Brown Forman Inc · NYSE:BF.A
Brown Forman — Investor Day (December 2010)
60 slides from Brown Forman's investor day presentation, Dec 9, 2010
Slide 1: Building Forever
BROWN-FORMAN I Building Forever
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation Thi t ti contains t i statements, t t t estimates, ti t or projections j ti th thatt constitute tit t "f"forward-looking d l ki statements" as defined under U.S. federal securities laws. Generally, the words “aim,” “anticipate,” “aspire,” “believe,” “envi
Slide 3: Forward-Looking Statements
Forward-Looking Statements Risk factors include, but are not limited to: • successful development and implementation of effective business and brand strategies and innovations, innovations including marketing, line extensions, formula, and packaging changes • competitors’ pricing, marketing, product
Slide 4: Building Forever
BROWN-FORMAN I Building Forever
Slide 5: > BUSHES mm | YQK ie MILOSEVIC [i
> BUSHES mm | YQK ie MILOSEVIC [i GORE|tss- Omt1 U.S. INVASION OF IRAQ BUSH: =}| MISSION ACCOMPLISHED | HURRICANE) KATRINA UNITED SEPT. 11 REPORT Wi, |HEALTH CARE REFORM/= jeaseee |S¥] sous er] 1 a|fs.. [DOTCOM BUBBLE sree [BURSTS srosay are ATTA PICS + IBP OIL) =1SPILL 15® Building Forever
Slide 6: Building Forever
BROWN-FORMAN I Building Forever
Slide 7: Jim Welch P l Varga Paul
Strategic Philosophy Jim Welch Vice Chairman Portfolio of Brands P l Varga Paul V Chairman and CEO Geographic Opportunities Mark McCallum Chief Operating Officer Experiences from Thomas Hinrichs Germany and Russia Managing Director , Greater Europe & Africa Investment Philosophy Jane Morreau and Cap
Slide 8: Strategic Philosophy
Strategic Philosophy Jim Welch Vice Chairman
Slide 9: Building Forever
BROWN-FORMAN I Building Forever
Slide 10: Strong, Consistent Results
Strong, Consistent Results Compound Annual Total Shareholder Return (As of April 30, 2010, assuming reinvested dividends) 40% 30% 20% 10% 0% -10% 10% 1-year return 2-year return 5-year return 10-year return 15-year return Brown-Forman 28% 6% 8% 13% 13% S&P 500 Index 39% -5% 3% 0% 8% Source: Bloomber
Slide 11: Spirits Industry Attractiveness
Spirits Industry Attractiveness Leading Suppliers 20% Operating Margin Hi h Relative High R l ti ROIC Long Brand Life Cycles Growth Industry Global Scope p
Slide 12: Market Cap / Industry
Market Cap /Industry 1989 2009 1.7B 9L Cases 2.8B 9L Cases 2010 10.2B 1989 2.4B B-F Top op 100 All Ot Other e B Brown-Forman F Market M k tC Cap Volume data from IWSR with assumption of flat growth ‘09 v ‘08 based upon estimates from DISCUS U.S. volumes and Impact Top 100 Premium brands for 2009
Slide 13: Building Forever
BROWN-FORMAN I Building Forever
Slide 14: B-F Strategy
B-F 150 Strategy • Starting from a position of strength and health • Tremendous opportunity • Not a radical change from our current path • Primarily an organic growth strategy • Continue to deliver top tier total shareholder returns • Aspire to be in an even stronger position by 2020
Slide 15: Portfolio of Brands
Portfolio of Brands Paul Varga Chairman and CEO
Slide 16: Building Forever
15® Building Forever MOSSEL | WHISKEY |
Slide 17: Packaging, R-T-C, Pricing, Line Extensions
Packaging R-T-C Pricing Line Extensions Channel Strategies Geographic Expansion Product Reformulation Brand Differentiation A&P
Slide 18: Organic Development
BROWN-FORMAN Organic Development 15 Building Forever
Slide 19: Acquisitions
BROWN-FORMAN Acquisitions 15® Building Forever
Slide 20: Vodka Opportunity
Vodka Opportunity Global Vodka Market (MM Cases) 687 483 351 7.0 1% 1 0.6% 3.1 3 1.5 0.4% 1999 2009 2020
Slide 21: Tequila Opportunity
Tequila Opportunity Global Tequila Market (MM Cases) 30 23 17 3 2 11% 3.2 1.7 7% 0.2 1999 2009 2020
Slide 22: Innovation
Innovation Building Forever
Slide 23: Building Forever
150 Building Forever
Slide 24: BROWN-FORMAN
BROWN-FORMAN a Building Forever
Slide 25: BROWN-FORMAN
BROWN-FORMAN Building Forever
Slide 26: Whiskey Opportunity
Whiskey Opportunity Global Whiskey Market* (MM Cases) *Only US, Canadian, Scotch, Irish 156 141 128 99 9.9 6.2 1999 2009 2020
Slide 27: World's Top Premium Spirits Brands
World’s Top Premium Spirits Brands 2009 Rank 2000-2009 CAGR 1 Smirnoff 10% 2 Johnnie Walker 8% 3 B Bacardi di 2% 4 Jack Daniel’s 9% 5 Absolut 7% Source: Impact Databank/IWSR Retail Value
Slide 28: Whiskey Opportunity
Whiskey Opportunity Global Whiskey Market* (MM Cases) *Only US, Canadian, Scotch, Irish 156 141 128 16.5 11% 99 9.9 7% % 6.2 5% 1999 2009 2020
Slide 29: Mixability, Consumer Communication, Geographic Expansion
Mixability Consumer Geographic G hi Communication Expansion Premium Line Li Pricing Extensions Pop Differentiation C lt Culture
Slide 30: BROWN-FORMAN
BROWN-FORMAN 2 Building Forever yor Danigy; | DAA SINGLE BARREI {" Ay old } Jenness | WHISK dack Danters, [79%
Slide 31: Video
Video
Slide 32: Jack Daniel's Tennessee Whiskey Black Friday
Jack Daniel’s Tennessee Whiskey This is our kind of Black Friday. How about yours? Old number 7, how do I love thee, let me count the ways… OH, Hell yes It’s Black Friday Everyday! Well I gotta be honest, I love Black Label,, but I tried some Gentleman Jack today, and it was amazing
Slide 33: Video
Video
Slide 34: Geographic Opportunities
Geographic Opportunities Mark McCallum p g Officer Chief Operating
Slide 35: We Are at "Early Stage" International Expansion
We Are at “Early Stage” International Expansion Net Sales Contribution 47% 78% US International 53% 22% 2000 2010
Slide 36: Past 10 Years Growth has Come from Multiple Markets
Past 10 Years Growth has Come from Multiple Markets Stripped Net Sales Top 10 Australia Mexico Canada Poland 7% France Germany Spain U.K. 10 year CAGR Japan U.S. Top 11-25 Belgium B l i I Israel l R Russia i China Italy South Africa 14% Czech Republic Korea Switzerland Greece Netherlands Thailand 10
Slide 37: Our Opportunity for Growth is Based on Global Category Fit
Our Opportunity for Growth is Based on Global Category Fit and Significant Market Potential Category Attractiveness BF Market Whiskey Vodka Tequila RTD % Market Share US U.S. 55 5.5 U.K. 4.9 Australia 6.9 Poland 3.1 France 0.8 G Germany 11 1.1 Mexico 5.0 p Spain 1.0 Brazil Russia Tenfold growth to g
Slide 38: Our Sources of Future Growth…
Our Sources of Future Growth… Poland UK U.K. Russia Germany US France Spain China Mexico India Brazil Australia
Slide 39: Experiences from Germany and Russia
Experiences from Germany and Russia Thomas Hinrichs Managing g g Director of Greater Europe and Africa
Slide 40: Opportunity in Germany
Opportunity in Germany Spirits Market Ready-to-Drink Market B-F Germany B-F Germany 2009 Volume: 0.6m 2009 Volume: 0.4m 17% 322% Germany 2009 Volume: 50.4m, -12% Germany 2009 Volume: 1.1m, -71% 99 00 01 02 03 04 05 06 07 08 09 99 00 01 02 03 04 05 06 07 08 09
Slide 41: Opportunity in Germany
Opportunity in Germany • Strongg pposition todayy • Portfolio – Whiskey – Tequila – Super-premium Spirits – Liqueurs – Vodka – RTD‘s • Route to Market – Focus – Execution
Slide 42: Opportunity in Russia
Opportunity in Russia Spirits Market Whiskey Market B B-F FRRussia i B F Russia B-F R i 2009 Volume: 0.3m 2009 Volume: .08m 1373% 1626% Russia Russia 2009 Volume: 2009 Volume: 276.2m, +49% 1.6m, +1444% 99 00 01 02 03 04 05 06 07 08 09 99 00 01 02 03 04 05 06 07 08 09
Slide 43: Opportunity in Russia
Opportunity in Russia • Early stage of development • Portfolio Opportunity – Vodka – Whiskey – Tequila • Route to market – Strong distribution platform – Exellence in execution – No competing brands – Local organisation
Slide 44: Building Forever
15® Building Forever Wstuchaj sig w nature, a odnajdziesz tam siebii lili —“t — ond MAND ie Crystose Uy st Pj FINLANDIA Odpowiedziatnie. finlandia cor Kite Tad
Slide 45: Investment Philosophy and Capital Considerations
Investment Philosophy and Capital Considerations Jane Morreau
Slide 46: Strong, Consistent Results
Strong, Consistent Results 12% 8% 4% 0% 35-yr 25-yr 15-yr 10-yr 5-yr CAGR CAGR CAGR CAGR CAGR since 2005 since 1975 since 1985 since 1995 since 2000 Net Sales 7% 5% 7% 8% 8% Operating Inc 8% 7% 8% 9% 10% Diluted EPS 12% 11% 10% 11% 6% Results as of Fiscal 2010. Restated growth for continuing operati
Slide 47: Focusing on 10 Years
Focusing on 10 Years 12% 8% 4% 0% 35-yr 25-yr 15-yr 10-yr 5-yr CAGR CAGR CAGR CAGR CAGR since 2005 since 1975 since 1985 since 1995 since 2000 Net Sales 7% 5% 7% 8% 8% Operating Inc 8% 7% 8% 9% 10% Diluted EPS 12% 11% 10% 11% 6% Results as of Fiscal 2010. Restated growth for continuing operations on
Slide 48: In 2000...
In 2000... 1 Building Forever
Slide 49: Today…
BROWN-FORMAN Today... 150 Building Forever DaNigy; F BARREL } Jennessee WHISKEY
Slide 50: BROWN-FORMAN
BROWN-FORMAN Building Forever £ Ran a ROVE BI 2a 2 Se dt FRO Tae “one “BRO MA eT ee) DLVERSI PY*INGLUSJON*GROWTH & el. i : wh ‘ist g Be A . atts ¢ Ss 2 il
Slide 51: Highly Efficient Employees
Highly Efficient Employees (operating income per employee) 2000 2010 $0 $50,000 $50 000 $100,000 $100 000 $150,000 $150 000 $200,000 $200 000
Slide 52: Low Risk, High Returns
Low Risk, High Returns Net Debt/EBITDA Decade Average Total Shareholder Return 5x 15% 4 4x 10% 3x 2x 5% 1x 0x 0% Brown-Forman S&P 500 Brown-Forman S&P 500
Slide 53: $22 Billion
WN-FORMAN = By 5 e/ : ulding
Slide 54: Deployment of Cash
Deployment of Cash 2000-2010 $5 $4 $4.2B 2B $4 Debt Lenox Share Repurchases $3 $2.5B Cash from Dividends Business $2 Acquisitions $1 Capital $1 7B $1.7B Investment $0 Available Capital Reinvested in BusinessReturned to Shareholders
Slide 55: Cash Returned to Shareholders
Cash Returned to Shareholders S i l Special Dividend ~$400M Repurchases Regular Dividends $- $50 $100 $150 $200 $250 $300 $350 $400 $ millions
Slide 56: Package Changes: Then and Now
Package Changes: Then and Now 30% 20% 10% % 0% -10% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Slide 57: The Australia Story
The Australia Story i5@ Building Forever
Slide 58: Acquisitions Investments… …Distribution Platforms
Acquisitions Investments… …Distribution Platforms
Slide 59: 10-Year Total Shareholder Return
10-Year Total Shareholder Return Today’s Value of $100 Invested in 2000 BFB: $333 S&P 500: $98 13% Brown‐Forman 0% S& 500 S&P 00
Slide 60: Building Forever
BROWN-FORMAN I Building Forever