Good morning. My name is Lavriel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter Fiscal 2015 Year End Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn today's conference over to Jay Koval. Please go ahead.

Thanks Lavriel, and good morning, everyone. I appreciate your patience. We were trying to accommodate an unusually large group dialing in at the last moment for Brown-Forman's year end 2015 earnings call. Joining me today are Paul Varga, our President and Chief Executive Officer, Jane Morreau, Executive Price President and Chief Financial Officer, and Brian Fitzgerald, Chief Accounting Officer. This morning's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine 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. This morning, we issued a press release containing our results for the fourth quarter of fiscal 2015. The release can be found on our website under the section titled Investor Relations. In the press release, we have 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 Form 10-Q reports filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures. These measures, and the reasons management believes they provide useful information to investors regarding the Company's financial conditions and results of operations are contained in the press release. And with that, I'll turn the call over to Jane for her prepared remarks.

Thanks, Jay, and good morning everyone. Thanks for joining us for our year-end earnings call. I'll cover three topics today, which should leave plenty of time for questions after our prepared remarks. First, I'll review our fiscal 2015 results, including recent trends from the fourth quarter. Second, I'll discuss our earnings outlook for fiscal 2016. And finally, I'll update you on our capital investments plan. So with that, let me start by reviewing our fourth quarter. As expected, we delivered strong results in the quarter, with underlying net sales up 10%. This topline growth flowed nicely to the bottom line and resulted in 22% underlying operating income growth. As a reminder, the fourth quarter benefited from soft sales comparisons, and unusually high SG&A in the prior year period. These fourth quarter underlying trends lifted our full year growth rates back into the ranges that we have shared with you since the start of the fiscal year. Underlying net sales grew approximately 6.5% in fiscal 2015, with price mix and volume contributing just under three and four points respectively. Price mix helped us deliver gross margin expansion of 60 basis points in the year, and underlying operating income grew over 9% through operating expense leverage. We believe these are terrific growth rates against our public competitors, who we estimate are only growing organic operating income by low single digits. Looking at our business by geography, results in the U.S. accelerated nicely through fiscal 2015, resulting in 8% underlying net sales growth for the year. Fiscal 2015 marked the fourth consecutive year of volume share gains for Brown-Forman's portfolio in the United States. Looking at the most recent blended three month data for Nielsen and NABCA, Brown-Forman is growing value share at 8.2% versus TDS growth of 6.9%. We believe we are…

Thank you, Jane, and good morning, everyone. Jane, I appreciate you taking the time to recap fiscal 2015 and give a good detailed understanding of our forecast for fiscal 2016. Yesterday, in preparation for this morning's call, I glanced back at my comments from the last several fiscal years, and I noticed something interesting. Although I've emphasized various points in certain years, or said things a bit differently each year, what was interesting was that themes from each of these last many years were largely the same. As I read through them, some of the words and phrases that I found common were strong organic growth, high margins, led by the Jack Daniel's trademark, focused portfolios of premium spirit brands, successful and impactful innovation, balanced and diversified geographic results, consistent investment behind our brands and people, long-term view. I was really struck by how consistently I was using the same phrases over and over again. There are a few more worth mentioning as well. Excellent capital deployment, favorable balance of risk and reward, industry-leading returns on invested capital, strong track record of financial performance and financial responsibility, top-tier total shareholder returns, outperformance relative to the competition, Brown family commitment engagement and support, and of course very importantly, diverse group of talented employees that make it all happen. So when you put them all together, I think it makes for very nice list of ingredients in Brown-Forman's recipe for success. It has been such a privilege to be able to discuss our Company and its progress using phrases such as these. Know that all of us feel really fortunate. As you can tell from our release this morning and Jane's comments just a moment ago, these same many descriptors can be applied to our fiscal 2015 performance. The largest exception in…

Operator, we're ready for your questions.

[Operator Instructions] And your first question comes from Vivien Azer with Cowen and Company.

Hi, good morning. My first question has to do with the outlook please, for price mix, and if you could unpack that a little bit, price versus mix and how that might vary, U.S. versus international?

Okay. I can take that. So we'll talk about that the top line we were forecasted the growth in the 6% to 7% range, and we're forecasting that this next year we have a bit more volume than we had this past year, so volume will be up a bigger contributor to our topline growth than it has been this year. But we do continue to expect price to deliver and mix to deliver in the low single digits up a percentage point. But I will say what we're doing as it relates to pricing we're taking nominal pricing if you will in the U.S. in many markets around the world. But in some markets we are being very focused on pricing so for instance our focus on our humidor which of our largest bowstring tequila in the Mexico market itself in our second year of three major pricing activity, so that is the second year repositioning the brand to be more premium. I will improve that brand business if you what we think over the long-term that will improve the equity of the, the growth of the man and more importantly the returns on that brand because of that's a place where we are focusing heavily on taking pricing. so markets were FX is hurt the resulting where we see competitors also taking pricing such as Brazil and Russia we're also taking pricing in those markets. And so we're obviously very - looking around being very aware of what's going on in the marketplace, and where the economics and so forth support pricing, and we’ll take further if things happen to improve in certain markets. But that's kind of the way we're looking at volume pricing. I hope that helps.

I might add one thing of this pick up tickets helpful if you think about the pricing over a multiyear, if you go back a few years, we have been a little bit more aggressive. And I would say this year we're leaning a little bit more on volume than pricing and the total mix. And some of that is because as we look ahead as well, if you think about the consumer trends and their volume metric interest particularly for the premium brands where we are already well positioned, this is a great year for us to get volume, I think. And if future years, because of the capital investments with the making of this last many years, it will start to see some of the cost associated with those commemorative I think it will be coming up, there will be more software the on our part to try to cover some of that with pricing, if you think of it like which we try to do over a three year, five years seven year period, the balance of pricing and mix, this is a particularly good year we think. And I think our people feel that way, too, when we did our planning that this is a gold volumetric year, so we lean a little bit more toward that, and we still got a lot of benefit from the mix, we think.

Yes, that's a good point, Paul. Just building on Paul's point on mix, you heard us talk about some of our brands Jack Daniel brands, exceeding 2 million cases this year are our premium in general Jack, single barrel, and actually the honey brands. And those are a higher prices brands, if you will. Those coupled with if you get Woodford Reserve going over 30%, those are higher price and that mix alone as they continue to grow will help -

They become effective pricing increases on the whiskey.

Absolutely. That's terrific. My second question has to do with your outlook for advertising spending, please?

Yes, so I don't have specific - I think what we said looking to do next year is get some operating expenses some leverage between operating expenses. Most likely it will come in the form of SG&A. SG&A the biggest of our two component, so we're going to continue to invest behind our people. And we will continue to invest behind our brands. I think what I'd like to do is look at some of to what Paul said about pricing is to look at what we've invested of the past five years, particularly as it relates to SG&A. And I think our step up investment whether it was in route to consumers in France or Turkey and Brazil and other places. We've invested quite a bit, and we want you to think this is a good year ahead to start leveraging that. As it relates to A&P, we will continue to invest behind our brands and the markets where we think that the consumers are willing to listen out where we can listen that. I think one other point - important point to make here is on dark markets, more markets are becoming dark. And so I think that we - we all need to be aware of the people are the ones building the brand in those markets so in those you may see SG&A increase. So we kind of look at the things together that you have to have people to grow the brand and if that to be there to support the A&P spend, too.

I think within the mix, too, Vivien, you would as you would imagine, this quite a bit of - not quite a bit, but we allocation has been going on within our mix of A&P investments so like for example in the first half of this you would expect us to be spending more money on Jack Daniel's Tennessee Fire. As it launches and we go out and supported initial reception in the marketplace. Our American whiskeys increasingly have been receiving more A&P because of the trends being so a favorable to them and it be coming - like I know for example last year became a little bit of an expense to the media by different Southern Comfort which had not been traveling as well with its trend. But there's been some reallocations within the mix as well. But we think - because of the past investments and the level we are going to have of investing down to now, I think were pretty comfortable that we still get nice leverage.

Terrific. Thank you very much.

Your next question comes from John Faucher with JPMorgan.

Thank you. Good morning. Wanted to follow up a little bit on some of the comments about the SG&A leverage on investment. And I guess what I'm trying to figure out is, you improved the profitability per case by bringing this stuff in-house, but there are also was, I guess, a level of investment in terms of building that capability. So as we look at you cycling those, is it two benefits as we look out to fiscal year '16, in terms of the additional profit plus the lower spending? Or is it just one benefit from that standpoint? Thanks.

Can I just ask you to clarify pick which benefit are you talking about? I maybe missed the first part of it. Are you talking about the absence or presence of the French investment? I was trying to read into your – yes -

Yes, I guess what I would say is, right, my understanding is the investments in France create a business that is structurally a higher profit per case business. And along with that, you have additional - were there additional investments, so as we look at the leverage, are there two things driving the SG&A leverage, as opposed to just one, if that makes sense.

I will take the first part of your question. The benefit of from fans happening at 15 in terms of our net sales benefits that we are currently - you will not have another benefit and 15 as it relates to that so that happened. The distance step back for Malawi change these rows to consumers from it's really what happens if someone else was representing us in the market, and we were paying them a margin. So our sales were lower at the time. Now we brought it in-house did our sales are higher and we brought the capability of house and so that SG&A which started when we drove up the size consumer about a year ago January. So we had nine months of it in this fiscal year, roughly that won't repeat itself again next year. So you will get a benefit from that next year that you won't have that year-over-year increase, if you will.

Yes, so it's knowledgebase, and there will be less benefit to the sales line of incorporating it and less hurt to the SG&A line of hurting it in fiscal 2016.

Yes, there's no more hurt coming through. It's in the base.

Yes, okay. Great.

Does that answer you question?

Yes, it does. Thank you.

Your next question comes from Robert Ottenstein with Evercore ISI.

Hi. It's Eric Serotta in for Robert. A couple questions with respect to flavors. First, on previous calls you talked about Fire indexing at about 130 to 140 relative to Honey at similar stage of its development. I know you mentioned this call, it's also tracking favorably, wondering if you could put some quantification around that. Second, hoping you, Paul, could talk a bit about flavors more broadly. Diageo is having a lot of success recently with Crown Royal Regal Apple. Wondering how you're thinking about whether a year-round apple variant for Jack is needed or next? Any context would be greatly appreciated.

You want me to take the first for and you take the second? So as we talked about Jack Daniel's Tennessee Fire just got launched in our fourth quarter nationally, and we know there is continues to be an enormous amount of interest in flavors, as you noted, in the U.S. And very please with honey is completing its fourth year and having the type of growth it had this year in the U.S. at 10%. So as we look at our read on fire, what we have communicated last quarter we really had to focus on our three test markets, and we've now since had five other markets that we had expanded to on October. So we got a little bit more read, and we feel very good about what we're seeing. It still is in the 130's, 130% range as it relates to how it's relating to the same period of time for the Jack Daniel's Tennessee Honey launch. And so, we know cinnamon is a hot category, and we have - we're very cautiously optimistic about the Tennessee Fire and what it could do for us next fiscal year. I will turn it over to Paul to talk about flavors in general.

Yes, I mean, just building on what Jane said there, I think as a general comment, I think we're going to continue to pace ourselves correctly, even with Tennessee Fire, which in my view sort of had a three-stage introduction to the U.S. market. We even there want to continue to evaluate its performance in the marketplace. As you can imagine, with any Jack Daniel's product, or line extension of these cases, there's always initial interest in it. It's such a big and powerful brand and people give it the benefit of trial often times. And so in the test markets were Tennessee Fire we wanted to make sure that was repeatable that people actually would get through any bears that might been perceived. The biggest one oftentimes where products are labeled flavored is whether product in the bottle is working. Every indication we've had so far on Tennessee Fire is that it in fact is. So when you move beyond that for us, it's always a consider pick Jack Daniel's tends to enter a very premium price points, and that's again the case here in the cinnamon world. So you're trying to test what level of consumer interest in affordability shakes out. So that's something we continue to watch and with a national scale launch now, as the months unfold have more and more data to look at to see how that particular aspect plays out. As it relates to the increasing competition - you even referenced one of them, there are no plans on our part right now other than really implementing the Jack Daniel's Tennessee Fire and Jack Daniel Tennessee Honey plan that we have in place for fiscal 2016. The general you should expect us to begin to be cautious. The Jack Daniel's Tennessee Honey sort of global rollout to four years, and I think with Tennessee fire, it beyond the things have already mentioned related to what we'll evaluate there, Jane did mention these limited test in a few of the international markets we are going to want to look at those and read those. There's a lot of work still to be done and to be interpreted and evaluated before we consider anything beyond what we've done just now. But we will of course try to study the competitive landscape related to any flavor that is out there so we can understand how it may impact the flavor entries we've got. So that's how we feel about it right now.

Great. And just one housekeeping question, Jane. I think you gave specific guidance in terms of FX impact on net sales for fiscal 2016. I know you said that the EPS impact for the earnings impact when have that headwind of the $30 million in translation balance sheet translation. Did you give specific EPS guidance as to what they year on year headwind would be for FX?

I did not. And you - but you can expect it to be several months. Thank you.

Thank you.

Your next question comes from Tim Ramey with Pivotal Research.

Good morning. Thank you. Paul, with respect to the list of superlatives that you rattled off, and this truly is probably the best company I've ever followed in 30 years of doing research. I did note two things that we frequently talked about on calls that were not talked about today, SoCo and RTD and just wondered if you'd offer up any thoughts about sort of reigniting or stabilizing, reigniting growth, whatever it might be in those two?

Yes. For the - number one a welcome to the call, we'll have you read it next time. Honestly, the Southern Comfort one we have talked about with regularity about the challenges in part of - this is a very interesting dilemma for Brown-Forman if you go back five or six years ago, the Southern Comfort was one of the key targets of all this competitive flavor success that other companies were having. And to be quite honest, our entry into flavored whiskey was a bit defensive. It was to protect Jack Daniels and Southern Comfort and our company in some ways and honey emerged mostly - mostly to be fair, out of that and then. But I think our company and the people who lost it did a superb job of making it work in the marketplace in the way that it has. So Southern Comfort along the way, we've been - we have actually I feel like shoring it up. I really do feel like it would of been competitively deteriorating more had we not been taking some of the steps we've taken. As I look at the growth rates going back seven years ago, five years ago, threes ago, some of them have moderated and some of that has come through what I will call innovation underneath the Southern Comfort umbrella and some of it has just been that there really is a core Southern Comfort user who likes product in the bottle and is not going to be distracted by some of the flavor entries. And so we feel like we've done some of the best work we can do there with particularly with advertising communications. We put forward a good step they are. It's just competitively under assault. So I will say that from a…

And just follow for Jane if I could.

Sure.

The discussion of the fourth quarter tax rate, obviously the quarter would have been a much better if you had a more normal rate. And also Old Forester up 30%-some?

Right.

There you go

Can you elaborate? It sounded like you may comments I think in the release that suggested that it was getting more on premise future is that correct?

Yes, I will comment on old Forester and led Jane tackle the taxes. Yes, the Old Forester, there is this irony, since you've known us for so long, the brand in some way became so small that it became cool and relevant again. Because as our founding brand. It have been chugging along at the 100,000 case Mark for a bunch of years and of course everybody of Brown-Forman's very passionate about because of what it represents to the Corporation of the family. But it has met his time is the way I'd say it. It's an exceptional value in the marketplace for the quality of bourbon that's in the bottle and the price that the consumer pace. And I think that recognition has come about that were certainly some retro feel to it and I would give a lot of credit to the teams that have worked on old Forester because the expressions of old Forester birthday bourbon that is been up there now for many, many years and remind people of the quality bit and I was struck just within a short amount of time to spring. I observed somebody sent me a copy of people standing in line to get the latest release of old Forester birthday bourbon, right around the time that we announce that old Forester would be flavored and be the julep of the Kentucky Derby. So there was working both dimensions of the appeal of the American whiskey both premium rising and also adding flavor. So I think old Forester is a sweet spot of opportunity for American whiskey and Brown-Forman and that's why we're investing in the way we are down the historic whiskey Road behind the new distillery.

Okay. And, Tim, just to follow up on your question as it relates to the tax rate, it did come in a couple points higher than what we had anticipated, too. And a point of it was due really do a higher mix of our U.S. business, if you will. Which, unfortunately, is taxed at a higher rate than we had anticipated, but if we had more earnings outside the U.S. So said another way, our earnings outside the U.S. will resolve all of than we had expected. That's about a point. The second point is what I would call more discreet in nature, more one-time in nature and it relates to the foreign exchange transactions. And again, we wouldn't expect that to continue next year, some of the greats stay where they are. So just as a reminder, the forecast of a 30, 31% for 16 is what we are assuming right now.

Thanks so much.

And your next question comes from Bill Chappell with SunTrust.

Thanks, good morning. Just a couple quick questions. One, can you give a little bit more color on el Jimador and what was alluded to in the change of the pricing in Mexico, and how that's expected to play out over the next few months, or few quarters, I guess?

I will start it and Jane can add to it. I think part of it - our company is not largely in what I will call the big local market categories. And the lone exceptions actually we probably would've referenced over the last fiscal year would be the very sizable at the popular price point el Jimador business in Mexico, and then the closest thing to that might be the Finlandia business even though its premiere in that market. To the - in the Polish market, worldwide, a lot of those segments are - have been under pressure for a while. And so we are not exposed to them too much, and I think it's actually one of the reasons why we have such competitive outperformance. But where we do have, that we try to approve them is the way I'd say it, and our teams in Poland and Mexico have been busy working on corrective actions. In the case of el Jimador down to Mexico, it has our attention because we just think it's not that great a business for Brown-Forman at that price point. And so you get extra motivated to make sure the economics of the business improve come a not only try to get the thing to grow, but also the economics of it improve. And that one is unique because it is at that price point, is the wanted to percent agave product which means it has a privy significant amount of raw material commitment behind it for our multi-year's and the way I said, it's just sometimes the math is a worker that unless you go fix it. And so part of it is, like the Herradura business at a very super premium price point works pretty well, the math for Brown-Forman, but down to lower price points doesn't work as well. Even the el Jimador business in the United States works reasonably well. And so much more attractive price point in the Mexico price point. Now, we go into that with our eyes wide open knowing that the Mexico price segment we are in now is ultracompetitive. And so, I think it's a pretty courageous thing by our company to predict by the Mexico team to take on a very high quality product in that segment and try to generate incremental value through pricing in a different blend of pricing and volume. So that's the whole idea there, and anywhere we see that in our company, we try to make sure that the businesses are attractive to us. And that particular case, it needed some improvements.

And just so I understand, is it - there's no packaging marketing that comes with it with it, or is this all of a sudden - ?

Absolutely. No, yes, you try to work the whole mix, the product is - continues to be 100% agave. The el Jimador product is exceptional it really is across all three expressions. So getting the value for it in the marketplace and of course we did repackage it here - I guess within the last 12 months, so there's some packaging work and a lot of what I would say trade relations and public relations that go with it, the sales force gets retrained on how to sell it. Then you try to give it the support it needs so that it can actually justify itself. In some of these instances, you are actually willing to accept lower volumes going into it. You sort of expect that there's a customer who won't not travel with you to the higher price point.

Got it. And just on the Slane Castle acquisition. Are there any dilutive costs to EPS this year? I understand the $50 million is largely CapEx, but didn't know if you have start-up costs or other financing costs or stuff like, which will be net dilutive to your guidance this year.

Very immaterial, I mean, we always are working that's what come brand positions in some of these initial development work. We're doing that kind work all the time. But it's immaterial early on.

Perfect. Thanks so much.

And your next question comes from Ian Shackleton with Nomura.

Good morning. Paul, congratulations on the Irish deal. I had a couple of questions around it, if I may. Can you give some idea of the size of the distillery? I know the family originally were looking to a much smaller investment a couple of years ago back, and your $50 million is a lot more. Can you give us some idea of how large this could be? And secondly, just from the phasing of the spend there, if I understood Jane rightly, within the $200 million this year, there will be a reasonable amount of the $50 million but not all the $50 million. Is that correct?

Yes, Jane do want to answer that last question and I'll talk about the?

Yes, planning on starting on construction the summer in the amount of money that I announced, the $50 million or mentioned, it's not only for the distillery, but it's for building a couple of warehouses, which will not happen right away, as well as a home space. So of the $50 million, it's not even half of it would I anticipate being spent in this fiscal year.

Yes, and initial investments there around the hospitality and enabling your distilling, those are the two big wins. And Ian, I think I've got this right. I mean, I think it would enable - you going to deliver success, it would enable us to look past with the initial investment to do in excess of 100 million cases; nine liter cases. So I think we would plan for success. And to give you a scale of it, Woodford Reserve is not that large now. And so, we have been at that for 20 years. So just a frame of reference, so we would be enabling a generation of development maybe is a way to think about it.

Thank you, Paul. Just one quick follow-up. Jane, you answered the question on FX to EPS and you broke up, could you just please repeat what you said?

Sure. What I has said was it would be about that she had asked - we're going to be hurt by transactional is that the whiskey we heard as we know the freight still throughout the year, so we're still expecting a transactional negative impact. But the translational absence of the $30 million this year will offset some of it, but not all of it. So we're still expecting several cent hurt to EPS for fiscal 2016

Very good. Thank you for clarifying that.

And your next question comes from Bill Marshall with Barclays.

Hi, good morning. I'm just wondering if you give us a little more color what you're seeing on the on premise versus off premise. I was hearing that maybe we are seeing a little bit of a slowdown in May, I don't know if you had seen that, and just generally what you're anticipating going forward?

I haven't looked closely at the main numbers. I assume you're talking about the United States.

Yes

Yes. It's been ebbing and flowing a bit. Sometimes I try not to get too fixated on a because of the weather and some of these other things. But our assumption right now is that in the U.S. market, the off premise will continue to be the driver with the on-premise - at least the numbers I saw last time looked more flattish as it related to traffic. But I would continue to remind you that I just think the study of that is so interesting in the world of social media today because of the way - at least in this country it appears to us the consumption formats and locations have changed and have been enabled by what I call the crowd sourcing ability of social media. And we've traditionally because it's convenient to do so and very important to do so, bucket it between an on and off premise. But I can continue to observe more anecdotally that the off-premise environment increasing has been many on premise environments as people host others. And some of that is affordability. Some of it is buying by the bottle versus by the drink is more affordable. And one thing that you hear this phrase of people warming up, so they will assemble at each other's residences or whatever and have a drink or two before they go have dinner and go to a restaurant or go to a bar and so it's almost like changing patterns of consumption in the U.S. market that I think are influential to trends and brands that might be relevant but they also will change in show up I think over time to these metrics call just on premise and on premise.

I would build on what Paul has said. We had members of the comes to on premise and I agree with everything you said in terms of the change and where people are consuming and so forth period for us, I will say through April, our results were actually trending quite well in the on premise. Where we were flat over a year ago and we've been trending continuing to improve month after month in both Jack Daniel's and overall company itself has been - and I think one of the things we talked about earlier is old Forester. Tim Ramey mentioned going 35% and it actually is the fastest-growing brand we have in our portfolio and the outcomes seems to be doing quite well.

Yes, and we would expect - I will tell you compared to the early experience we had a Tennessee Honey, we would expect that Daniel's Tennessee Fire to have a little bit more of a to be on premise versus the on premise. I think it will still be very off premise successful to but I think the early reception to - and for what we've seen to Tennessee Fire is a little bit better development in the on premise than what we've experienced from Tennessee Honey.

Perfect. Thank you, one last question. I don't think I heard you give an update on the situation with the wood cost and the barrel making costs, and if you could just give us an update on that situation, and then how that plays into your 2016 outlook and guidance?

So our - what we've done is it relates to that we take a more things under our control. We mentioned that we were investing behind a new mill in Indiana this year and that along with being able to be supplied with the logs around it will help us in terms of the availability as well as cost. I think right now just the overall dynamics with the bourbon and whiskey just growing like it is a middleman out there for new barrels is putting pressure obviously on the cost of wood. And so with that we've seen some stabilization. But it's definitely higher than what it's ever been. But if you flip it around and look at the other side of it, we also benefit from selling our barrels when they become used, if you will. So there is a two-sided coin to this, if you will.

We have a higher cost because they were already occurring in fiscal 2015, and we have those incorporated into our estimates for fiscal 2016. They would be incorporated in our guidance.

And yes, just I think maybe you weren't - if you look what are cost increases for next year might be, I think it will probably be still inflationary 2% to 3% rate.

Perfect. Thank you very much

And your next question comes from Mark Swartzberg Stifel Financial .

Thank you. Good morning. As good as the growth is, and I think we can all see it, and it has been very reasonable for you to have the optimism you have, I want to probe on a couple areas of risk that are on my mind. One is the cinnamon whiskey category here in the U.S. You are off to a very good start. Of course Fireball started the category, but when you look at the momentum for the category, never mind whether it is Fireball or you or another smaller brand, what are you seeing in terms of momentum in terms of consumption at the point - momentum at the points of consumption for that category? Is it picking up, is it slowing down, is it holding steady? That's one question I have, as I kind of think about the effect of your performance a year from now, with Fire. And then the second is on the subject of advertising, Paul, when we talked last quarter, I think you made a very compelling case that even if you yourselves grow mid-single digit in terms of advertising spend, which is lower than anticipated rates of revenue growth, that's superior to your competitors. Can you talk a little bit about what is the anticipated rate in the guide for fiscal 2016, and whether there has been any change in your assumptions and planning for ad spent, given the anticipated rates of revenue growth?

Okay. I will try to tackle those and Jane, chime in as a feel. On the slowing down, I think you would expect that the - it will be interesting to see how Tennessee Fire as if you were to divine the subsegment called cinnamon or if you were looking at it broadly as flavor. I would say that flavored generally, the leader in flavored whiskey has been decelerating but also very high levels. But then you would have the infusion of new entrants, and to continue to like Tennessee Honey been one to continue to grow nicely but then our new engines and cinnamon and then I think the aforementioned Crowell wattages all those will be added to the basic you defined it as flavored. Cinnamon I would expect just because a very large volume level fireball to slow down with the passage of time and whether or not Jack Daniel's Tennessee Fire more than makes up the category level it have to be seen but I would just - if you just added up the volumes associated with these leading brands. I mean, you start to get bigger than - entire categories have been in existence the United States for decades. So, I mean, it really is - a very interesting development, phenomenal for the industry that you have to pay attention to be very responsible about it, and I think there's - I'm sure a part of your question about is this stuff just a trend is going to busting doorway. I mean, there's nothing we can do about the categories marketing as it relates to that or the way that the consumer experiences. We cannot control that a little bit on the way we market our brands. And so one of the reasons we're being so…

That's very, okay great. And if I could just kind of continue from a U.S. perspective, ask about, a question that pertains to the gross margin evolution, we just got some color that was helpful on the wood cost. But on the last call we also talked about, and in this call, you've talked about wanting to expand the consumer base, which brings a certain incentive not to raise prices, and even to promote a bit more. As we think about the gross margin evolution here in the U.S. for the total portfolio or the Jack Daniel's family, can you just talk a little bit more about how you're thinking about that average selling price at retail and what you need to do with the family, given what's going on within the larger bourbon segment, but of course, also what's going on in the vodka segment.

Yes, I mean that - you basically reference the most artistic exercise that goes on in brand management. It really is. On balance so you think about the that's the challenge with and back Daniel's framework and just use the example of United States. Simultaneously what we're trying to do is to continue - and by the way, the brand Jack Daniel's black label finished in the United States fiscal 2015 at its all-time volumetric high level. It's just is a wonderful attribute of the brand that next year will celebrate its 150th year in the United States. So it's sort of staggering to think about that and had some pricing and also was the basis for the success of Jack Daniel's Tennessee Honey. Gentleman Jack, that been single barrel, Doug Nelson on attributes of the ability to delicate balancing act is continue to advance Jack Daniel labeled equity, volumetrics, while also advancing the other consumer opportunities that may be Jack Daniel's black label can't, so readily or easily accomplished through its own programs and more efficiently accomplished through line extensions in these cases, and you have to be very selective. You have to be very thoughtful. In our case, we sometimes a little bit more patient than people would like. But it works very well for us. And the thing I would point to is the level of cannibalization that we experienced is so minimal, and it's because we will continue to support like Daniel's black label while we are introducing Jack Daniel Tennessee Fire, for example. And when the line extension emphasis is on items that have higher gross margins, you effectively take the pressure off Jack Daniel's pricing and permit it to grow a little bit more volumetrically because what you end up doing on the mix of debt Daniel's whiskey is get a mix increase. You get an effective price increase because of the mix. And so elements of that are at play right now, and we like it. We actually like it. It's not that we're anti-price increase because we believe one of the elements of making Jack Daniel's continues to be exceptionally special, well valued is to keep its price premium. I would even refer to it today most markets around the world a super premium. I hope that gives you a little bit more color on a. It is a really artistic exercise as you can imagine. I wish we could write even a roadmap for ourselves, but you are always dealing with the influences of the competitive environment around you and so far so good and I think it's in our results, but it's why we get paid to do what we do everyday.

Fair enough. Very good. Thank you, Paul.

And your last question comes from the line of Brett Cooper with Consumer Edge Research.

A couple questions. Can you just talk about the phasing of how we see Slane Castle come to market?

Can you say that again?

Phasing of it coming to market, the Irish whiskey project.

Yes, the plan on the Irish whiskey project, if you will, is to purchase some new whiskey, if you will, that we can make our own product line.

From the bulk market.

From the bulk market. So we plan on starting to do that in at fiscal 2016 hopefully, go to our proprietary blending and so forth with angle to market probably in fiscal 2017, if you will. What we're actually building now in terms of the capital and we won't have that all completed probably two at 17, early fiscal 2018 for we won't be distilled, making our own distillate if you will until about that time. So that actual whiskey that will be producing for the $50 million investment that a referenced won't be available till 2022. But in the meantime will continue to purchase on the bulk market?

So we'll have a product that we're very proud of, that we haven't constructed yet that would be made and available for the five years while we are aging the product that we can in fact distill after 2017. Some of this - at least in my time, we've only done it once, which was Woodford Reserve, when we renovated the distillery and built out the distilling capacity, you wait a few years before the distillate comes in. And so I think the key thing is to make an excellent product. And that's one of the things - Irish whiskey, there's very few competitors and the product themselves are - generally, and very genuinely of very high quality. So you are going to want to make sure you put something out there that works very well in the marketplace, so the standard I think for Irish whiskey fairly high.

And I may if I on the pricing question, if you think about the mix that's going in the U.S. specifically within U.S. whiskey, you are seeing average price per volume increases of 4% or more. How do you balance Black Label pricing with the goal I assume of never having black label be the equivalent price to average price volume for the average U.S. whiskey?

Well, I would have to look at your data. But it traditionally, number one it's a big within American whiskey, it helps to set the price for American whiskey. At least early make the Constitution. But again, I go back to that how do we do it. I mean, we look at it literally each half year or so to make sure we're comfortable with the pricing. And there say - if you think about this American whiskey market, most of the excitement right now is - if you just think about it on human engines, price up and down and flavor sort of going view that across or horizontally. There's so much interest in flavor we talked about earlier on the call how large that segment. Jack's participating that of those brand by the way have excellent gross margin. We also a very much participating in the super premium and ultra-premium expressions in the United States above us and that's where a lot of the growth is too. There's been less buoyant growth in this category down at the very low price points. They are getting some halo effect on it but it's really been the premium plus ultra-premium arena where we are playing, where a lot of competent and is playing and then the player where we've also been successful. So I think all told, we will be advancing our sales dollars through the combination of - and also because we also take price increases from time to time that we think a reasonable on Jack Daniel's, on Gentleman Jack on Tennessee Honey, we take price increases on Woodford and its expression. I can't tell you how impactful it is, too, when you look at an individual brand. The example of Woodford Reserve, which is growing very, very well, been growing 30%, very premium price, periodically takes price increases but the impact of introducing Woodford Reserve double oaked at about double the price. What that does to the Woodford River family overall, pricing is really exceptional. And so we're getting it through a combination. I think what we are highlighting a little here today is an fiscal 2016, which is saying to expect a little bit less comprising more for mix, and in the sales composition, a little bit more from volume .

Great, thanks.

Thank you, Paul and Jane, and thanks to all of you for joining us today for Brown-Forman's year-end earnings call. And for those of you who are planning on attending our Jack Daniel's distillery in cooperage tours at the end of June, we ask that you please RSVP by the end of this week, so we can make sure that we have accurate counts. Thanks again for the time and have a great week.

Thank you, all.

Ladies and gentlemen, that concludes the conference call for today. We thank you for your participation.