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Jack & Coke canned cocktail a gateway to new markets: Brown-Forman CEO

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Brown-Forman CEO Lawson Whiting joins Yahoo Finance Live to discuss the brand's collaboration with Coca Cola: ‘Jack & Coke’.

Video transcript

BRIAN SOZZI: Coca-Cola is finally diving into the alcohol space. The beverage giant announced a new partnership with Brown-Forman to launch a ready-to-drink Jack and Coke cocktail. The product will debut in Mexico at the end of this year, followed by select markets globally next year. Joining us now in a Yahoo Finance exclusive is Brown-Forman CEO Lawson Whiting. Lawson, great to see you again. Look, this product makes all sorts of sense. I mean, this is a drink many folks have been drinking for decades. What type of-- how much in sales could this do within the first 12 months?

LAWSON WHITING: Well, as you said, we're going to be launching in Mexico towards the end of this calendar year, and then a whole lot more markets in 2023. We'll see. I mean, we haven't given any guidance on the absolute size of the product. It is a little bit difficult to know. There is a Jack and Cola product that's already quite sizeable for us. It's a big business for us around the world. It's particularly big in places like Germany and Australia. But certainly, putting the Coke label on the can is a game changer and something that we're really excited about.

JULIE HYMAN: Hey, Lawson, it's Julie here. Explain something to me. Why does putting this in a can-- like, we have-- you guys obviously are not the only ones, right? We have seen this explosion in canned cocktails. Why does putting it in a can make such a difference than just pouring two different beverages in a glass?

LAWSON WHITING: Well, I mean, it's about portability and convenience are a huge issue there. I mean, really-- I mean, we've been in this business for 30 years with Jack and Cola. So I mean, it's already, as I said, a big business around the world for us. Consumers love it. I mean, if you take a place like Australia just as an example, the RTD business is much bigger than what we call glass or the bottle of Jack Daniel's business. So there is a consumer demand for these products.

And when the pandemic hit, the business absolutely went on a rocket ship and really took off as consumers were consuming at home, as opposed to in the bars and restaurants. And so, yeah, there's a proven consumer demand for these RTD products. Obviously, there's a lot of people getting into the business right now, but they're not getting in with two of the biggest trademarks in their respective categories in the world. So, yeah, we're quite optimistic.

BRAD SMITH: Beyond Mexico, how available would the product to be able to be scaled up to other parts of the world?

LAWSON WHITING: Yeah, no, this is global. So this is a global agreement. And, you know, it's going to take us a little bit of time to get ourselves organized and get it into distribution. But I do think 2023 will be a big year. And yeah, this-- for us, I mean, Coke has such a magnificent distribution system, obviously, as large as they are.

And so places like Africa, India, that we see this, really, as an emerging market play, where places where we're not as big. And so-- and it's exciting in those markets where consumers often can't afford an entire bottle of Jack Daniels. They can afford a can of Jack and Coke. And so it's an entree into some of these markets for us and another reason why we feel pretty good.

JULIE HYMAN: Lawson, I'm definitely wearing the dumb question hat today because I got very upset with Brian Sozzi yesterday for telling me that there would be a zero sugar version of this. I said, but surely, there is sugar in whiskey. I was reading on your website, there isn't sugar in Jack Daniel's--

LAWSON WHITING: I know.

JULIE HYMAN: --which I have to admit, I was shocked about because it tastes like there's sugar in it. So I know you probably don't get this question very often, but, like, talk us through this process and what is actually in whiskey for a second.

LAWSON WHITING: Well, whiskey, the sugar goes out in the distillation process. But I mean, it is-- it's a series of grains and water. It's really not particularly complicated-- more complicated than that. It's one of those things where every drop is distilled down in Lynchburg, Tennessee. And we export it out to the world. But it's a-- obviously, we make-- we've been making Jack Daniel's now for 60 or 70 years. And it is one of-- it's one of the best whiskies in the world. And it is what we believe is the largest whiskey in the world. So, you know, it's an excellent product that we're quite proud of.

BRIAN SOZZI: Lawson, you've been at Brown-Forman for a good time. How do you envision your business performing if we do get a recession?

LAWSON WHITING: Yeah, look, I mean, the spirits business has been extremely resilient through a lot of different economic conditions over the years. And so, good times and bad, we have performed fairly well, a lot more resilient than a lot of other industries. So we'll see. I mean, the one issue is, does the consumer start to trade down? Brown-Forman, in the last decade, 15 years or so, has really reshaped its portfolio to be more premium. So we shed most of our wine businesses. We still own Sonoma share, but we sold the rest of them out. We've sold our less than premium spirit businesses, for the most part.

And so we are in-- our price points are quite high, which, in one way, means our consumer is a little bit towards the higher income scale. And so, hopefully, there won't be as much trading down there. But it's true. In past recessions, and back in 2001 and in 2009, you did see some trading down. Now, this Jack and Coke in a can could be a benefactor from some trading down because while it's still at very, very premium price point, it's not as expensive as somebody trying to buy an entire bottle, say, of Jack Daniels.

BRIAN SOZZI: And it should be noted, too, not just Jack Daniels. You're having a lot of success in the tequila business. But before I let you go, I want to talk about supply chain challenges. Now, where are you at in terms of glass shortages, can shortages, any of that ending yet?

LAWSON WHITING: Yeah, well, the glass shortages has been the story for us in the last 12 months. And when you really look at our business, it became a huge problem last summer. And we ended up, knowing we had a finite amount of glass, we allocated it to Jack Daniels Tennessee whiskey. The on premise was opening around the world. We wanted to make sure, as the biggest brand in that and around the world, that we wanted it to be available. And so, that caused us to have big shortages for brands like Gentleman Jack and Single Barrel and Woodford and Old Forester and Edradour and the others.

And so we are now in the process of reloading. And you would have seen that in Q4 for us. We were able to get a whole lot more glass and a lot more into the distributor warehouses. And it's just now getting into the consumer hands. And so, you know, it bodes well for this fiscal year because we got a lot of inventory replenishment to do. The situation is not solved, but it is getting better. And we expect and what we have told folks that we, by the end of Q2 for us, we expect to be back in kind of a, quote unquote, "a more normal state."

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