up till there's only two left. There's only two brands left that sell more than 1 million cases at more than $25 a bottle. Of course, a brand that we all admire and the largest trademark in the world for whiskey, Johnnie Walker, Black Label being their largest singular brand at that price point, at 6 million cases, selling at $38 a bottle. There is Jack Daniel's Old No. 7, which is now selling about 11.5 million cases, about twice that size, at $27 a bottle.
Again, what we believe to be rarefied air, large volume, high price, nice margins, have allowed us to create this great brand with great reinvestment behind it and with tremendous pricing power. Moving on to our portfolio expansion. Some think we've expanded a lot, I want to illustrate here. We've been very thoughtful over the years. Up until 1986, there was essentially one brand, Jack Daniel's Old No. 7 Black Label Tennessee Whiskey. In 1987, we introduced Gentleman Jack. Couple of years later, we got into the RTD business here in the U.S. with our Jack Daniel's Country Cocktails. About three years later, recognizing the size of, in particular, the Australian RTD market, we created Jack Daniel's & Cola in a can that was launched in Australia.
We took off about five years before we came back with, in 1997, Jack Daniel's Single Barrel was introduced. We went a long time. Went all the way from 1997 to 2012 without really any innovation other than some flavor expansion in our RTD business. Of course, introduced Jack Daniel's Tennessee Honey in 2012. Which we followed that this year with a limited introduction of Jack Daniel's No. 27 Gold, which I'll talk about, just now beginning to put out Jack Daniel's Tennessee Fire. You can see, there's sort of a nice blend, it's not happening all at once, we've been pretty careful as we move forward on this, as you can expect. Just touching on all of them then. Gentleman Jack was the first one there. Our double mellowed Tennessee whiskey that we talk about.
It's for occasions when people are looking to step up to a more premium whiskey than Jack Daniel's Black Label. Had very nice volume growth since the launch. It was really only sold in the U.S. until about five years ago, we've put an effort out into the U.S. Just in that five-year time then, nearly 40% of the volume is now sold outside of the U.S. With our key markets, of course, the U.S., but seeing great growth in U.K., Australia, France, Germany, and global travel retail in particular. We believe that there's tremendous upside for this brand that sells for about 35% premium to Old No. 7. Here's an ad.
The Order of Gentlemen would like to remind you that Gentleman Jack Tennessee Whiskey gets its exceptional smoothness from a mellowing process it undergoes not once, but twice. Because if once is good, twice is better. Which is why The Order of Gentlemen would like to remind you that Gentleman Jack Tennessee Whiskey gets its exceptional smoothness from a mellowing process it undergoes not once, but twice. Gentleman Jack Double Mellowed Tennessee Whiskey. The Order of Gentlemen.
That's a TV ad we just put on in the U.S. here in the last couple of months. We've seen that the brand responds very favorably to TV advertising. Jack Daniel's Single Barrel, again, very nice growth since it was launched. This one is two-thirds of the volume of Single Barrel is outside of the U.S. Does particularly well, in particular, Michel's market there in France, very good market, but travel retail, France, Germany, the U.K., doing quite well in other markets around the world. Our ready-to-serve business, we don't talk a lot about because it's not really a big factor for us here in this country, but it's a big piece of business for us outside of the U.S. In particular, in Australia, where it is bigger in terms of volume and value than the parent brand, Old No. 7.
We're doing very nice business in Germany, Mexico, the U.K., South Africa, and China is another one that's flourishing for us right now that we're very excited about. You can see on the right, too, actually began to innovate in the RTD space. We have a Gentleman Jack & Cola that's a super premium version that's sold in Australia. Just last month in the U.K., we launched Jack Daniel's Tennessee Honey & Lemonade in a single-serve format. On the left, you'll see our Jack Daniel's Winter Jack, which is a seasonal offering only sold around the Christmas time period, including here in the U.S. that we've gotten some very good consumer acceptance on this product as well. This is an area we're going to continue to explore and innovate into this whole ready-to-serve space around the world.
Of course, Jack Daniel's Tennessee Honey. Now entering our fourth year in the U.S. As you can see, it's still growing strongly. In our earnings call last week, I believe we said that it's still growing at about 39% growth right now around the world. Seeing tremendous success. In particular, I would call out the U.K., where it has become, if you considered it an imported whiskey, it is the number two imported whiskey in the U.K. right now after Jack Daniel's Black Label. Doing particularly well in France and Belgium, the Czech Republic, Mexico, Brazil, Japan, South Africa, and Canada, continuing to grow at double-digit growth rates here in the U.S. It's been an eye-opener for us. You've heard people talk about it.
It's really doing a great job of attracting new consumers to the Jack Daniel's franchise who may not, as I described earlier, like full-strength whiskey, but really like the taste of this one. In particular, we're seeing this brand over-index against females, African Americans, and young adults. Here is the latest ad that we've been running in the United States.
Honeybee, don't you sting me, sting me, sting me. That's your power. Oh, now you'll try but you'll see. Don't you power, oh, stay away.
All right. Finally, we've introduced two new brands in limited distribution in the last year. The first I talked about, and some of you may not even be aware of it, is a brand that we call Jack Daniel's No. 27 Gold. Why is it called No. 27? Well, it's two times seven. It's two times double mellowed, and it's two times double barreled. Like Gentleman Jack, we put it through the mellowing before and after barreling. Unlike anything else, we've transferred it to a new maple wood barrel that we're making ourselves now in our new Georgia cooperage, and gives it a very nice, interesting taste profile that we developed it particularly for the Asian market after a lot of research on taste profiles and things. Although we do think it has great potential around the world.
It's selling for about $85-$95 a bottle. We launched it first in Singapore and Hong Kong Airport last year. It's now expanding to all key international airports. It's entering a few U.S. airports this month. We launched it in just the Shanghai metro area in May 2014. Unfortunately, as many of you know, with the situation in China right now, probably not the greatest time to be launching a high-priced, super premium brand, but we're getting some nice acceptance for it, so we'll be patient for it. The plan is, next year we'll begin to expand to a few major urban metropolitan cities throughout the world, probably including New York. Within this one, we've got to be a little cautious because of the interesting supply component, especially with the maple barrel wood.
It's challenging from a supply standpoint and not something that we could be putting out in these early days with great volume. We're getting really strong acceptance for it in the markets, in particular travel retail, we've launched so far. Of course, many of you probably have heard about Jack Daniel's Tennessee Fire, which is our cinnamon-flavored Jack Daniel's product. We launched it last April in three states: Oregon, Pennsylvania, and Tennessee. Since the launch, Jack Daniel's Fire's depletions have indexed. If you go for the first, I think it's probably eight months, when Tennessee Honey was launched four years ago.
The first eight months or so, when Jack Daniel's Tennessee Fire was launched, we're seeing that Tennessee Fire is selling at a 35% greater clip than what Tennessee Honey did when it was launched during that same period of time, which is, of course, really exciting for us. We've been very careful on this one, because we truly want to learn the impact not only on the equity of Jack Daniel's as a trademark, what's the cannibalization impact on, in particular, Tennessee Honey? Are consumers willing to pay for a premium price, flavored cinnamon whiskey offering when the category leader is significantly less than we are? Finally, do they just like the taste of it? We're getting great things. First of all, people love the taste of it, and I think we have it here for you to taste today when we finish here.
They love the taste. We're seeing that because it's a high-quality product from Jack Daniel's, they really appreciate that. It is premium. It's very authentic, again, coming from Jack Daniel's. We believe that just the masculinity of what Jack Daniel's brings to bear on this product is something that consumers are really going to Well, they are enjoying it, because those three states, we were encouraged enough to go to five more. We went to five more states: Texas, Illinois, Michigan, South Carolina, Georgia. Missing one. Damn it. Illinois. I think I said Illinois. Well, yeah, there's five of them. That's just been about since October.
It's very early days other than the trade acceptance, the initial consumer acceptance is fantastic in those five states, which has given us confidence that Paul announced last week, that we will be rolling out Jack Daniel's Tennessee Fire into the U.S. in totality in the fourth quarter this year. We're also exploring international. We're just more in the sort of background of doing some consumer research and seeing the viability for it overseas, but to see if it can do what Jack Daniel's Tennessee Honey for us. Really excited about this new product from Jack Daniel's Tennessee Fire. Wrapping it up, we talked about everything. I'm just moving now to the geographic expansion, which I still think is, with all said and done, with the portfolio innovation's nice, but we are just scratching the surface, I just want to illustrate that for you.
Starting with a brand that you all know, the Johnnie Walker trademark, which again, admire very much, and the world's number one spirit brand. If you look at their trademark in the developed market world back to 1985, again, those U.S., Western Europe, Australia, New Zealand, Japan, and GTR, you can see they were about 5 million cases for their trademark, and pretty much have been flat within that area for this 28 years it's been going on. You compare that to Jack Daniel's, they were a little bigger, but we were about the same size as they were back in 1985. You can see, whereas they've had that 1% CAGR, we've really gone and built the brand during that time, not only, of course, continuing the U.S., but very focused on the developed markets around the world.
You can see that we are, if U.S. developed market world, much larger than Johnnie Walker is in that world. You can see here, this is where they've done a phenomenal job. You see in the emerging market world, is where they really have added tremendous amount of volume, and you can see their 9% CAGR over that world. We don't have anything that we're not proud of on this thing, but we were very focused on that developing market world during that time before we got into the emerging markets. We had nice growth 20% growth over that period of time, but you can see much larger in its volume base.
You put all that together, the percent of Johnnie Walker's total volume today is 66% of their volumes in the emerging market world. Jack Daniel's is 18%. We're not apologizing at all, because the good news of this is we got a whole lot to go after still here on this one. That's sort of where I'll leave you with on that one, is that chart to me, when you look at as well, and I closed this a couple of years ago with you all, is even as big as have we gotten, still remaining special. We still only have less than a 2% share of the total distilled spirits market in the world. We have about a 3% share of the total whiskey market in the world. We have about a 9% share of the standard plus whiskey market in the world.
For us, we're proud of our success, but those numbers and these numbers just show we frankly are just scratching the surface. Well, thank you very much. I will now turn it over. Are we running a video? We're running a video. Thank you.
The long game is so important in the bourbon industry. Not only do we have oak trees that are on average 85 years of maturity to make a barrel from, we mash, ferment, distill, and then mature for years in those barrels before the product can come to market. We've got a number of years just in our planning cycle of making the product for consumers.
You know, it takes years for a bottle of Old Forester to get to your table.
You've got to go through all that kiln drying. You've got to buy grain. You've got to build warehouses. You've got to have the still, mash tubs, fermenters, all of that. I think that is a lot of money tied up for a long period of time. You better know at the end of that time that you've got a brand that is healthy to put all that whiskey into to sell. You've got to think about the whole picture.
We were turning corn into liquid gold and into bourbon. I think that stewardship of the land, of our resources, the reselling of barrels, the use of grain again to feed local cattle as we do today, making sure our watershed retains its purity, was just something you did because if you didn't, you would damage your business, you would damage your livelihood.
We're producers. We're not takers.
What I like about that approach to describing the value of land is that it's very long-term.
Ladies and gentlemen, Alex Alvarez, Senior Vice President, Global Production Officer.
Good afternoon, everyone. Thanks for being here. As John mentioned, as you saw in the video, we're proud of what we do, we make Jack Daniel's. Every day we make it, we make it the best we can. I'm here to talk about global production. I'm here to talk about how we are investing in whiskey. We've been investing in whiskey for a very long time, for over 140 years. Chris Morris in the video summed it up really well. Our supply chain, he says, is the long game. We're here for the long term. If you think about our business, and one of the great things about our business, it's also how much it takes for us to be in the business, meaning it requires significant inventory, significant capital. It requires a long time for that product to get to the shelf.
That gives us pricing power. It gives us an advantage. It also puts some structure in the market as long as we are able to manage it well. It also means that in the whiskey business, you've got to be good in order for you to be successful. It's really tough to be successful. Sorry. As I said, we've been investing in whiskey for a long time. Paul and Lawson talked about the whiskey business and specifically the North American whiskey and why it's growing. There's a piece of that business that gets forgotten, and it has to do with planning and maturation.
If you think about our American whiskey, the fact that we mature it somewhere between four to seven years, and that window is in the perfect spot from a production planning standpoint in order for us to be able to leverage our production and our assets. If you compare our business versus, for example, the vodka business. I can have vodka tomorrow. That's the problem with the category. There is very easy for you to enter that category. If you think about it in terms of our Scotch competitors, they're boxed in decades, multiple decades, before they have product in the market. For us, there's a very, very important advantage against our Scotch competitors because we have flexibility. That window, that planning horizon is very important. Also against our vodka competitors, because there are significant barriers to entry into our business.
That's why we're investing. As we think about investment, we think about it in two-pronged approach. We think of it in terms of growth and capacity. We have to build the infrastructure for us to have the right stuff ready for the markets of the future. We also think of it in terms of investing in our facilities, in our operations, the efficiency and capability that we build, especially based in our single site advantage. If you look at our business model and our operations model, it's very different, for example, from Big Beer. They have plants all over the world, and they distribute all over the world also, but they are spread across many areas. For us, Jack Daniel's, as well as our other whiskeys, are produced in one place. In Lynchburg.
They've always been producing Lynchburg for Jack Daniel's, and it always will continue to be produced in Lynchburg. That gives us a great advantage. Gives us control over our quality, gives us control of our consistency so that our consumers across the world get what they expect. In addition to that, it allows us to run a very lean operation, very lean and mean operation, where we make it really good every day. Also gives us great capacity utilization, which is very hard to get in the alcohol beverage business. When you take those efficiencies and you add the premiumness that John and Lawson talked about, that gives us excellent margins. We think, at Brown-Forman, we think of our production as a competitive advantage. Our capabilities that we're building as something that makes us better and helps us lead in our category.
I already talked about the barriers to entry. It requires significant capital, it requires working capital, it requires time, and that makes it difficult to enter. I also talked about single-site production and the scale efficiencies that come with that. For Brown-Forman, we have a third factor that we also believe is important, and that's our vertical integration. We view our supply chain and our total integration as something very important. We are the only whiskey manufacturers that are vertically integrated from new barrel production all the way through our home places. That, to us, is key, and that helps drive efficient investment through our supply chain as well as, I think Paul showed it, very nice return on invested capital. Let me talk to you a little bit about our cost structure.
If you think about the bottle of Jack Daniel's and what makes up cost. It's about grain, it's about barrels, it's about glass. That's not different than other North American whiskeys and other whiskeys in general. What's important here is this maturation. As I said, it requires a long time in order for us to have the whiskey ready for the consumers, years ahead of time. That means that we have to invest. About 25% of our current assets are barrel whiskey. That's a lot. If you think about our balance sheet, the biggest item out of a balance sheet, excluding intangibles, is our inventory. This is, and will continue to be, a significant barrier for new entrants into the market, and for even people that are in the market to be able to successfully run the business.
What this also means is that we got to plan well. We believe that planning, for us, is a competitive advantage. We do it well. It's a strength. Why do we say that? We believe that because it is, for us, for Brown-Forman, is a very disciplined approach where we vet the volumes, where we're looking at the trends, where we do it on a consistent basis, where we have a discussion between global production as well as our regional and our brand leaders to figure out what is the current trends and what is the future trends. We also think that we've been doing it for 140 years, we kind of know how to do it. The combination of those factors makes it a strength. That planning horizon, as I mentioned, is also a strength in terms of our competition.
Our planning window is shorter, that gives us levers and that gives us flexibility that at the Scotch side, they don't have, or it becomes much more difficult for them to do because their planning horizon is twice as big as ours. That also talks about a little challenge that we have, which is still that window. I got to plan today what you guys are going to drink seven years from now. We got to put some levers in place in order for us to ensure that we bring some stability to something that we may get a little wrong in the future. We have some levers to that. What we do is we think of inventory and think of cushion.
We plan our inventory, we plan a cushion of whiskey, of Jack Daniel's, in order for us to be able to deal with unexpected demand. The other thing that we do is we have a single distillate. We have a single liquid, and I'll talk a little more about that later on. That also helps us balance between all of our brands and all of our presentations in order for us to balance demand. The last one is our maturation management. We are able to manage our maturation within the whiskey standards in order for us to ensure that we have enough whiskey to deal with unexpected demand.
As you saw in that bottle, you have grain, you have glass, you have barrels, all of it, not only because the way that we market our brands, but also because the amount that we use makes it key for us to leverage our single site approach. We have a concentrated material supply. We bring our glass from Ohio, we bring our barrels from Alabama and from Kentucky, our corn comes from about 150-mile radius from Lynchburg. That allows us to have pricing advantages because of transportation, but more importantly, scale advantages that, again, are very difficult to get in this business. In addition to that single point production, I talked about quality. Quality is important. Our consumers expect that quality, and they pay a premium for it. For us to maintain that quality in a single production site is more important.
It also gives us capacity utilization. The Jack Daniel's facility is a pretty big place, we're able to produce those 14 million cases, have excellent utilization of our assets. We bring all that stuff, bring it to Lynchburg, the corn, the barrels, we make Jack Daniel's Old No. 7 distillate. Here is another significant advantage. We use it for every single one of our Jack Daniel's products. We may age it a little less for our RTDs. We may filter it a second time, or mellow it a second time for Gentleman Jack. We select special barrels for our Single Barrel. We use it very efficiently in our flavored whiskey or liqueurs. At the end, it's the same one single distillate.
If you compare that versus our competitors in the Scotch industry, you're talking about a blend of anywhere between 15 to 30 or more different juices to make one product. That gives us tremendous flexibility versus our competitors. What does that mean? When you put that efficiency of single scale, or sorry, single site production, the scale that comes with it, our integration, vertical integration, that means that our cost of sales are better. I'm using here the PPI, which is the Producer Price Index, to reflect how although we've been growing, it's going up, it's going up significantly lower or below that of the industry standards. Let me talk a little bit about vertical integration, right? We think of vertical integration from the barrel, really from the stave that make the barrel, all the way through our homeplaces.
American whiskey is our business. Jack Daniel's is our leading brand. We don't only think of Jack Daniel's. We think of Jack Daniel's, we think of Woodford Reserve, we think of Old Forester, and really all of our older products. When we think of it, we think of it in terms of four factors or 4 stages, right? We look at it in terms of cooperage and how do we vertically integrate for all of our products from a cooperage standpoint? How do we distill? How do we warehouse? How do we homeplace? That is very important in order for us to drive efficient investment. We got to invest capital. We've had a very efficient way of running our business. We've been investing about 2%-3% of our sales in capital, but our business is growing.
It's growing really fast, like you saw from Lawson and John. That means we have to invest to support the infrastructure. That also means we have to invest today for something that I'm going to sell seven years from now. In order for me to do that, I got to make sure I'm efficient and I have a criteria that I use for us to be successful at investment. We want to invest in a manner that is flexibility for the future. What that means is, I want to invest today the least amount of capital that I need to invest in order for me to produce what I think I'm going to need in the future, I'm going to invest in a manner that I can build more or change that investment so that I can accommodate demand changes in the future.
I also want to invest efficiently. For Brown-Forman, investing efficiently in production means you want to invest so that your future cost of sales is lower than it is today. That you take even more advantage and leverage your single production site. That's what efficient investment means for us. The last one is we want to invest in a manner that enables innovation. We're always looking forward for the next gold like John talked about. How do we build our systems, how do we build flexibility so that we can innovate in the future? How do we leverage that innovation across our vertical integration? From our fiscal 2013 through 2017, there's going to be, or there has been, and there will be significant investments, because we have to support that growth. You'll see some examples of what that means.
For us, it is the right growth or it's the right investment to support the right growth, and we will get back to our 2%-3% investment in the future. Let me show you a little bit about why we vertically integrate.
Welcome to the Brown-Forman Cooperage, the longest operating barrel making shop still turning out barrels today. Formerly the Blue Grass Cooperage, we changed our name in 2009 to honor the company that continues the rich tradition of handcrafting barrels. Why is Brown-Forman the only spirits company that still owns its own cooperage? It's because we know a barrel is more than a container for whiskey. It's really an ingredient. All of the whiskey's color, and a good part of its flavor, are drawn from the barrel. That's why we go to the extra effort to make our own, crafted from American white oak. The rough staves are cut from the trunk and left to season in the open air. The simple seasoning of the wood prepares the oak to contribute to the character of the whiskey.
The staves are carefully planed, cupped on one side, and the joints cut at a slight angle. A mistake here, and the barrel will leak, giving the angels more than their fair share. The staves go to the barrel raiser. Yes, barrels are raised, not built. No glue, no nails, nothing that might taint the whiskey. The cooper fits together by hand staves of different widths, like puzzle pieces, 33 staves to the barrel. A seasoned barrel maker will raise 250 barrels a day. It's time for toasting, the crucial step to crafting a barrel that will impart the greatest flavor. Toasting releases much of the flavor locked inside the wood, such as whiskey's distinctive vanilla accent. Our barrel is now ready for the roar of the char tunnel's flame. As it passes through the fire, the natural sugar in the wood caramelizes.
More flavor for the whiskey to draw from. Finally, a craftsman prepares the barrel for its head. The hoops are put on. The bunghole drilled, the barrel tested for leaks, and inspected under a cooper's watchful eye. At long last, the barrel is ready to receive its whiskey. It'll go in clear with a hint of flavor, but emerge mature with a rich amber color and a warm, robust taste.
Hopefully, the video helps you understand a little bit the importance of the barrel. For us, being vertically integrated, owning our own cooperage, and manufacturing our barrels is a significant competitive advantage, and we're the only ones that do it. If you think about it, I'm going to sum it up very quickly, why do we think it's important? One, it secures our quality of supply. As the video said, 100% of our color and a lot of our flavor comes from the barrel. Ensuring that we have the right quality in order for us to produce the end product, the right whiskey, is very important. Also ensuring that we have supply security.
If you think about it, we're building new warehouses, we're building new distilleries, but if we don't build the wood infrastructure in order for us to produce barrels, we don't have a place to put Jack Daniel's. The fact that we own our cooperage and that we can build that infrastructure to support that growth is very important. It's also cost efficiency. Because of our scale, because of our technology, we can do it cheaper than other people. It's also wood innovation. If you think about it, since we're the only whiskey company that does this, we are wood experts. We own that expertise. I don't know if you heard it in some of the presentations from John and from Lawson, there's examples of that. Woodford Reserve Double Oaked. There's a special barreling that we do to get that flavor.
The Jack Daniel's Gold with the maple barrel. There's a special thing that we do with the barrel. Innovation becomes an important part of what we do. In addition, it helps us with our taste profile. People like American whiskey because they like that rich wood vanilla flavor. We know how to get it, and we know how to play with it in order for us to improve our product so that it delights the consumer at the end. Then it also helps us get into the used barrels market sale. Another source of income for us. This year, we're selling about half a million barrels out in the market. What that means for us is that we're going to continue to invest in the cooperage. We invested in a new cooperage in Alabama, $60 million.
The first one that has been built in the industry in the past 65 years. Used great technology to get us there. With that, we've been able to increase our capacity by about 40%. With this, we're going to be able to produce up to 1 million barrels a year. That's not the only place we're investing. Jack Daniel's, we're investing a lot in Jack Daniel's, and we've been investing in Jack Daniel's for a long time. We're investing in new warehouses. We're building two to three of those a year. Not only are the warehouses more efficient in terms of labor, they're also more efficient in terms of how we manage maturation within them. We also expanded our distillery, the current distillery that was there since Prohibition, until we don't have any more room to expand.
Now we're going to have to build a new distillery, and I'll talk to you a little bit about that one. Before that, the other thing that we're investing is in risk management. One of the things that happens is when you have a single site that produces a brand like Jack Daniel's, we need to ensure that it's well protected. We're also investing in a 10-million gallon spring water cave tank in order for us to ensure that we can get past a drought if it comes around. We're also investing in our fire protection. We have the Jack Daniel's Fire Brigade, literally a fully equipped fire department in case something were to happen in our warehouses. What I have here in front of you is the new distillery. The first distillery built in Jack Daniel's in Prohibition.
It's a long-term $100 million investment. It's going to start up in April, hopefully, you'll be invited at some point to come see the distillery and taste some of Jack right off the still. The important thing is that using that criteria that I mentioned to you earlier, we're doing it in an efficient but very appropriate way. It's modular, we're building what we think we need now, then we can grow it as the brand continues to grow that we don't overinvest. Also, we have included significant flexibility for innovation that we can innovate in the future. Now, we are also investing in our other whiskeys. About $60 million-$70 million in our other growing brands. You heard from Lawson about Woodford Reserve and how it's exponentially growing.
Not only are we investing in our home place that we get enhanced visitor experience, we're also investing in the infrastructure to support that growth. We're building warehouses, reapplying the Jack Daniel's warehouse model. We are expanding our distillery, we're doubling the capacity of our bottling operations. Then the last one is for Old Forester. Again, the brand is growing again. We have full confidence in our founder's brand, we announced that we're going to build an urban distillery. We're getting into the urban distillery business downtown Louisville. This is not just a showplace. It's going to be a great, cool place as a visitor to go see. The reality is that this is a functioning distillery where we're going to support the growth of our brand. In closing, we are investing in our business.
It is the right thing for us to do. Our category, through the efficiency that we bring and the barriers of entry, is the right place for us to invest. Because the way that we run our production through single-site approach, we get great scale efficiencies. Because of our vertical integration, we gain great advantage in our supply chain, Brown-Forman invests for the long term, the long run, that's what we're doing. We believe that our efficient investment approach is also going to generate top-tier ROICs like we've been doing in the past. With that, we're ready for a break. You get a 15-minute break now, I don't know what time it is, come back at 3:00. Thank you.
Ladies and gentlemen, please take your seats. The program is about to resume. Ladies and gentlemen, please take your seats. The program is about to resume.
To think of all of Brown-Forman's business out in the world being an expression somehow of the kind of values that we hold dear.
We have teams in São Paulo, Brazil, Moscow, Shanghai, Sydney, Prague, Hamburg, London, Paris, Barcelona, Milan, Cape Town, Amatitan. It's an amazing list.
Brown-Forman has made a tremendous effort to have employees who basically are happy with themselves. You can't beat that.
If you spend your entire working life here and experience just the goodness and greatness of Brown-Forman, which I have, I've had the good fortune of doing that, then you have the knowledge that it'll be around in 50 or 100 years, it means what you did that whole time is going to go on.
Whenever you've got a family company, you know that there are generations behind this, that there is a strategy, and that they're in it for the long term.
We haven't lasted 143 years because of just chance. We have lasted this long because of our values, our culture, and our people.
We're making solid decisions for the future and on behalf of certainly our shareholders and our employee base, and our partners. You can't help but be excited.
That was a nice video to start for the second section here. We're going to do about another hour, and I thought I'd introduce this crew that's joined me up here before I exit the stage. They're going to just basically take you through what we might call our talent and global capabilities, and each do a little piece of it. Just from left to right here on the stage, is Jill Jones, who heads up what we call our North American and Latin American region for Brown-Forman. Been working at Brown-Forman. I always like to tell a little of the story. She headed production as recently as two years ago for the company. You'll see a mixture of experiences across our folks. Michel Gayraud, who is here.
He'll talk for a little bit about It was about a year ago, a little less, that we launched our French company, but has been with the company 17 years and leads the French business today. Amador de Carvalho, who a bunch of us knew before he joined Brown-Forman four years ago because he'd been in the industry with four or five different companies previous to joining Brown-Forman. We were pleased to be able to recruit him to lead our Brazilian business, and he'll talk about that. Mark McCallum, whom most of you, if not all of you, will have seen previously in many of Brown-Forman's presentations. Today oversees the piece of the world that Jill does not. Mark is overseeing Europe, Africa, and Asia, as well as our global travel retail, a very rapidly expanding part of our business. Then Kirsten Hawley, who's been at Brown-Forman.
I always like to think about this. Kirsten's going to talk about our people. She is in our human resources leadership group, and I'll tell you the thing that's wonderful about Kirsten's experience is she once left human resources within Brown-Forman to go work in our brand world. Had an exposure to the building of brands at the company for a few years before coming back to the HR function. A mixture of people here, and I think Kirsten is going to start, I'll turn it over to her as we spend the next hour before we go to a Q&A. Thanks. Kirsten?
Thank you, Paul. Good afternoon. As Paul said, I have been with Brown-Forman for 17 years, and I lead the human resources team that is responsible for executing HR strategies in our regions, with our brands, and in all of our functions. Today, I'm going to be talking to you about something that may not typically happen at an investors conference. You heard a lot from John and from Lawson and from Alex about our brand assets and about our production assets. I'm going to talk to you today about our human assets, the people that build Brown-Forman's brands all over the world. Who are these folks? Well, we are 4,200 strong, and we work and live in about 50 different countries. Despite this global presence, we're a pretty small company.
If you were to look at a Diageo with 28,000 employees, or Coca-Cola, if you include its bottlers, it's 700,000 people. If you look at Marriott, 330,000 people. At 4,200 strong, we're pretty small. We actually believe that that is an enormous benefit, because with 4,200 people, we can be focused, we can be agile, we can have information flow faster through our system, and for me in HR, I can execute high-touch talent strategies to really get to know the people who work in this particular company. As Paul said earlier, a lot of us have come from other places before we came to Brown-Forman, when you ask people, "Why is it that you joined this company?" We usually get three pretty consistent reasons. People come to Brown-Forman because they love this industry. It's just great to work in beverage alcohol.
They also tell us that they come because of our portfolio of brands. John Hayes talked about how much people love Jack Daniel's. We're the same way at Brown-Forman. Employees like me, like all of us, feel a strong affiliation for the portfolio of brands in our business. The third reason people come is because we have a track record of stability and success, and this is the kind of organization that many people want to join. A bit about our age. I'll go ahead and reveal that. We are mid-career professionals at Brown-Forman. The average age in the U.S. is 45, and in our international markets, it's 37. We like to believe, and I hope all of you will agree when you think about how old you are, that with age comes wisdom, and in many cases, as a proxy for experience.
We also know that once people join Brown-Forman, we are inclined to stay. If you look at our average tenure, it's three times that of the national average in the U.S., with 11 years average tenure. In the other parts of the world, Latin America, Asia, Europe, they don't track tenure the way the U.S. Department of Labor does, so it's hard to do the comparisons. With 5.5 average tenure, we can draw the same conclusions, that when people come to Brown-Forman, they want to be a part of it for the longer haul.
We look at this age and tenure, and we say, "This gives us a great deal of experience and depth of knowledge." When it comes time to build a new cooperage, to launch a new brand, or to simply make great whiskey, we have the people who have the know-how to get these kinds of things done. We also recognize that with an average age of 45 and 37, we have to attract younger workers, too, and we have talent strategies in place to do that. We also have to make sure that when we have this depth of experience, we also have learning strategies in place to create breadth, so that we don't become too deep, and we maintain a broad perspective. About half of us work for Alex, who you heard from earlier. That's right.
About half of our employees are part of our global production organization. These are people who work in our distilleries and in our manufacturing operations. The other half work in functions that you would expect to see in a brand-building company: sales, marketing, finance, and yes, even HR. If you look to who we've hired lately, you'll find that it is mostly hires from our international markets. That shouldn't be surprising to anybody in the room, given our global expansion efforts. Our international markets have grown at an 11% CAGR, we have invested in people accordingly. In our emerging markets, we're hiring more sales expertise, but in our developed markets, more sales support expertise. This is to support our RTC models, our brand-building efforts. If you look to who leads our markets, an interesting trend emerges.
You'll find local experts, people like Amador, who happened to be born in Brazil and is running Brazil. You look at Michel, who is French and is running our French business. If you look at the makeup of our expatriates, you will find that we have a Brazilian running our India business. In South Africa, we have a German running that business. We have a Greek running our Russian business, and a person who was born in Portugal running our Polish business. We are both local experts and global citizens who are building our brands. We also invest in our people through the kinds of things that you probably experience in your organizations, training, onboarding, mentoring, because we recognize that people at Brown-Forman have to learn faster than our company is growing, and we make investments in them as well.
Here are some numbers that we are particularly proud of, especially in HR, where a lot of my time gets spent on these types of topics, but in Brown-Forman in general. The other investment we make in our people comes through our culture. Talent alone is not sufficient to achieve our strategic ambitions. We actually have to have a place where people can contribute their best ideas and execute them. Every few years, we invest with a company called Aon Hewitt, who measures something called engagement. Pretty basic. When your people show up at work, do they say nice things to each other and to others about working there? Do they have a strong desire to stay, thereby reducing your cost of turnover? Do they give what's called discretionary effort, meaning when no one is looking, do they work harder than they have to?
At Brown-Forman, over the past several years that we have done this engagement study, we can report that in our business, our engagement scores put us in the global best employer ranks. I hope that doesn't sound like the soft side of business, because there are correlations between high levels of engagement, which your company actually delivers. Engagement is an indicator of increased sales, and it also correlates with above-average returns for shareholders. Said another way, our investment in culture supports highly engaged employees who are creating sustainable value. In summary, here are the three things I want you to know about the people who work at Brown-Forman. First, there is the depth of experience. We understand this industry, we understand our company, and we understand the challenges and opportunities in both.
The second thing about us is that the people who build our brands are a diverse mix of local experts and global citizens who leverage their experience to build our brands across the world. Lastly, the people at Brown-Forman are engaged. They produce more than is expected, and they give more than what is required. This unique talent mix, when you couple it with our geographic strategies, our portfolio strategies, our capital investment strategies, this is what enables our organization to not only achieve our yearly growth goals, but also our stated mission of building forever. That's a little bit about the human assets of Brown-Forman. Now I'm going to turn it over to Mark McCallum, who's going to talk further about building global capability. Thanks, Mark.
Thank you, Kirsten Hawley. I just wanted to add my welcome to you all as well. We're going to spend the next sort of 50, 60 minutes continuing the story of the performance and potential of the company, but particularly through a lens that might be a little bit different for you, and we'll give you some observations around how we've been doing it. I'm going to sort of tee it up from a global point of view. I've just had three slides to just sort of base it on what's been happening, particularly in the last 10 or so years as we've been globalizing. Some of my teammates here are going to give you a better sense of it, an example of what's happening in one of our emerging markets with Brazil, when Amador tells his story.
Michel will tell you a little bit about what some folk thought of as a very developed Western European market, but how to us, it looks more like a developing market. Of course, Jill will bring it home with a discussion around that amazingly incredible U.S. spirits market. That's the next sort of 55 minutes. Let me, as I say, tee it up from an altitude of the total company. This story of globalization of Brown-Forman, we will look here at this last 10 years. This is a reported net sales representation, 2004 to 2014, just showing the distribution of net sales in 2004, with the predominant amount of our business being generated here in the U.S., 64%, and 36% being generated outside the U.S.
When we embarked on this journey, particularly the modern history of Brown-Forman over the last 10 years, it's moved, as you can see. We've had around a 7% growth in our reported net sales over that 10-year period, and now we speak of our business differently. The U.S. has continued to grow, even though it has declined from 64% to 41% of our net sales. Over that period of time when Brown-Forman growing at around 7%, the U.S. has been growing at a compound rate around 3%. The yellow segment of the pie is our developed markets around the world. They've been growing nicely in that cluster of markets are the usual suspects, Western Europe, Australia, Japan, Canada, and others. It's grown considerably to now represent 35% of the company's reported net sales in 2014.
Into that green section, our emerging market business, growing very strongly for us. Growing ahead, of course, of the Brown-Forman corporate average, growing around 9% as we've gone over the last 10 years. Represented by, again, the usual emerging market suspects of the BRIC cluster, plus Mexico, plus Poland, parts of Eastern Europe, Latin America, and particularly, Southeast Asia. The smaller piece in there, the 4% section of the pie, global travel retail, actually also includes those barrels that Alex was speaking about that we were able to onsell. Principally, though, the global travel retail business is a wonderful channel for premium plus brands such as ours, and fast-growing, double-digit growth over the last 10 years in global travel retail, an important part of our business as we look to the future.
There's just a what happened, in terms of globalization of our business and the way that we've been able to differentiate ourselves versus our competition. On the bottom of this slide is another way to think about it. You're looking here at a 20-year movement, and the numbers represented are the number of countries in 1994, 2004, and 2014, where we sold more than 50,000 cases of product. In most cases here, principally Jack Daniel's, although a couple of recent additions to that. Then the number of markets around the world where we sell more than 100,000 cases. This progression from six markets back 20 years ago to 41 markets today where we sell more than 50,000 cases, then 24 markets today where we sell more than 100,000 cases, is another way to think about the way we've been globalizing.
Some of us, and I'm sure many of you, some of us come from the fast-moving consumer goods business, I suspect many of you follow many of the companies within that sector. I don't think many of us in fast-moving consumer goods would be saying that a 50,000 case business represents something of note. This is a really amazing and a different business, this Brown-Forman and premium spirits business in general. What I'd like to say to you is that we have found, from a capabilities point of view, that when we reach an approximate sort of size, such as 50,000 cases or more of a brand like Jack Daniel's, commanding a shelf price north of $27, as John had showed a little earlier, on average. We get the attention of the retail customers in that market, generally speaking.
If you have 100,000 cases or more, we certainly get the attention of the retail customers within that market. John and Lawson talked a lot about how well we connect with our consumers around the world, that this Jack Daniel's brand in particular has a certain magic to it, a little piece of America. We non-Americans like to sort of think, a little piece of America that most of the world actually loves. Connecting with the consumers is something that the brand does on our behalf, and we do on the brand's behalf. We do it really well. Connecting with the retail customers, it's a different story, as I'm sure you know. It's business.
Anyway, a long way around perhaps describing Brown-Forman and the premium spirits industry as a sector, it's quite unique, and we'd like you to observe and understand, perhaps, the uniqueness that a business is not necessarily seeking scale the same way fast-moving consumer goods businesses require scale and diversification of manufacturing assets in order to keep cost of goods at a point where that scale can be leveraged efficiently for profit. 41 markets already around the world. Arguably, there's 197 countries in the world. If you Wikipedia it'll give you plus or minus two. 41 on its way to, well, whatever, with a brand like Jack Daniel's. Anything up to Wikipedia's 197 countries is a possibility for a company and a brand such as Jack Daniel's. There's a way to think about 10 years of purposeful globalization.
How'd we do it, and what were some of the ways in which we enabled that? This is our route to consumer, RTC, route to consumer. It shows you 2004 to 2014, an evolution in the influence we, as Brown-Forman employees, have on the building of our business out and about the world. Back for about 50/50, we see 51 arm's length. The term arm's length is that we had other folk building our business for us. We would contract and have agency relationships with either the competitors or standalone distributors in a number of markets around the world, and they were able, in many of these markets, to bring our business to a certain degree of performance.
Over the last 10 years, we've moved this arm's length involvement in the building of our businesses much more to a business where we have what we would call control or much more significant influence over the way we build our brands, and it's been incredibly successful for us. Where now today, 80% of our business, we would say we have some form of control. As I say it, I would like you not to take away a conclusion that it's a natural progression that Brown-Forman will invest in its own infrastructure in every market as we go forward. There are many examples, I'll give you a couple of them now, where it doesn't necessarily mean that we completely fix infrastructure cost on our P&L.
Although we've done that purposefully in markets such as, over the last five years, Germany, France, Brazil, Turkey, Canada, elements of Asia, where we have fixed infrastructure cost and Brown-Forman employees. We've also got very successful, not arm's length partnerships, but hybrid partnerships with companies, even in our competitive set, such as Bacardi in the U.K., where the two companies together, we've enjoyed 10 years of very successful business performance in that market because of a hybrid partnership we have constructed uniquely for the U.K. For all intents and purposes, it's running very well and should do so as we look forward. If you move across Europe, particularly Central Eastern Europe, and look at some of the partnerships we've set up with Coca-Cola Hellenic, one of The Coca-Cola Company's, or the largest European bottler for The Coca-Cola Company. Our partnerships are hybrid arm's length partnerships.
We bring it in a lot closer. We have a little more influence than we would have normally. We've been working with Coca-Cola now in eight markets through Central Eastern Europe, including Russia, and the Ukraine, which we can talk about later. This purposeful evolution of arm's length, less influence, to more controlled, more influence, is one of the ways in which we've been able to deliver those results that we looked at a little earlier in terms of our growth and persistent performance. Lastly, I would just want to talk a little bit about opportunity. The way I'd like to tee this up, you'll see a similar sort of illustration when the team describe France and Brazil. IWSR will tell us that the global whiskey market is 360 some million cases of whiskey. IWSR, total whiskey.
International whiskey, outside the U.S., is, of course, the predominant proportion of that volume. Within whiskey outside the U.S., so 312 million cases of the globe's consumed whiskey is consumed still outside the U.S. It's been growing very strongly. 7% growth, 10-year CAGR outside the U.S. American whiskey is a sliver of that. However, we've been growing strongly. Jack Daniel's, within that sliver, has also been growing faster than the American whiskey category itself. The way we think about it from an opportunity point of view, looking forward, John said we've barely scratched the surface. I think he used that term a couple of times. Certainly, the opportunity, as we observe the way in which Jack Daniel's can gain the interest of both retail customers and consumers, we are demonstrating in multiple markets the ability to continue to increase our share of whiskey.
I'll just finish it off here by saying that Jack Daniel's has about 56% of share of American whiskey outside the U.S. 56% outside the U.S. 40 some percent, if you include the U.S., share of American whiskey. Sometimes we may sound or you may observe or conclude that Jack Daniel's Brown-Forman are riding some sort of order, the wind behind our back, that we're riding the momentum of the growth of American whiskey. What we would say to you is that it's not like that at all. We're actually leading and driving the growth of American whiskey around the world. At a 50 some percent share of international American whiskey market, this has been a very purposeful, very concentrated, and focused effort to lead the development of American whiskey around this globe.
As we look at that and consider the fact that our share of that whiskey is around 2% only today, I think the rest is, in terms of opportunity, speaks for itself. There's the global oversight. Now I'm going to introduce Amador here, who will tell you about some of this how he did it with his team in the emerging market of Brazil.
Thank you. Thank you, Mark. Good afternoon, everyone. It's a pleasure to be here to talk about our journey in Brazil. I will start by basically setting up the context, and I think that's very important. Our brands have been in Brazil for a number of years. Even difficult to detect when we first got there, but different schemes, different distributors, up to 2010. At that point in time, we came to a conscious decision that it was about the time to do something in Brazil, and we decided to make a bet in Brazil. I use the word bet because there are a number of reasons why that was a difficult proposition. We didn't have scale in Brazil to begin with. Brazil is a very high-cost market to operate in.
We had formidable, and still have formidable, competitors in the market that have been there for a long, long time. Barriers of entry, et cetera. On the other hand, Brazil offered, and still offers, tremendous opportunities. The country had been very stable politically, socially, economically for a number of years. Competition is consolidated, so there was no risk whatsoever there. The economy was doing very well, and many of you might remember a page of The Economist with the price in BRL taking off. Unfortunately, a number of years back, the price came down. Anyway, on those days, the price was flying all over the place. On top of that, inflation was reduced. The emergence of a very large middle class.
Brazil has managed to bring into the middle class about 40 million people in the last 10 years, and plus 10 million on the top of that, on the proper end of the higher end of the middle class, A and Bs, for us, even more important. The demographics, most of you know, Brazil has a very large population, 200 million people, and the fifth largest population in the world, so it made sense to be there. Even more important, perhaps, and here we go. It's that slide that Mark referred to. A very large spirits market, in general, with consumers trading up from local spirits to more aspirational brands in various categories, and a very large whisky market, both with local brands and, in particular, with Scotch whisky.
Brazil is not only number 6 in the world, I guess, in whisky in total, but for Scotch whisky, it's probably number 4. The growth rates for the category are interesting, 6%, and our growth has been, in the last 10 years, CAGR, 23%. As many mentioned before, and again, Mark just mentioned in his previous slide, in spite of all of that, in spite of growing 23% in the last 10 years, we still have just 2% of that total. The opportunity was just there and is still there for us. What we've done. We established a company. We barely had people there, perhaps a country manager plus an assistant on those days. Now we have 60 people on board. Most of those guys, commercial, sales, and marketing out there, building brands. We've tripled the volume from 2010 to 2013. That's the last number you have there.
Let me tell you, the numbers look even better for the current fiscal. Just Jack Daniel's whiskey will probably go over 170,000 cases, and the whole family of brands will definitely cross the barrier of 200,000 cases. It's a staggering result. Establishing a brand that is really doing very well in the market. I had a page here to tell you about things that Jack represents. I think, again, John said so much about it that I won't say much more. It does resonate with the Brazilian consumer, young crowd, so well. It's a down-to-earth, relaxed brand that is mixable. It just really goes around the area for the wide spirits consumer so well as well. Again, the brand DNA, if you're talking about integrity, authenticity, independence, resonates with these millennium consumers so well, that's unbelievable.
It's like Americana in a box, in a bottle, sorry, plus. It's incredible. We are tapping on that. Mark asked me to tell you about how we're building that up. I think it's a matter of simple things. It's doing the obvious many times over. It's a simple model with lots of focus. If you don't have focus, first priority, right? Find out what is really important to do, what's really moving the needle. The second, once you establish that, it's really focusing. In a country like Brazil, large expansion is very expensive, very stiff competition. You've got to really stiffen your resources, both financial and human, in certain brand-building aspects of the brand, plus some geographies. That's what we've done. We have a brand-building model that's definitely working. It starts with an amazing digital platform that has been very creative.
As a matter of fact, Brazil has the second Facebook page for Jack Daniel's away from the U.S., with 1.3 million people, and is the number 5 in terms of, in the country, in Brazil, of all the consumer goods. It's unbelievable. In just two or three years, it's doing very well on that. Generating, not just being on the Facebook or whatever, and we know how that moves so fast and turns around, but it's generating experiences and connection with consumers, very relevant, that link that to all trade activities that are very exciting, very unique. experience that only Jack Daniel's can perhaps really deliver. No other brand can do that, much less Scotch whisky, I guess. We're doing that quite frequently.
The whole mixability thing with the few drinks, not reinventing the wheel, doing the same thing over and over, Jack and Coke, Jack and citrus, believe it or not, in Brazil, Jack and passion fruit. It's called MaracuJack, it does work very well. It probably doesn't sound very good, but it does taste very well, this is another vehicle for consumption and attraction of young consumers and females into the brand. Unbelievable work, we are very happy about the results. Again, you can see that not just on volume, but in terms of share of market as well. We've managed to get to 13% of the premium whisky, there's more to come. The potential, here talking about what you see as the opportunities for us, as, again, many said before, John and even Mark, the opportunities, we just scratched the surface.
We started at the very beginning in 2010, you can see there on the left-hand side, we had strongholds basically in São Paulo and Rio, as everyone else in Brazil. That's where we've been for many years, we decided just to tap on that and really protect the hardcore consumer we had at the time and learn there and build from there. The second step, perhaps toward already 2011, was moving to Recife. Recife is the city that you see up more north. It's a city of about four or five million people. It's the largest Scotch whisky consumption per capita in Brazil, and some say in the world today, it's the largest stronghold. It's the largest market for Johnnie Walker Red in Brazil, and Brazil is the largest market for Johnnie Walker Red, period. You can see that.
We're doing some work there, and it became a gold city for us. We expanded between 2013, 2014, to Belo Horizonte, right in the middle of the country. You can see a number of potential cities where we can expand the same model, adjusting to regional realities, because Brazil is large, as the U.S., and as the U.S., is a melting pot, and as the U.S., has very different regional aspects to brand building that we have to take into consideration. From the south upwards, Porto Alegre, Curitiba, Cuiabá, Brasília, all cities with 2 to 3 million people. It's a funny thing, Brazil has more 1 million people cities than the U.S., about 40 cities, so it's a much more concentration of large urban centers, which, in a way, facilitates our brand building. Jack consumption is 65% on trade, which again, with the urban centers help.
I finalize by talking a bit about why I am, and the whole team in Brazil, and I think the team here in Louisville as well, we are all very confident on the future growth for Jack in Brazil. Same expression again, I'll repeat it, scratched the surface just there. Lots to be done still. Potential for growth within the Scotch whisky category is amazing. We could bring in here, if we had more time, the whole white spirit arena and the vodka, where we have been tapping quite a lot of our consumers and building the brand on top of that as well, so it's more volume to come from that. The usage of whisky in Brazil is just one-fifth of what it is in Spain and the U.K., which is another thing, so there is more whisky to be consumed per capita as well.
We think that we have something on our hands, as John said before, that is very unique. It has all the credentials, and we have the right brand-building model to expand, to accelerate, and just to make a very strong market for Jack Daniel's in Brazil. I will finish basically by saying that on top of that, I think, and that's the sharing the pie, and I definitely believe on that it's about people. We made a bet. We had a number of years losing money in Brazil, and Paul always asking, "When is Brazil going to make money?" We're breakeven, and now we're making money. Anyway, we were there to build brands to begin with, and we invested on people, and took us a while to get the right team in place.
I think, and I'll state very proudly, that we have a dream team in place that has a great mix of experience, talent, tremendous energy, and passion. Everyone that goes to Brazil and visits the operation can see that. An ability to execute and to implement the plans that is formidable. With that, I think we have everything to not just build more of our portfolio in general, but in particular, Jack and the more premium expressions. I have lots to say. I could have lots to say about Woodford Reserve, Jack Daniel's No. 27 Gold, et cetera. They are all doing very well in Brazil. To do something that is outstanding and to really make history for Brown-Forman in Brazil. With that, I'll leave you. Mark, back to you. Thank you very much.
Thank you.
Thanks, Amador. We'll move to Michel just in a minute. Brazil, as an example of how we did that, as Amador said, he called it a bet. We invested before the return, of course. It seems to be working. After many years of trying to find at arm's length a way to develop the business in Brazil unsuccessfully. We move to France, where we had a pretty decent business in France, working at arm's length with Bacardi as our partner. The decision there was that we, Michel and his team, believe that focus may bring even more results and more influence would actually accelerate our growth. Here's the story of France.
Thank you, Mark. [Foreign language] Bonjour. I've been with Brown-Forman for 17 years, leading our growth from two people in 1997 to 100 today. France is the world's third whiskey market and the first Scotch market. Curiously, the French people drink more Scotch than the British, but the British drink more cognac than the French. It's a massive market with all categories represented, but Scotch is by far the number one. American whiskey is growing quickly, led by our work around Jack Daniel's, but still untapped. We drive 75% of the category by value, but our 600,000 cases represent only 4% share today. Given the investment we have been making, including this year, route to market change, we are focused on driving growth through leading the development of the American whiskey category in France. Let's look at the market composition today. It's a massive market, concentrated on two categories.
The French spirit market is about 37,000 cases, made of 15 million cases of whiskey and almost 10 million cases of pastis. Over the last 10 years, whiskey grows by 2%, but pastis declined by 4%. This whiskey market is dominated by Scotch, with 13 million cases. While most of the other category exists, and we have also some French whiskeys, American whiskey has delivered the fastest growth over the last 10 years, with a 5% CAGR and close to one million cases. Jack Daniel's represents nearly three quarters of the North American whiskey market and has grown sales by 13% over the last decade, the best performance in the market. One characteristic about France is its retailer concentration, with eight accounts representing 90% of the business. The spirit is Excuse me. The spirit is very. The English is difficult.
The spirit is very much squeezed to the off-premise. Historically, the French retailer has created the hypermarket concept. A hypermarket concept is you buy everything in one store. Instead of having a mall, you have one thing. You can, clothes, food, and everything. Brown-Forman needed to have the flexibility to allow us to build up an organization that best positioned us to work with a retailer partner. This includes leveraging our growing size to stay front of mind of retailers and then build up a profitable partnership with them. Jack Daniel's has been the backbone of our growth over the last 10 years. With consistent growth over the last 8 years, we doubled the growth over the last 5 years, and we tap now 16,000 cases that represent only 4% of the market share.
This constant growth is based on leveraging and bringing to consumers the unique brand legacy duplicated by an emotional image that rings very well to the consumer aspiration. This is summarized by our advertising message, Jack is not a Scotch, it's not a bourbon, it's Jack. You see that we are still in the universe of the whiskey, but nevertheless, it's Jack. We are unique, we are different. Finally, Jack Daniel's is perceived in France as the original premium crafted American whiskey. It's also important to underline that the Jack Daniel's result and the core brand image has been executed in France in a market where restriction exists. Quite sure you don't know that, since 1991, the French, and the name of the minister that created this law is Mr. Évin, which is curious because évêque in English means wine.
It's Mr. Wine that built up a regulation law. This regulation law, in fact, says that you can talk about origin, tradition. You can talk about origin, tradition, the way of doing the product, about the legacy. The only thing you cannot do is transmit emotion. You cannot transmit emotion. I am able to say Jack Daniel's is made from Tennessee, but I am not able to show a nice person, top model or man, whatever you want, drink, showing a glass of Jack Daniel's. The consumer focus and the consistency of our marketing plan explain the attraction of new consumers, getting share from the other category. This growth is also the result of an excellent commercial relationship with the trade, based on creating value for them.
Based on the Jack Daniel's success story, given our goal of leading the category growth in France, we decided to expand. We believe the best way to drive the future growth was through owning our own distribution. In January 2012, 2014, sorry, it's this year in fact, we hired almost 80 people coming from different origins of background, one-third from the spirit industry, one-third from FMCG, and one-third from the other industry. Our strategy anchored of having the right people join Brown-Forman and infuse the Brown-Forman culture through the organization. This has been done through a combination of people and training from Louisville. I don't know if I pronounce right, it's Louisville? As well as something we call Global Orientation, this is a program that everybody loves in France, is a Global Orientation.
Brown-Forman bring people from France. We send the people in the U.S., then they go to visit the distillery, meet the leadership team, go to the Blue Grass Cooperage, where we produce our barrels. They like also to go to see Woodford Reserve Distillery, because what you don't know is, the Woodford Reserve Distillery is in the county of Versailles, which in English is Versailles. We believe that we have some of the best people. Pardon? Yes. Excuse me. I just went Versailles. Cross-selling brand, including our desire to grow another American whiskey outside the U.S. through prestigious brands such as Woodford Reserve to address the premiumization opportunity. We have the right portfolio for the market, now we have the right go-to-market to be enabled to get further gain. Can you come back, please?
Despite an 11% CAG over the past decade, Brown-Forman France still has only 3% of the spirit industry landscape. Over the medium term, we're targeting more than 1 million cases. This is important. Even that numbers will only have Brown-Forman a 5% share. Based on the development of our American whiskey portfolio, the expansion of the category, and our investment in passionate people who are focused on our brand, we believe that France will continue to be a large growth contributor in the future. [Foreign language]
Very good.
Thanks, Michel. Of course, Jill and I have been sort of walking the world, overseeing and facilitating a lot of this change that is being described here. Just for a moment, we're just going to ask Jill to focus her attention on not all the world that she is stewarding, but this amazing market in the U.S., which I know you all have a high level of interest in. Jill will tell you the U.S. story.
Jill.
Thank you. The United States is a smaller portion of our overall earnings, and that's definitely true, but the United States is still the most valuable spirits market in the world. It has retail sales above $36 billion. That's in the off-premise, and it's added 5 million cases in each of the last two years. In this really important market, in a very competitive environment, we're delivering top-tier results. You can see on the left, we've gained market share in each of the last three fiscal years. In FY 2014, we outperformed these large suppliers you see on the screen. We've done that because our portfolio skews to American whiskey. In American whiskey, we are the leader. You're going to see that our brands resonate with consumers.
Jack Daniel's is the number one brand, and as we keep going closer and closer to 5 million cases in the U.S., we're still growing impressively at 4.5%. We're the number one brand. John Hayes mentioned that we introduced Gentleman Jack in the late 1980s. It was the first extension we had done in 100 years. You look now, it is now the number one brand in the $25-$30 price segment, and it's growing nicely at 10%. This one I enjoy a lot. In the 1990s, when whiskey was declining, vodka was king. Everybody was talking vodka. People were entering vodka. Brown-Forman made a different decision. We said we're going to go to Woodford County, Kentucky, for sales, and we're going to build a distillery with pot stills. Unheard of.
We did that in the late 1990s, and it is now the number one brand in the $30-$40 price segment, growing 26%. When Mitch McConnell, Senator Mitch McConnell, and President Obama were talking about the Bourbon Summit, that's why Saturday Night Live chose Woodford Reserve, because it is iconically a Kentucky bourbon, and it took a chance when everybody else was playing in vodka. We introduced, in the late 1990s, another extension of Jack Daniel's, a Jack Daniel's Single Barrel with higher proof, very robust. It's the number one product in the over $40 price segment. In 2011, we introduced Jack Daniel's Tennessee Honey. This was a way to attract new consumers to the franchise and to give existing consumers a different way to drink Jack Daniel's, with a little bit of honey and a whole lot of Jack. You can see in the $20-$25 flavor whiskey category, again, we're number one.
I just have to talk about Old Forester. Old Forester was the first bottled bourbon. It came with a written product guarantee. It's the only bourbon that was around before, during, and after Prohibition. It was around during, because we got a medicinal license. Let me tell you, in the years of Prohibition, there were a lot of sick people. We introduced a lot of people to Old Forester, and it's really what established us as the American whiskey leader. How do you stay the leader of American whiskey? Well, you don't take it for granted. There are now a lot of people getting into American whiskey. You hear a lot of noise, and we have to make sure we're talking every bit as loud.
What we did this year is we mobilized our workforce, best-in-class workforce, asked our partners to help us. We invested incremental time and focus and money behind the brand. We put it in media. We put it in off-premise and on-premise. We ramped up our digital efforts, we focused on the multicultural market. It all paid dividends. As typically happens with Jack Daniel's, the more you give Jack, the more it gives back. We're also engaging consumers because it's so important to tell our story. Everybody wants to come into this segment, they're creating brands, they're creating stories, but we have an authentic brand with an authentic story. There was actually a real Jack Daniel's that nurtured this brand. We have people, real people, in a real town, Lynchburg does exist, that make the whiskey every day.
We take ricks of sugar maple, we make our own charcoal. Drop by drop, every drop of whiskey goes through 10 feet of this charcoal mellow, which uniquely makes it a Tennessee whiskey. We put it into a barrel that we craft for us, we create Jack Daniel's. Of course, we introduce people to our master distillers that you're going to get to meet today, they learn the art of whiskey making. We invite people to our home places. We invite them in. They get to walk around, see how it's made. They get to see people, meet people, smell our product, taste our product. When they leave, they're ambassadors of our brand. On screen, you're going to see a lot of new brands.
There's more craft distillers, consumers are getting used to different products and wanting to experience new things. We as well have started to introduce new expressions. We have some that are more robust. There's an Old Forester 1870. We call this our Whiskey Row series. There's a Woodford Reserve Double Oaked doing a great job. Jack Daniel's Sinatra and Jack Daniel's Rye. In the flavored category, we have Winter Jack, a lower proof, ready to drink. Absolutely delicious, a bit punch-like. Great for the holidays. We have Honey, we recently announced we're introducing Jack Fire. We have some seasonal offerings that our master distillers put together. We have an Old Forester Birthday Bourbon that's created each year. We have a Woodford Reserve Master's Collection.
This year was the Woodford Reserve Bourbon was finished in a Pinot Noir wine barrel. Absolutely terrific. This is probably my favorite slide. What have all these efforts done? They've helped us accelerate Jack Daniel's to generate these kind of results. We're very proud of being the leader in American whiskey, we're very proud of how we're doing in its country of origin. Thank you.
It's always exciting to hear about the brand-building efforts that are going on in three of the world's top whiskey markets. We're not ready to leave the stage just yet. We have a few more stories that we want to tell that speak to the themes that you should have heard in today's presentations. The themes of capability building, the themes of focus, and the themes of consumer relevance. Before we leave, we've got a few more stories to tell on each of these areas. I want to, Amador, return the stage to you for a minute to give us some more information about a focused approach. Why has this mattered so much in Brazil, and what have you done to take a focused approach to build Jack Daniel's?
Thank you, Kirsten. Is this working? Well, I said a bit about focus during my presentation, but it gets back again to the fact that, in the case of Brown-Forman, we're starting from pretty much nowhere with very little scale and no structure. If you don't have focus, you can't get anything done. Large market, large competitors, as I said, very high cost of doing business. You really have to set up your priorities straight and just stick to them and make sure that we have the right capabilities, and then get back to people and the ability to execute them very well, consistently over time to make sure you get results, again, against the brand, against the program, against the market, until you learn more and then develop that. If you don't have that, you scatter your resources, you are limited, and you pretty much go nowhere.
Frustration comes around, and you know the story. I think focus is absolutely key. In my case, it was absolutely key, and continues to be absolutely key. As I said before, the setting up or trying to decide with the team what are really the key priorities is priority to 80/20, and then setting the programs around that and focusing on those, and consistently year from year, don't reinvent the wheel. Just keep it going. If it's working, just don't reinvent it. Just do it. That would be my answer in a nutshell.
How about you, Michel, in France? How is it similar, and how is it different?
Focus is, was the keyword, or is still a keyword in France. As you heard previously, we set up our own organization in France this year. When you weigh 3% of the spirit landscape compared to the big one, and when you go to see the retailers, and I said that the retailers are very much concentrated in France. We have only eight major retailers covering 90% of the business. They thought that we will open our portfolio to all the products, including vodka, including Chambord, the French liquors, including the tequila. In fact, strategically, we focus on the American whiskey, Jack Daniel's, but also Woodford Reserve. They're surprised because this focused thing makes us Having the, I would say, the positive points or the positive arguments, and also it's the thing that makes us very strong in France is the American whiskey.
Focus was a key success of launching, now I can tell you that after one year, we have a very consistent growth in France because we were focused on the American whiskey category.
Great. Thank you, Michel. You all also spoke about consumers, whether they are multicultural consumers, the rise of the 18 to 29 population in Brazil. Jill, what else can you tell us about what's happening in the U.S. to resonate with consumers in terms of our brand-building efforts?
Yeah. I'm ever amazed at whiskey's resurgence. I think back to Prohibition ended in 1933, when I was a little girl, I remember my parents drank whiskey, and that was really all that existed. Vodka was hardly anything, suddenly it started declining. About 2011, I guess, when we introduced Honey, Fireball started becoming notable and bigger, craft distilling started really coming about, and people wanted flavors. You see consumers wanting that, so we're responding to that. The new generation, it's their first time to really come to whiskey that wants a different experience. They want to taste something different, but they also want a true different experience. They want to go out and discover something, and they want authenticity. They get a lot of their stuff from digital and social. They want to interact.
We've had to really ramp up our capabilities around digital. Of course, the face is changing in the U.S., a very different consumer, a multicultural consumer. We've had to get better at marketing to multicultural. Like Jack Daniel's Tennessee Honey resonates great with African Americans, Hispanics. We see a lot of different things in consumers. We're trying to stay relevant. We've hired some new assistant brand managers that are younger millennial consumers to help us really tap in and understand and meet their expectations.
Michel, how about with you? What's making a difference with consumers in France?
In fact, what resonates with the French consumer regarding Jack Daniel's is that the opposition between Scotch and between American whiskey and Jack Scotch, you heard that we are a strong consumer of Scotch in France. This is old fashion, with rules, with tradition. The way of consumption is very strict, where with Jack Daniel's, the American whiskey, but mainly Jack Daniel's, it resonates much more in a cool way. It's much more, not liberal, but it's much more open. It's much more easy to drink. I like very much when our Master Distiller, for instance, when he came last year in France, he said, people always ask to our Master Distiller, "How do we drink Jack Daniel's?" They expect that they say straight or on ice.
The Master Distiller said, Jeff Arnett said, "Drink the way you like it." This is typically the kind of difference and the way it resonates in France. I will say that it's a bit like our American and French relationship, like all couple. I mean that sometime we like us, sometime we do not like us. Nevertheless, with Jack Daniel's, we will be always together.
I think that probably brings an excellent end to our discussion. Thank you very much, Michel. We are done now here on stage, and I'd like to welcome Jane Morreau, our Chief Financial Officer.
Thanks, Kirsten. Thanks, everybody, for joining us here today. I've got one more thanks, and that thank is thanks for hanging in there. I'm the last presenter, I promise, before Paul comes up for some closing remarks, and we open it up to some Q&A. Perhaps more importantly, before we invite you to join us for a cocktail reception, and you can enjoy and get a taste of some of our amazing products, including Jack Daniel's Tennessee Fire. First, before we do all that, I wanted to share some financial metrics with you to pull together and summarize what all my colleagues shared with you today. With that, let me start with a chart that many of you probably have seen before.
What it's doing is illustrating some of our key financial metrics that we look at in our P&L, our net sales, our operating income, and our EPS growth. I'll start off with our net sales. When I look at this, the charts that you see up here, you see very steady, consistent growth in our net sales over 35 years, 25 years, 15 years, and 10 years. That's been driven by our consistent investment in both our people and our brands, our intense focus, and our great brand-building efforts that we do. Further, if I showed gross profit, you would see further leverage. In other words, you would see the bar on gross profit for each of these time periods above my net sales growth.
That's driven by our pricing power that's supported by our premium brands, as well as some positive mix benefits that we've enjoyed from expanding Jack Daniel's around the world and just really becoming more global. That leverage that we enjoyed through gross profit and some additional modest leverage from SG&A, you'll see that operating income growth over all the periods of times that I'm showing is growing faster. One more bar, more leverage. All the things I said about what drove our operating income growth is driving our EPS growth as well, coupled with two things, share repurchases, as well as over time, our tax rate has come down gradually.
I think I wanted to pause here on this chart for just a minute, because I wanted to point out a couple of time periods, 35 years and 25 years, included the dark ages that Lawson was referring to in American whiskey in the U.S. These are quite great growth, I think, over those periods of time, despite the fact that the category was against this. I think it's a testament of our ability to grow our brands in a period of time, regardless of the category momentum. With that being said, now we've got the category momentum in the U.S., the winds at our back. We see that our brands are doing very well. Our premium American brands are doing very well around the world, and we think we're in a great position to seize opportunities for future growth.
Now, what I want to do is step back for just a moment and look over the past decade. What I'm defining as the past decade here starts in 2004 through 2014. I would say there was a substantial change over that period of time. It would be a decade of transformation and maybe another way to saying it, where we went back to our roots, where this company was built on a more pure spirits company. When we look at the beginning of the decade, in 2004, we would've been defined as a multi-industry company, where 36% of our revenues would've come from popular priced wine brands as well as consumer durables. At that time, we owned Hartmann Luggage and Lenox, excuse me.
Over the last ten years, what we've done is, through active portfolio management, we actually disposed those low margin, low growth, highly cyclical businesses. We also had some selected acquisitions over that period of time where we diversified our spirits portfolio a bit to where, if you look at the 2014 year-end, our sales from our business was 96% from spirits. I also refer to the last ten years as a continuation of our globalization efforts, that really started in earnest in 1994 by our former chairman and CEO, Owsley Brown II. He had the foresight to see the global opportunity for American whiskey, to introduce American whiskey to consumers around the world. Still, in 2004, we were very much a U.S.-centric company still, with over about two-thirds of our revenues coming from the U.S. at that time.
You fast-forward to the year-end that we just completed, we're getting close to two-thirds of our revenue now coming from outside the U.S. That growth has been built on the backbone of Jack Daniel's, the expansion of Jack Daniel's, and some route-to-consumer investments that we made to further build Jack Daniel's around the world. By what a decade makes for us, if we look at the beginning of the decade, the American whiskey category was still declining. Over the last four and a half years, there's been a rapid increase in the U.S. in American whiskey. That's what resulted in what we believe is the wind is at our back, and opportunities lie ahead for us. All this, put together, we believe, has really positioned us quite well as we look ahead for further growth.
You see all the different things that we're saying over here. The one I'm going to focus on, beyond the wonderful margins that now have come and the capital efficiency, is really the cash generation business model and what's driving that superior cash generation business model. Paul actually shared a couple of slides with you about our business model. I'm going to go a couple of little different directions than him. It's really building on what he did. I want to start with what makes an excellent business model, and I think it starts even further up the P&L. You got to have great gross margins. You see in this chart here, we have excellent great margins, almost 70%. It's improved over the last decade. You see the margins up here. That, we believe, has been afforded by three primary factors.
First, our pricing power that Alex referred to throughout his presentation. The barriers to entry that exist to get into the whiskey. The intense amount of investment, both in working capital as well as capital spending to get into the whiskey business, provides pricing power to our brands. Cost efficiencies that Alex also referred to have come through our margins over this period of time, being single source production and then the vertical integration that results. Both John and Lawson talked about our skew of our portfolio to American whiskey and primarily Jack Daniel's. With that comes terrific margins. In fact, our margins are industry leading. They're nearly nine points better than our competitive set. This chart looks at our 10-year average net income margin compared to the S&P 500, the consumer staples, as well as our peers.
Despite us being burdened with a higher tax rate because we're a U.S.-based company, and the consistent investments that we've made behind our people and our brands, including one we talked about here today, our France RTC that happened over this past year, we have the best net income margins. You can see compared to all of our industry as well as above, significantly higher than the S&P 500. We really believe that the quality of our earnings is very high. I'd like to use this little ratio here. Ratio of free cash flow to net income at 90%. If you were to compare that to the S&P 500, this is over a 10-year period, compared to the S&P 500 conversion ratio of 67%, and we're further ahead of the consumer staples at 38%. I like this margin, this net income margin.
It's a good proxy for the efficiency in which we turn our sales into profits. It's also one of the factors that are driving these top-tier returns on invested capital. Again, Alex talked about all the things that we have to do, planning ahead, seeing the growth several years down the road to lay whiskey down that's inherent in our business, making the investments that we have been and are continuing to make so that we can make the products at our production facilities. Despite all that, we still generated a 22% return on invested capital this past year. In addition to our return on invested capital, this has come in part to our focus and our superior efficiency. The way we target our opportunities is we target them by looking at and balancing our risk and reward. Paul talked about this a bit earlier, too.
As you heard from our geographies today, we don't put all of our eggs in one basket. We've really diversified our business geographically. We think that's one of the reasons why we have performed so well over the long periods of time. We take a long-term approach to our balance sheet, and we have low levels of debt that are required to generate our EBITDA. When I pull this all together and look at the model that we have, the industry-leading gross profit margin, the exceptional net income, the top-tier return on invested capital, and the low debt that's required to generate our EBITDA multiple, it turns into quite a cash-generating machine. That's a good segue into this next chart, and we'll look at our 10-year cash.
Today, depends on the stock market, I realize, but we're somewhere around a $20 billion company in market cap. I'm starting off with this first chart here, because 10 years ago, we would've been a $5.7 billion company in market cap. Over the 10-year period, we've essentially generated this much cash from our business after funding our P&L items to grow it, which is pretty amazing. What did we do with that cash over the past decade? About a third of it was invested back in our business in the form of capital spending, both in working capital terms and CapEx, as well as acquisitions. A third of it was returned to our shareholders in the form of ordinary dividends. The remaining third went to our shareholders in the form of special dividends and share repurchases.
The combined return to our shareholders was about 66%, so about two-thirds of it went back to our shareholders. When I look at our philosophy or our prioritization of our capital and how we allocate it, we first and foremost prioritize it to fund our business, to fund the organic growth of our business. Again, we have to invest ahead of the game in working capital, in primarily barrel whiskey. That's the biggest piece that we are investing in. The second thing that we have to invest in is our capital spending, which you heard from Alex this morning. Historically, we've spent around 2%-3% of our revenues back in CapEx. We are, over the last couple of years, spent a couple of hundred million dollars collectively between 2013 and 2014. Projected to spend somewhere around $120 million-$140 million this year.
We expect that level of investment to remain high for the next couple of fiscal years before we return back to more of the 2%-3% of revenues thereafter. Again, we're making these investments for the growth that we see and the potential we see in the business. Second area we look at is dividends. We want to grow dividends, and we want to grow dividends as our earnings grow and maintain a payout ratio somewhere around the 35%-40% range. If you look over the last 69 years, we've paid dividends. We've increased our dividends over the last 31 years, making us a member of the Dividend Aristocrats. After dividends, we look at acquisitions, and we look at those opportunistically. The company has been built on a combination of acquisition, innovation, and organic growth. I'm going to come back to acquisitions in a moment.
Assuming that we don't find suitable acquisitions, we're going to look at how do we return our excess cash to our shareholders. We generally look at either a combination of share repurchases or special dividends. If I were to show this chart over the last 5 years, what you would see missing from this chart is acquisitions. We haven't made any acquisitions over the last 5 years. It might be worth taking a few minutes just to talk about our philosophy and our approach to acquisitions. With that, Lawson had shown earlier our focus on being the leader in American whiskey. He also mentioned that we would be interested in attractive categories in whiskey, and we publicly have noted Scotch and Irish. That's easier said than done. You've got to find those brands that meet the criteria that we're looking for.
We're very disciplined. We have a high bar that we've set for what we're looking for in terms of what we use a term as, it's attractive. What's attractive business, if you will? We're looking for a good business, something that has characteristics of nice margins, good returns on invested capital, has growth, sustainable, not just over the last 2 years, something that has nice growth with it, can be meaningful in size to us. Quite frankly, we're looking for something that has characteristics such as Brown-Forman. In fact, we find if we don't find brands that are suitable, that meet our criteria, if you will, we're better off investing in ourselves with that great model I just shared and Paul shared with you earlier today, through share repurchases or innovating, much like we did with Woodford Reserve back in 1994.
The one other thing I wanted to mention about this chart is that if I then looked at over the last 5 years and took out the acquisitions, I mentioned earlier that we returned about two-thirds to our shareholders over the last 10 years. That ratio would've gone up to about 75% over the last 5 years. Spend just a minute just looking at how we've returned cash and capital to our shareholders over the last 3 decades. This chart illustrates that we have consistently increased our dividends over a long period of time. In fact, over the last 20 years, we've increased our dividends at a compound annual growth rate of about 8%, which is consistent with the growth rate that we just announced a couple of weeks ago, in line, 8.6% was our increase for next year's dividend.
We bought it back over the last 10 years, a substantial number of shares of our stock, and thereby reducing our total share count by about a third from where it was some 30 years ago. More recently, we've sent some special event-driven dividends, some special dividends totaling $1.2 billion since 2008. In aggregate, the return of our capital to our shareholders has been one of the reasons and one of the factors that has driven our total shareholder return. I talked about all the refocusing of the company over the last 10 years that we've done to set us up and better position us for growth as we look ahead. We've also simultaneously delivered industry-leading total shareholder return. You can see all the benchmarks behind me. We actually outpaced the competitive set and the S&P 500, and the S&P 500 by a factor of 2-plus.
All this has been propelled by our high industry-leading, top-tier operating income growth over that period of term, as well as our return of capital to our shareholders. We, like many family-owned companies publicly traded, want to deliver the greatest shareholder return we can, but we also want to do it with a balance of risk. I think I'll share this next slide with you. What it does is it looks at the S&P 500, so the 500 companies in the S&P 500, then it slices them by total shareholder return, as well as beta being a proxy for volatility. This first slice says, how many companies delivered above the S&P 500 total shareholder return? There were 276 of them.
Well, when you put another factor on there, beta, that number goes down to 133 companies, of which Brown-Forman is one of them. When you put Brown-Forman's metrics on there and you say, how many companies actually delivered a higher total shareholder return than Brown-Forman with a lower beta? There's only five companies that did so. This is over a 10-year period of time. You could see that we are in the 99th percentile of companies delivering top-tier total shareholder return with the least amount of risk involved. Okay, I've got one more chart, then I've got two more things. I got one more chart on market share. This will be in a similar format that you saw earlier from some of the folks that just came up on the country. Now I'm going to focus on value. More numbers, right?
We're talking about dollars here. I think this chart is a really good example of the great success of our strategy over the past decade. Let's start off with IWSR on a value basis. The total global spirits on a value basis was over $300 billion for 2013, of which whiskeys represented 20%. Of the total, growing at a very healthy clip over the 10-year period from 2003 to 2013 of 7%. Jack Daniel's in 2003 represented 6% of the total whiskey pie, and it represented 39% of American whiskey. We fast forward it to today. You've heard a lot of the investments we've made over the past decade, the development of our brands, geographic diversification, the investments in our people. What you'll see is in 2013, we gained a whopping 1% market share. We went from 6% to 7.4%.
Why I say that is you saw the great numbers, the industry-leading total shareholder returns, the great growth rates that we've experienced, yet we only have increased market share 1%, which makes us very optimistic as we look ahead at the opportunities that lie out there. If you look at that market share and say, "Where's it coming from?" You can see we only have 6% outside the U.S. on a value basis, 14% in the U.S., thereabout. Again, illustrating the opportunities that lie ahead for us. Perhaps, even more impressive is while we've grown the category, our market share of the American whiskey category from 39% to 46% over the past 10 years. Outside the U.S., we would have grown it even more, from 50% to 62%.
I think this illustrates, we believe this illustrates that we are clearly the leader in the American whiskey category, and we've got a lot of untapped potential to get to. We see a lot of growth ahead for us. In summary, I want to leave you with why we believe Brown-Forman is a great long-term investment. I want to start off with reason one. We really do believe that we've got one of the best premium portfolio of brands in the world, focused on the fast-growing American whiskey category. With that, we don't have a local, low-price brand in our portfolio. Second, we own Jack Daniel's. It's an iconic brand. It's one of the true global brands of all brands, all kinds of categories in the world. It's very special. It's very powerful.
It lives, as John described, in a rarefied air, both in terms of scale, price point, efficiencies. We believe, as you saw from that chart and what we showed earlier, that we have tremendous opportunities to grow both in the U.S. and outside the U.S. With our singular focus on this brand that Paul and Kirsten referred to, we believe that the development, and we can continue to develop this brand, and it's a true competitive advantage for us. Third, this really has to do with the production that Alex was talking about earlier. We've been in this business since the beginning of time, 144 years. We know the whiskey-making business. We know the quality. We know what counts. We know how to plan for it. We know what to do, the various levers. We know it takes investments.
We know from this, we understand the full supply chain. We've got single-point production efficiencies as well as vertical integration that we think are competitive advantages to us. Then I spent a few minutes ago just talking about we are the leader in the global growth of American whiskey. We have been over the past decade. We have built it outside the U.S., and we will continue to do that through our focused investments in people and brands. We know in the U.S., we're well-positioned. We've got the premiumization trend. We've got innovation and, of course, organic growth behind us. Outside the U.S., it's untapped with such a small market share that exists. Fifth, we've got an incredibly long track record, we believe, of being strong stewards of capital, investing behind our business, making acquisition opportunistically, and returning cash to our shareholders, all shareholders.
Sixth, we have a very committed, passionate, engaged family, Brown family, behind the company, which we believe is extremely competitive advantage. The family, much like all of you in this room today, wants nothing more than to see earnings growth sustained over long periods of time, growth in dividends, as well as capital appreciation. We believe Brown-Forman is very well-positioned to do just that and to thrive and endure for generations. I've got one more thing that we're going to share with you before Paul comes up here with the closing remarks, and it's a short video. With that.
I think the characteristics that unite a lot of us Browns include a desire to connect with other people. I think that relates to the company directly in as much as most all the people I've ever talked to love working at Brown-Forman. They really love working there. I think there is a sense of responsibility to take seriously all that's been given to us. Somehow it goes beyond that. Brown-Forman is just constantly creating new, interesting things. It's still a very creative and dynamic place.
It's one of America's few companies that has gone five to six generations owned by one family.
When my father started, it was one product Brown-Forman had, Old Forester.
Can you imagine going from 100,000 cases to 2 million, then it was 4 million, now it's 12?
The family brings in a continuity that you don't see in other companies.
Thanks to all that, I just don't think we've lost our way. God willing, I don't think we ever will.
We're making a transition to the Q&A now. Thanks for hanging in there through what I hope you all considered to be a much deeper look at Brown-Forman Corporation today through the leadership that we've had with you in the room today. Now I think is an excellent opportunity, as you've heard from us, for us to hear from you as it relates to any questions that today's presentations brought up. I'm going to ask my colleagues who've been with us today to I'll try to emcee a bit and direct questions, or you all feel free to direct them yourselves. I'll play the role of emcee up here to help us through the Q&A. Why don't I have everybody come on up? Great. Okay. I think we've got roving mics, just so everybody can hear you.
If we can't, we'll try to repeat the question. Bill?
Thanks. Can you hear me? Can you hear me now?
Just there. You just shake it.
Can you hear me now?
Yeah.
I guess two questions. One maybe on the operational side. With all the CapEx, with all the expansion going, I guess, how far does this get you? Are there any areas where you could run into capacity constraints in the next two, three years from the super premium side to certain parts of the business? What will this do? Will we see the next build 20 years from now, 30 years from now? How far does it get you out? One on the cash question. If, and this is a big if, there is a tax reform in the U.S. and there's maybe a repatriation holiday. Is that a possibility? Can you maybe talk about what kind of cash you have trapped overseas, and would that be a possibility for a special dividend if the tax reform occurs?
I'll maybe let Alex address the first question that you asked about how far a run do these recent capital investments we're making. What sort of horizon did we have when we entered into them?
When we're looking at capital investment, we're looking at a 10 to 20-year horizon. Today we're looking at, okay, what do we need to do in order for us to ensure that we have supply until 2025? What flexibility do we have to build in order for us to ensure that we can continue to support growth until 2035? All of that to say is that based on our outstanding planning process, we believe that we are in a good position to supply premium and super premium products.
One thing just to add. Throughout, even in that base of our historical CapEx, we were always doing a form of what we would today define as expansion. The premier way we did that was through warehousing. We were always adding warehousing, some of those are in there. What's in this more exceptional level the last couple of years is actually expanding distilling and then expanding cooperage. Those we think will be, in some ways, more significant during a short amount of time. Will set us up for sure. Alex referenced the modular nature of what we're doing, particularly at Jack Daniel's Distillery. There could be additional CapEx down the road as we continue to expand as needed. The most significant amount of it is going on right now.
Jane, did you want to handle the question on trapped cash and maybe big "if?
Yes, trapped cash. When we look at the cash we have overseas, we've grown bigger overseas. Clearly, having cash overseas is more important and needed than we historically have had. I think your question really was directed toward would we bring cash back for a special dividend? I think we generate enough cash in the U.S., but that wouldn't be why we would bring it back. We would approach our capital allocation much like I described here today. We would go through the process in terms of what makes sense. Where do we need to fund the business? Dividends, ordinary dividend, and its growth, acquisitions, and then the other portions of it. We wouldn't do it just to bring it back for a special dividend.
Can you just talk about if you think industry consolidation helps or hurts your business, and then maybe the relative merits of scale versus focus in the industry globally?
Sure. It depends on who's being consolidated and who the consolidator is in every instance, I think. Over longer periods of time, kind of hinting at the second question, we feel that, particularly in this industry, that, you saw from some of the relatively meager share numbers, that while, of course, scale, like the major decision in going forward in terms of integration toward owned RTC is coverage fixed overhead. You need to have a business that's scalable enough to support the investments you make in an RTC. As it relates to getting shut out at retail by more larger portfolios and that kind of scale, I think that we would opt for the more focused model that has served us so well.
I'll just ask maybe Michel and Amador, Michel for sure, who has the very concentrated retail environment, to comment on the difficulties that you might experience by being smaller than some of the larger players and the trade-off between sort of scale and focus in that case.
Absolutely. First? Yeah. Absolutely. In fact, we were not even facing the trade because we were working with a distributor partner in France. We have first built up the, what we call the key account, and then we face the trade. Obviously, in France, as I said earlier, the concentration of the trade makes the relationship and the negotiation with the trade extremely tough, I would say.
Right.
Nevertheless, due to the fact that we had the program, it works very well.
Yeah. Maybe Jill, I'll just say, as the example from the world's largest distilled spirit market, if you looked at the relevant performance of larger versus more mid-size versus smaller companies in the U.S. distilled spirits market, I think you'd find over, for sure, the last five years, and I think it would hold up even over 10 because of the performance in the last five. The smaller, less scaled companies, those that would profess to not being in the scale game, have had far greater success in this market than the larger players. That holds up to almost any data.
Yeah, you saw it on the data that was on the screen, I would say that we aspire to be big but nimble like we're little. I think we like where we are. We like focus and the ability to try to move things more quickly and not get stuck in bureaucracy. Of course, there's always trade-offs, focus has served us very well. If you look at the folks on the screen, you can see that we are outperforming them.
Just on the Fire launch, do you ever consider using Old Forester instead of Jack Daniel's for the launch, just given the price point of the incumbent there? Also, maybe the risk to the brand equity in case it doesn't go as planned?
Well, we look at the opportunity for all the trademarks, but we certainly wouldn't put Old Forester in a Jack Daniel's bottle or anything like that. As the main asset going forward for our company, that's why we went and tested it. As an example of what you're talking about, we've had in the U.S. marketplace and I think in maybe one or two international markets, an Early Times Cinnamon expression that has been out there and done okay. You all just need to understand that the power of the Jack Daniel's trademark, it significantly scales up the opportunity for our company when we consider it that way. We don't enter in it lightly. I think a lot of companies might have entered that business a couple of years ago.
We're been a little bit more measured than many because of what I think you're referencing here, which is just to be careful and cautious enough to make sure we know what we're doing and what the impact might be to longer-term brand equity. Yeah. Ian? Oh, you got one over here, and we'll come back.
Hey, Paul. Nice to see you, thanks for bringing the team up to-
You're welcome
make the presentation. Just two questions related to growth potential in emerging markets. I guess if we kind of look forward over the next five years or 10 years. Could you talk a little bit about, first, how that might affect leverage in the company? You've had really good operating leverage, gross margin leverage. Is there something that we would give up in terms of expanding into emerging markets? Second, if you step back and you look at how you're allocating your spending and investment across the entire portfolio, so outside of American whiskey, will you be taking resources away or allocating more resources towards that development and maybe away from some of the other businesses or brands in the portfolio?
Anybody want to talk about, maybe Lawson? I'll just say, while they pass the microphone, that, yeah, I think that on this question of resource allocation, we would say we've been in investment spending mode, for example, in our tequilas since we bought them. Within the portfolio, I feel like those things that offer the most attractive returns, regardless of whether the category has momentum or not, we're going to try to do what we think is a proper job of brand building. On the emerging markets, we'd have to go look at it by individual market versus as a whole. In general, I would anticipate that we would continue to get the same sorts of leverage as you went down the P&L in those emerging markets that we've seen over the last 10 years.
Personally, every time I see the presentations that are made by my colleagues here, in each of the BRIC markets, I don't know if I'll still be around Brown-Forman, but over the course of, say, a generation, I would be really disappointed if those weren't, when that one chart we showed minimum level of volumes, if all those markets didn't have the potential to go past a million cases. Over the passage of time, always the question is how fast and what level of investment is required. They certainly have the population and the appeal of whiskey in those markets. If Jack Daniel's continues to do what it does as the leader, I can't imagine that we wouldn't be making whiskey and anticipating and investing, that they would be much more largely scaled.
Amador's example, I thought, was a great one today of virtually a 20,000-case market now to forecasting going over for the family, 200,000 cases. In that kind of example, you just start to extrapolate that over the next 10 years and then take it into markets of equal population size with growing middle classes that have whiskey as a core category. I think we would remain very optimistic about it.
Yeah. In the last even year, we've spent a lot of time looking farther and farther out on Jack Daniel's and where is the volume going to come from over five and 10 and 20-year time periods. Very much true that emerging markets are going to be increasingly important. They've already doubled and tripled in size for us in the last 10 years. True, we are going to be investing more in that, but how you do it has a huge impact on the margins. For the most part, our margins don't really vary that much around the world. Brazil is sort of the exception to the rule.
When you get into some of these very much larger markets like the Chinas and Indias and Africa and things like that, whether or not we would go in and go hire, I'll make it up, in China, go hire 1,000 people and go develop the market that way is probably not the way that we're going to do it. Different markets have different methods for it, but generally, we would not go into it thinking that we're going to take a lower margin to be able to make it happen.
Second, please. Yeah.
Two questions. Paul, you made the point earlier on, quite rightly, that you're being quite careful of rolling out the flavors, but you have pushed the button now on another one. I just wonder whether you've got a better roadmap now thinking forward about how many flavors, how fast, and whether you can talk a bit about that. The second question was more around acquisitions. Just to be actually clear what you're saying, because you have talked about the Scotch and Irish before. You have also mentioned previously other categories like vodka. Is it narrowing down to the focus here?
Yeah. I think the thing is, if you saw, we've seen some of the themes today from just being at the premium end. The premium end of, just to answer the second question, the premium end of the global whiskey opportunity, it's so attractive. The things that we would find to be attractive and maybe advisable for us aren't this other A word, available. You can go through the mental math of how do we get there? What is it that would attract somebody to wanting to sell us their attractive brand in either the malted whiskey business or Scotch or Irish? They've been having a pretty nice run, too, if you look back over. I think that's why you pair that up with realistic thinking about innovation.
I think we gain inspiration a bit from the story we showed on Woodford Reserve, that you can control your own destiny more. If you can find the right spot for investing and you have a long view of it has to be meaningful. As you see the size of our company, they can't be these little bets. Nonetheless, we're going to look at both alternatives and see what the wisest way to enter the most attractive markets without taking our focus off our primary theme of today, which is American whiskey and the continued development of the Jack trademark. On flavors, what I'd say as it relates to Jack Daniel's, I would say two is where we are.
We know that the honey and cinnamon, at least in these early days of flavored whiskey, because people were not in a cold format already asking for American whiskey or Jack Daniel's with honey or cinnamon. They were asking for it largely on ice, with water, with citrus, and primarily with Coca-Cola. These open up new markets and new consuming occasions for the brand, I think have actually been very important to the low levels and almost absence, in many instances, of cannibalization, because they became new ways, not convenient ways, to consume existing drinks that were already offered by Jack Daniel's or by the category. I think that was really important to it. Who knows where this thing might go?
I don't mean to imply, either, that every single possible way that a consumer might choose to drink our whiskeys, we would eventually go into some flavored version of it. I think that's where the vodka companies, in some way, got ahead of themselves. For us, we still want Jack Daniel's to be diluted and mixed at times in cocktails and in mixed drinks in the way that it historically has, and that is a far larger business than even our flavored whiskey business is today. I would say expect us to be conservative and thoughtful about it. Also, you should expect us to be articulate about it. Thank you for asking the question. Just make sure the microphone's. Does somebody have the mic? Oh, you have it. There you are. Sorry, I lost you.
Thank you for the data and the slides you shared. It's quite evident that you have a terrific business model, and this management team has a great track record of execution. Paul, as you're thinking about the long-term strategy and growth, what are some of your key worries? What are some of the key risks you think about?
Well, the ones that, I think, I'll let anybody up here talk about that age-old question of, if you're doing a SWOT, what are the threats that you would foresee? The two that would show up for me that are more contemporary, one would be, and this is beyond the global macroeconomic stuff that all of us would deal with, that are unique are excise taxes. I just would say models that we see in, particularly some of the larger countries, Australia comes to mind. These things can be really detrimental to companies and brands that have premium priced positions in the marketplace or in the category. That's something I worry about. I wouldn't say I'm losing sleep over the legalization of marijuana, but I'm paying attention to it. I'll just say it that way.
Others may have their own form of, Mark, you do a lot of SWOTing around the world, what are some of the things that have come up as worries or concerns that would be unique to either the company or the industry?
Well, I think I would say that a very disruptive threat, I'll leave that alone. The outside, what we would be able to control as a corporation, but up in the weaknesses quadrant of our SWOT, we've had things, Paul mentioned a couple. We'd be concerned if pricing wasn't available to us for the long term. This balance of volume and price that you hear a lot of us talk about. Excise tax has an influence on that. Also, as we're only really five years into fixing infrastructure cost in key markets. This learning, we're cautious about the efficiency of fixed cost investment in markets and what you do when the growth curve slows.
In the sort of not very disruptive outside our control area, we're just paying attention to the fact that this is not a scale business, but yet, we need to invest in infrastructure at a pace and with a potential flexibility that enables us to be reactive. John mentioned the South Africa story. What happens if we're invested in a market like South Africa and we were facing a slowdown, what would we do with our investment posture then?
Lawson?
I think, too, this is a business that has gone through cycles before. Particularly those of you that followed Scotch's business, they've had booms and busts many times over a 100-year period. We're very sensitive to it. We look at it. We actually are pretty comfortable that supply and demand is in a pretty good place. But we know there's a lot of people building a lot of distilleries right now. What happens with that and what happens to pricing would be a BRL risk to our business. Now, as I say, I think it's years before we really would see. There's so much supply coming on that's still got years before it's actually going to hit the market.
It's not really a short-term risk, but I think it's fair to say that we need to be conscious of keeping supply and demand in balance.
Our risk register's organized around two primary buckets at the company. One is those things that would potentially threaten Jack Daniel's or our American whiskey supply, and those things that would threaten the demand. You can imagine that we would have risk mitigation efforts, everything from, on the supply side, fire protection and things like that that we've invested in over the years. Demand, I just think it comes down to doing the jobs that we're paid to do, which is to run this business and these brands exceptionally well. That's what we tried to show to you today, a lot of the ways we try to do that. Competition is always one of the potential derailers that occur for any company and any industry.
I don't know that we can. We would worry about smaller, literally some of these upstarts, particularly in the U.S. today, but also larger companies who our perspective would be broad there on competition. I think competition keeps all of us on our toes. It really does. We have to think anew and not misdiagnose or create ideas that we shouldn't create or make investments that we shouldn't make, while making the right choices on that. I think that's what we're tasked to do as managers and leaders, you should expect us to do that. You're welcome. Thanks for the question.
Great. Thank you. Two questions. First, kind of big picture, kind of theoretically, if a property in vodka, like Tito's, came on the market, is that something that you would seriously consider, or would you just not even consider it very much given the category it's in the sense that vodka would dilute the overall quality of the business? Second question, can you give us a little bit more color on your business in China and India? Roughly how many cases you sell, how happy you are with your route to market, and whether you're looking for perhaps other avenues to increase your penetration or your potential in those markets?
Maybe, Jill, you want to hit on the opportunity, say, of a large, at this stage, a very U.S.-oriented vodka like Tito's, Jane, you might supplement that as it relates to acquisition. Mark, you might hit on the-
Sure.
I'm trying to think of, Lawson, you, several of us could hit on the China, India thing.
I don't know that we would carte blanche just disregard a whole category. The interesting thing about Tito's for me is Tito's actually is resonating with consumers. The handcrafted message is bucking the trends of the rest of vodka. A brand that resonates with consumers that we think can do well in our hands, we would look at it. It would have to meet our typical criteria. I think we're a bit more discerning because there's all kinds of case studies of where companies have gone out and made acquisitions, and it's actually taken them backwards. That would be the type of brand, one that resonates with consumers, that has a proposition, that's premium priced, that can grow well, that I would be interested in the management team looking at and considering.
Yeah. Just building on what she said, we would look at our criteria. It's not so much about the category, it's about the business and the brand. We would apply, get in there, look at it. Is it a good business? What kind of margins does it have? What kind of growth potential? What kind of returns? We would apply those filters to it, then can we create shareholder value in the end? Is it advisable to us? I'm saying, I don't want to lead people that we're not looking at stuff. We do, but it's all about having a good business.
We explore a lot of things.
Yeah.
I will say this. One of the difficulties today versus, say, 5 or 10 years ago for a company like Brown-Forman looking at, in this case, an emerging brand, a brand that's doing very well in this country, is whether or not. We never would've thought about ourselves as being a big player in the spirits company, and is part of the appeal of actually Tito's or any of these other sort of locally developed and growing brands, is that they're not owned by companies like Brown-Forman. We're seeing this in a number of other industries. You have to wonder and you want to be realistic about it, when you go to being a perceived big corporate entity in American spirits or whatever, and going in and buying something small, do you actually diminish the value of it in the eyes of some consumers?
We're actually seeing some of that, particularly beer, because they were ahead of spirits on this front. China and India?
China, India?
Well, let me say this, that from a China and India point of view, we definitely see them as you would expect us to see them, as significant long-term opportunities for us. Today, the opportunity for our business in those markets is certainly not at the level of the opportunity that it might be in a number of other emerging markets that we're investing in. Specifically for China, both those countries exist on that green chart of markets with more than 100,000 cases in them. Would we direct a significant resource to accelerating that in any way? I would say no. We are growing in China. That's sort of unique at the moment.
in India
in India.
Very much.
Certainly, we have a number of Brown-Forman employees on the ground, local employees as well as other folk, moving the business forward. I think you know enough about China from everything else you've read about the category, that it's a really slow-build market. It's an on-premise market for premium global spirits, and it's bar by bar, nightclub by nightclub. Very inefficient in terms of investment as opposed to other greater opportunities that we've got elsewhere in the emerging world that we've been able to show some examples of today. Their time will come for whiskey and Brown-Forman. India and China will be significant businesses for us in generations to come, without any question.
I will just add, I think China is its own business strategy. I think what I find for virtually all the companies in our industry, and certainly is for us, you see how we like to disproportionately derive rewards from lower outputs of risk. We have not yet found in China, not yet, that model that works. It doesn't mean that we're going to be totally risk averse. Anytime you walk into these emerging markets today, you're going to carry a little bit more risk. I also feel like that we're going to continue to be really thoughtful. It just doesn't mean throw caution to the wind.
The big difference for us that I see maybe over the next 20 years, is that the local markets that will likely trade up, if you think about their palate, is great in India because it's a local brown spirits market. It's a very sizable local brown spirits market, whereas in China, it's undeniable the opportunity and the size. Not only do they have to trade to Western spirits, but they also have to make a shift from their local spirit, which is a clear white spirit, over to whiskey. We think both will happen. Frankly, you see these share numbers. In China, you do not need that much to have a just wonderful business. We feel like we can play in both, but it won't be to the exclusion of this thing that never showed up on a slide today, called rest of world.
When you are doing business in 170 countries like Jack Daniel's is, those smaller countries that are I love the slide that had all the 41 50,000 case markets. Those add up to something, and also spread the risk around. We like that model, but we still have work to do to crack both of those countries at the level that we would like to crack them. Yeah. Vivian, That's just next to Vivian.
On your acquisitions strategy, you mentioned availability. In the Scotch and the Irish industry, they are incredibly concentrated, the sort of brands that could be potentially out there are going to be relatively small. Would you ever consider taking your production expertise and building a distillery in Scotland and/or Ireland and building your own? There are lots of startups.
Well, sure. You see a lot of people are actually. A lot of that's going on, particularly in we've seen a number of announcements just in the last year in Ireland. As we highlighted, the Woodford model, in fact, that's what we did in bourbon 20 years ago. Yeah, that is absolutely an avenue. If you don't have availability through acquisition, that is an obvious arena for investment for the company. It fits pretty nicely, quite honestly, with Brown-Forman, who's going to have a longer horizon. The multiples in this industry, you wonder sometimes, you won't know for the better part of a generation, whether a 20 times multiple or 20 years to build a Woodford Reserve, which was better and which carried more risk with it.
I will tell you that any of those that we do, they have to, I think for our shareholders, all of you and the family, they need to have the prospect of being reasonably meaningful with the passage of time. We want something that's not just a toy, something that would really be a meaningful business operation. I think just companies brand building and manufacturing capabilities really fit better with those categories than they might some others.
A follow-up. On the chart you put up about the dark ages of whiskey in the U.S., what do you learn from that and the rise of vodka when you look at other world markets where whiskey is pretty well established and there's an under-established vodka market? Are there some key learnings from that, some warning signs you need to keep your eyes out for?
Want to hit on that? Some of these, how about those of you who've been spending time in markets that were heavily like Poland or a market like Mexico? Anybody want to talk about those categories? They're actually shifting over from those large local markets to whiskey. Some of the fastest-growing subsegments of their distilled spirits markets are the premium price points in whiskey. As it relates to American whiskey, Jack Daniel's has largely developed it, and it's still at such an early age. Could that occur as people move away from whiskey? You saw these share levels. The penetration is something like 2%. It's hardly such a dominant share that I think that it would have enough consumerism to qualify as, say, a fad that people might move away from. Anybody else? I mean, John or anybody who.
If the question is, can we switch the vodka markets over into some big vodka-
No, we're worried about the whiskey market shifting over to vodka or cognac or gin or some of these other
No.
We didn't go into a category review today. It's really interesting. I think the largest global category, most globally present, is whiskey, followed pretty far behind it is vodka. That's if you exclude the. I'm saying categories that are used in a multitude of countries. Baijiu is very large, but is largely just in China. GSM, you looked like you were going to say?
Yeah. I think back to even when whiskey wasn't growing, recall Jack was. A brand like Jack was able to transcend, and one of our slogans is, "We're not whiskey. We're Jack." We're not scotch. "We're not scotch. We're Jack." It kind of cuts through. I think it's the strength of the brand that really matters.
Good, fair question. Put it on our risk register. Yeah.
Thank you. Two questions, please. The first on Woodford Reserve. Given the robust growth that you continue to put up in the U.S., how much capacity do you really have to expand that brand geographically outside of the U.S.? Because I think it's still, like, 85% in the U.S.
We can run pretty hard. We were planning on this thing, I think you were showing 30% plus growth rates or something like that right now, those are in our plans.
Yep.
It's about 80% U.S., 20 international right now. Yeah, it's one of the benefits of having a long-term view. Back when a lot of other companies were really cutting, we were really juicing up our distilleries four and five and six years ago. At Woodford, at least. We've added a lot of capacity; we're in the middle of it right now, actually. Yeah, we've still got a pretty good runway ahead of us, and we have plans for the kind of growth rates that we're seeing right now.
Okay.
Can I say this one thing, Jamie? It's just really important. To play at the premium end and to be sourcing, like if you just think of your whiskey market is not just American whiskey, but scotch, at the very high price levels, we have shorter aging horizons than our key competition. Something that's really important about the way that American whiskey is made, you might talk on the break to Alex and Chris, and some of it is the new barrel that we use with our whiskey manufacturers. The other one is our climate.
We never used age as the defining metric for quality in American whiskey, and I think we are benefiting from that hugely today because we can adjust on cycles of aging that are more like four to seven and eight, whereas the people that are playing at our price point in scotch oftentimes built their brand on the basis of 12 years of age and higher, so they have less agility. You're starting to notice a lot of age statements coming off of super premium brands as a result. They're moving a little bit more toward the American style of maturation and marketing.
My second question has to do with Southern Comfort. Clearly, you guys have a very robust portfolio of American whiskeys, and you're tapping new brands to help capitalize on that growth, but where does Southern Comfort kind of fit in to your longer-term strategy in terms of driving American whiskey growth?
Well, Lawson, you want to hit that? Yeah.
Yeah. Look, it's been tough. It is a very tough brand. We have put a lot of effort. We've changed up our mix many, many times in trying to find the right combination. It's in a better place today than it was.
It's in under competitive siege in sort of being the original flavored whiskey. Many other brands are coming in to take its place. Having said all that, it still has a very strong franchise. It's still a very strong brand name. One of the ideas is to take it more international and make it part of your flavored whiskey strategy. Is there a way to play that? It's tough. It's a very tough one to figure out how to do right now when we've got the Jack Daniel's flavors that we know and we have very high confidence in. Southern Comfort is sort of taking a bit of a back burner. Know that our profits are sort of flattening out right now.
They're not in any kind of big, steep decline. We feel a little bit better today than we did, say, two, three years ago.
We don't have a lot that we observe, a 1 million case plus flavored brown spirit or flavored whiskey brands that exist. That brand continues to be one of them. I think in my comments earlier, I talked about you can have a great business, which Southern Comfort, by the way, is an excellent business. It just misses that second component, which is it hasn't been growing. If you're declining 3% per year, which it has been with all this flavored whiskey competition, much of which is coming from us, this is part of the way we're thinking about it from a category, 97% each year are voting to stay with it. We're losing 3% of it. It's still a good business. We wish we could get it growing.
I'll tell you, the company produces far greater results and returns from the growth of a drink of Tennessee Honey than it does Southern Comfort today. That was, in fact, the beginnings of Tennessee Honey emerged as a defensive reflex to watching Southern Comfort being exposed to what was happening. Get the microphone to you in just a minute.
Thank you. Two questions. One is just around your pricing strategy. This year, I think you decided to take a little bit more modest pricing. It looks like sales momentum has improved as a result. When you think about the next two years, does it give you just more comfort around taking more pricing? The second question is, in one of the white space opportunity that you alluded to was the high-end flavor side. Is there actually a need or market or demand for that segment? Is this more of a long-term opportunity, or could we really see innovation in the high-end flavor side?
Okay. I'll share the stage. I think it was Lawson or was you who referred to the sort of the flavor and price. On the pricing, those of you who are closer to it, Michel or Jill, but Jill, you for sure, I think your question may relate a little bit to the U.S. momentum we're seeing. Jill, you might talk a bit about that.
We do a lot of extensive modeling that kind of helps us understand where we are positioned. The first thing I would say is, with Jack, we want to stay premium, and we don't want to get to the point that we aren't taking price and we lose relevance. We're always looking to maximize value. Of course, it's in a competitive context, and honestly, we had just outpaced our competition for two years in a row, and it was starting to show. We looked around, made some predictions on what competition would do, knowing we are always going to go toward the direction of being premium, and we increased our price. We'll always look to that balance. If you think about the recession, when the Great Recession happened, we did pull back price.
We're going to do what we need to in the environment to maximize value to continue to grow.
General pricing?
Yeah, anything on pricing.
General pricing in France, we increased price every year, but of course, we negotiate some trade with a trade condition with the trade. That mean that we reinvest a little bit of a price increase into the commercial terms. Nevertheless, the fact that, one more time, I'm going back to the same subject. It's a core brand, so that mean that we don't have to invest or reinvest on top of the price increase too much in France. In fact, right now, we have the lowest level of promotion compared to the other competitors. I mean that we're able to increase price. We reinvest a little bit, but for the time being, we're still in good condition.
If I got your question right, your question around sort of a higher priced.
Flavors
flavor extensions might play in that. To be honest, I'm a little hesitant to say too much because some of these are things that are sort of in the works right now we're planning. I'll give you an example of one right now that I think may be something we could do with, and it's the Jack Daniel's No. 27 Gold. It's something that sort of sits in the middle between, it's a double mellowed, double barreled product that has a slight, tiny bit of flavor in it that we're charging $100 a bottle for.
Yeah.
Something like that. In that space, it likely wouldn't be cinnamon honey types of things. It might be something different, but there are other ways that we can play that game.
That's right.
I'd even add on that is, flavor is a very broad category here. You could talk about the grain flavor. Woodford Reserve, of course, is playing in all kinds of that. We've announced we're making a Jack Daniel's rye whiskey that we will be bringing out in more volume in the next year or so, which is a different flavor of Jack Daniel's, and it will be at a higher price point than what Tennessee Honey is. That would be an example that I would use. When just not, I work on Woodford, but just the Woodford Reserve Sonoma-Cutrer Pinot Noir finish, which, if you get a chance to taste, is brilliant.
Just came out, yeah.
Has this little bit of sort of very subtle Pinot Noir wine note to it that we sell for, I don't know, $75, $80 a bottle or something like that.
Yeah.
$100 a bottle. That's.
To clarify, we're unlikely to lead the $50 a bottle, I'll call it, apple whiskey market. When we're talking here, we're talking more accents in the, of course, you would see the super premium. Oftentimes, you've seen already expressions in this from many Scotch companies who have cask finishes and things like that. Yeah.
I follow up to this question on Southern Comfort. I almost forgot you had this great portfolio of other brands. I guess maybe you're getting closer to changing the name of the company, maybe to Jack Daniel's. Seriously, I was wondering, I was thinking, trying to put my hat on as another brand manager within the company, trying to figure out what I have to do. I see a lot of the print advertising, the cool stuff you're doing with Herradura, and even Southern Comfort. I'm just wondering, what do people within the organization do to try to compete for capital and attention with Jack at this point?
Right.
Just to follow up on that, in some of these countries, like France even, where you have low single-digit penetration rates in Jack, are people being incentivized to use Jack as a way to grow the rest of the portfolio? Why isn't Southern Comfort, for example, a big international brand at this point?
Very good question. Thank you. I think, on the Southern Comfort one, there's maybe two angles there. A little bit of an employee, Kirsten, you might touch on about just how we manage internally. It comes up, like, what do people want to work on? How do you motivate them? How do you incentivize them? It's a very natural question when you own Jack Daniel's. It's one thing. Also, any of us could talk about the, what I'll call the other brands in our portfolio in some ways that we haven't talked about today, just to give you a little insight. Today, just so you'll know, it's not that we don't love those brands. We get so many questions, particularly the last 24 months, about the American whiskey opportunity, just because it's so hot. We focused today.
We love all our brands, and we'll find opportunities to talk about them at a little more length at another time.
Can I?
Yeah, go ahead.
Okay. In the case of Brazil, we are definitely using Jack. We spoke about Jack quite a lot today because this was an American whiskey forum, so we didn't touch base on different things, but we're really a company that has a portfolio. We definitely invest in el Jimador quite a bit. We have a great opportunity for tequilas there. We are growing substantially. We have propositions for Woodford Reserve. The rest of the portfolio has been really attended. Jack is, of course, the one driving this whole thing and supporting and opening doors, et cetera. In the case of Brazil, yes, I think we're working as much as possible, whatever the portfolio that is, of course, geared to the market there.
Michel, you're doing some of the same thing, too, right? On that same front, with your portfolio, how just the last year, you've started to utilize the Jack Daniel's brand strength to introduce Woodford Reserve, et cetera.
Absolutely. Obviously, we have one year license. That means that we were very much focused on Jack Daniel's. As you said, this year, we launched the Woodford Reserve in France and the Double Expressions, extremely successful. Of course, we have the line, the familiar brand of Jack Daniel's. Single Barrel, for instance, has been launched in France since 1999, the first year. It's the second market after the U.S., Single Barrel, and we also Gentleman Jack. On Woodford Reserve, it's amazing and interesting how this new American taste is taking over also in France. It's not only Jack, it's also this kind of new expression.
Thank you. Kirsten, on the internal side?
In terms of how employees feel about working on other brands, if Jack Daniel's was the only brand employees cared about at the company, any time we had an opening on any other brand, we either would get no applicants from the outside, nobody on the inside would apply for those jobs either. I can tell you that that is not true, that when we have openings on a number of brands, people want to come work either in the industry or for Brown-Forman. In fact, a person who used to be working on the Jack Daniel's brand in the U.S. is now leading our Herradura and el Jimador brands for the globe, and she doesn't feel like she got punished in moving from Jack to the tequilas brand.
We all understand at Brown-Forman, the power and importance of Jack, but have an incredible amount of pride for everything that is in our portfolio. We don't treat people who work on other brands or those other brands themselves with any less passion than we do our Jack Daniel's trademarks.
It's an insightful question, I'll just say that, because we wrestle with it all the time, and we will joke with each other that since the mid-'50s, we'll say that the Jack Daniel's trademark, in some ways, staged a very friendly takeover of the Brown-Forman Corporation from the inside. It just captures the hearts and minds of our global employee population so easily, just as it does consuming population. It also sets a wonderfully high bar for investments, for incremental activities. That's why you see us very highly focused because we need things to be reasonably successful to be meaningful to Brown-Forman Corporation because of the high bar that's set by Jack Daniel's. We're trying to build incremental value.
The thing that would've come into focus for us the last several years is that it needs to be of a larger size because when you're fortunate enough to own Jack Daniel's, it is just a very large and profitable business, so you want other things. I would give the example of Woodford Reserve today. When we break out the increments of our annualized growth, you'll start to see brands like Woodford Reserve jump up and be pretty meaningful. We want other brands. We have what we call these processes where we're building what we call billion-dollar businesses. We've asked ourselves, and that's pretty exciting for an internal group of people to go work on to build a billion-dollar valuation. On brands ranging from Woodford Reserve to-
Herradura
Herradura, we've done it. We've actually started to think more about that possibility even on brands like Old Forester, maybe starting it a little lower than that. Just how it just stimulates the imagination to think bigger as it relates to the impact of the work and the ideas. So. Yeah.
For the record, I love all your brands, too.
You did? Good.
I'll love them a lot in about 10 minutes.
Yeah. In the same glass?
How about now?
Yeah. Just a quick question. Obviously, with Suntory buying Beam, I'm just curious from your perspective how that's changed the competitive environment, or if it has at all, what you've noticed in the marketplace with a foreign player owning Beam.
Anybody? Where Beam would be relevant in your market, and a couple of the markets here, they're pretty small. John, you may have seen some of it. Lawson, Mark, you would've seen some of it.
If I may just jump in then pass it over to you. In the case of Brazil, Beam could be relevant. They have a stronghold there with Teacher's moving 800,000 cases. There's no movement so far. As far as American whiskey goes, we drive the whole thing. We have more than 90%. We are the category by definition, want to keep it that way and keep it that way aside. We have seen no movement whatsoever. They have more people on the ground. They're establishing something there, but I don't see anything major happening in the near future.
The only one I'd say is that. Because we know Suntory pretty well, they were our partner in Japan for many, many years, is they really weren't a big player outside of Japan. Where we would see it mostly is in Japan, where they're a big player. In the Jim Beam business there, they have put a lot of time and energy and discounting behind that Jim Beam brand to grow share in Japan. That would be the one area, their home market, where they've really-
Volumetrically
volumetrically gone after it with some, I'd say, questionable things within that. Even things like just announced a couple of weeks ago about bottling Jim Beam in India then, which because they have a little bit of a presence there. Those would be two countries I'd point out. From the rest of it, Suntory, as an entity outside of that, they really just weren't a big factor.
John, it's true that Jack Daniel's business, since the transition of Beam into Suntory and the announcement, we actually had a distribution change that occurred in advance of it, so we switched partners there. That our business from that point in time today is larger.
Yes.
Even though they've added to their business significantly through the model they're using, it has not come at our expense. Maybe we have time, maybe just for one more question, because everybody, I'm getting thirsty, so.
Yeah. As you look at the change with the RTC, clearly it's giving you great benefits. Do you see that sustainable? Is the first question, and the second is, where do you see opportunities to get better control of that in other geographies throughout the world?
Leave it to my regional colleagues here. I might have a couple, but I can think that you guys would probably have better insight into that. Michel, you just recently did one. Is there other places around Europe or other things? I mean, we've done it in Germany and France for the last couple of years.
Gentleman asked if we are sustainable?
Sustainable.
Sustainable.
Sustainable, yeah.
Yeah. Yes, we are sustainable. Yes. Fortunately, yes.
Me as well.
Yes. I would say it's a long journey. It was a long journey. All these gentlemen and ladies on the stage, of course, were totally supportive and also give the argument. Now we are set. We say we are in good shape after one year. We just finished one cycle because growth was January 9th last year. It's amazing how. It's very long, it's very complex, it's demanding a lot of energy, it's demanding a lot of everything. Nevertheless, we already get, after a couple of months, the benefit of having our own distribution, and the leverage is there. The leverage is clearly there, and we were in France with a previous partner, that was a good partner. You see? It's not changing for somebody bad to another organization.
We were already with a partner that was good, but the leverage is there. We feel it already. It's not a scoop because it's Nielsen. We can give Nielsen numbers? We can say Nielsen numbers? I mean.
Yeah, sure.
Yeah. For instance, I got the last Nielsen yesterday, we are +14% this year. That mean that leverage is there, for sure. Of course, it's opening more opportunity, and it's why we work now on the two years, three years plan to be sure that we will get the benefits of this new organization.
Yeah, Mark then.
I would also I think the modern era, the last 10 years from a global point of view, we've really pushed that forward and to the point where I think we said that about 80% of our net sales is now under what we would call reasonable influence or control. I think we're in a now a capabilities growth period in a number of these markets. You heard evidence of we've brought talent from, some from the industry, some from competitors in the industry. Many of the new folk we've added to the Brown-Forman world outside the U.S. don't come from either our company or the industry. We're on this wonderful, observing it is just so much fun, watching us get better and better. We've got Germany and Turkey, four years in. Brazil, four or five years in. France, one year in.
You can see the difference of four years of doing what we do versus one year of doing what we do, plus 14 is great, it'll get even better as experiences develop.
Even though Mark's correct, I think it was now 78/22 was the split, 22 doesn't leave that much. It depends upon I can't imagine, though, that in the next 10 years, in some of these major markets, that we, just because the markets themselves change, I would even use the United States, where privatization has occurred. Brown-Forman wasn't at the forefront of that, but we have to adjust our models for how we sell and market in those states when those occur. It seems that we might not, when we think of RTC, we always think global RTC for Brown-Forman. I can't imagine that there won't be changing dynamics with some of these emerging markets around the world that have us think differently. Sometimes they'll have different partnerships. It won't always be about owning. I think it's a really important message.
It's just maybe that it's just the best way for us to exert the right influence, particularly at the right cost and level of risk we like. I do think, each state is a significant business for Brown-Forman in the United States when it adds up to 40% of Brown-Forman. You have to think through, if there's a lot of initiatives where these states change the way they do business, we'll have to adjust ourselves. Those could be things that influence our route to market in the most established market for Brown-Forman. I thank you all. That concludes it. I hope, and look, you'll have an opportunity. All this group and plus some others are going to be at the reception. Take the opportunity to visit and ask questions that we didn't get to.
I really appreciate you all sticking with us for the full afternoon. I don't have a lot of closing. This group did, I thought, a super job of explaining the Brown-Forman opportunity and putting it on show for you here today.