Ladies and gentlemen, thank you for standing by. And welcome to the Brown-Forman First Quarter Fiscal 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Leanne Cunningham, Senior Vice President, Shareholder Relations Officer. Thank you. You may begin.

Thank you, Dorothy, and good morning, everyone. I would like to thank each of you for joining us for Brown-Forman's first quarter fiscal 2021 earnings call. Joining me today are Lawson Whiting, President and Chief Executive Officer; and Jane Morreau, Executive Vice President and Chief Financial 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 takes 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 first quarter fiscal 2021 in addition to posting presentation materials that Lawson and Jane will walk through momentarily. Both the release and the presentation can be found on our website under the section titled Investors, Events & Presentations. In the press release we listed a number of risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-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, a reconciliation to the most directly comparable GAAP financial measures, and the reason 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 investor presentation. With that, I would like to turn the call over to Lawson.

Thank you, Leanne. And good morning, everyone. As I stated in the earnings release that went out earlier this morning, I'm actually very pleased with the company's first quarter performance and truly want to thank our dedicated, agile, and resilient team of employees worldwide who made these results possible. We entered this fiscal year in one of the most complex and challenging business environments that we have seen in decades. Every market around the world has and continues to experience the health and economic impacts of the COVID-19 pandemic. We continue to lead by our values, keeping the health and safety of all our employees as our highest priority, but we remain committed to our strategic priorities. But like much of the world we're adjusting the ways in which we do our work. There have been very dramatic changes to channels, to brands, occasions, which really impacts things like size, mix, and formats; and we continue to see a lot of volatility around the world. One of the most obvious ways that COVID-19 has impacted our business is the prolonged closure of the on-premise and the resulting shift in consumption to at-home occasions. As you can imagine, we've rapidly shifted people and investments into the off-premise, but different markets around the world have shown very different results. Even more interesting, we've also seen the pandemic accelerate a number of macro consumer trends. For the most part, trends that were happening before the pandemic have really accelerated over the past few months. So, I thought I'd walk through some of these accelerating trends, as well as provide examples of how we're capitalizing on these trends to our advantage. The first really would be premiumization. This was a growing trend pre-COVID and really has been a trend in the spirits business for…

Thank you, Lawson, and good morning, everyone. As Lawson said, we are pleased with the start to our fiscal year, particularly in light of the current environment, with both our underlying net sales and operating income up relative to last year, and our reported operating income and EPS increasing even more. Not surprising and amplified during this volatile term, there is considerable noise in these results, ranging from product innovation launches, timing-related items in the same period last year, portfolio reshaping, a significant discrete tax benefit, and of course COVID-19 related effects that include inventory fluctuations, customer buying pattern changes and geographic, channel, size and portfolio mix shifts. I plan on highlighting these effects on our results to provide more clarity on our performance in the quarter. But first, as a reminder, our business began to significantly experience the impact of COVID-19 pandemic in our fourth quarter of fiscal 2020, beginning in mid-March and continuing throughout April. As a result, we estimated that the pandemic negatively affected our underlying net sales approximately 15% for the March-April period, with a greater negative effect occurring in April, following some benefit we believe we experienced from pantry loading in March in some of our larger developed markets. Now with that as a backdrop, let's turn our attention to the first quarter, where our results improved significantly relative to our fourth quarter of fiscal 2020. Starting with our top-line, compared to the first quarter of last year, reported net sales were down modestly reflecting the rebalancing or get-back of the distributor inventory built in the U.S. in April 2020 during the period of great uncertainty surrounding potential supply chain disruption. Adjusting for this factor, our underlying net sales grew 3%. When stripping up the noise I noted earlier, however, we believe our net sales…

[Operator Instructions] First question comes from the line of Peter Grom with JP Morgan.

So I was hoping you could help us understand the phasing of the quarter. You showed that one slide, we see March and April performance in each market and then just kind of the drastic improvement in Q1. And I know you talked about some of the timing related items that helped, but could you speak to or help us quantify the sequential improvement in trends that you saw in June and July, both from a channel standpoint, but also in key regions? And then just to the extent that you’re willing to share, how did those trends progress in August?

Yes. I mean, let me start off, I know you asked a lot here, and I think I’ll make sure I understand. You're focusing specifically on the top-line. Is that correct?

That's right.

Okay. So, if you recall at our year-end call, we had already some visibility in our month of May results. And we told you at that time that they had improved from our lows in April. We think that was the trough of what we have seen, and -- but they were still down. So the month of June and July were both positive months, when we look at – and growth months obviously to drive the quarter up. When we look at what's driving this, Travel Retail has not improved, it remains down. Our emerging markets set aside the three countries I noted within our script today, which is Poland, Brazil, and Mexico, were all down pretty significantly. There's been no change there really from what we had seen at year-end. Where we saw the biggest changes were in an acceleration in the U.S., which by the way has remained resilient throughout this pandemic. So we saw some acceleration there and Lawson was referring to some of the reasons why that was, which is really the consumer behavior and the desire for convenience with the at-home consumption and our RTDs business’ still well placed for that as is our flavored whiskies and tequilas. So, we benefited from that. And then finally, the developed markets improved significantly from year-end. And that's where we got a fair amount of noise in the numbers. We had some easy favorable comparisons to last year. We actually saw some restocking, if you will, in some markets that we restocked at the hypermarkets where they -- where people weren’t shopping at the local corner before. That would set as an example. So we got a benefit from that. We had the launch of Apple, and they are both from the U.S. and it wasn't there…

Your next question comes from the line of Vivien Azer with Cowen.

I was hoping to ask about Woodford Reserve. Certainly double-digit growth is excellent, given the strong track record that we've seen for the brand. But the growth that you guys are reporting certainly is below what we're seeing in Nielsen and NABCA. And so my understanding was that the international exposure for that brand inclusive of Travel Retail was still relatively small, but just wondering how big of a headwind that might have been to Woodford’s underlying trend?

Sure. I mean Travel Retail is a meaningful business for the Woodford Reserve brand. So that would have put a little bit of pressure on it. But the bigger issue is the on-premise really in the U.S. for Woodford. I mean, it's -- that's put pressure on it. That's why you see better Nielsen trends than you're going to see in our reported results. Another part of that I think that is just interesting, Derby, remember moved from May to this coming weekend. And so we were comping against a quarter that had all the Kentucky Derby related volume to it. And so we hope to see a little bit of a pick up this coming weekend hits. Although lord knows, we don't know what kind of Derby it’s going to be, but that put pressure on it too.

And I have one quick follow up, please. It looks like you're canned cocktail offering in the U.S. for your website is listed in about 16 states. Just curious to understand like what your level of distribution is within that limited footprint and how we should think about a further national rollout in the U.S. for the canned cocktails? Thank you.

Yes. To be honest, I don't know the distribution numbers off of my head but it's still small. I mean, it's an effort -- it's really an innovation effort that we're trying to just get off the ground right now and figure out which flavors are going to work best. We do know that Jack & Cola and Lynchburg Lemonade are the two flavors that seem to be doing the best, but it's still … And in terms of scale of our RTD business, the spirit-based RTDs in the U.S., they are still pretty small.

Yes, 1% or something like that.

The Country Cocktails brand, that is absolutely on fire. I know that is one of the ones that has really just taken off in this environment, as we mentioned, the Southern Peach in particular. I mean, it's a business that's crossed 2 million cases at this point. So it's much bigger than the spirit-based business.

Understood. Yes, no, absolutely. Just seems like the spirit-based RTDs are gaining a lot of attention from consumers. So glad to see that you're playing there too. Thanks very much for the time.

Your next question comes from the line of Kevin Grundy with Jefferies.

Hey, good morning, everyone. And congrats on the strong quarter. I wanted to come back to the on-premise and the cadence there and how that's improving, just given the importance here more broadly to the recovery in the alcohol space. So Jane, you gave a lot of color, I appreciate that on the call, and you mentioned some of the recovery to Peter's question earlier. So specifically with respect to on-premise, as we've seen some case counts take up in Western Europe now at this point, can you just talk a little bit about what you're seeing is specifically in on-premise for July and August? Has that sort of hit a little bit of a pause, or did you see continued improvement here exiting the quarter?

I think to your question, in the U.S., we have seen it more leveled out. And again, year-over-year when we look back at June -- May and June, even early July, and gain some theme if you will, there would be recent halts in openings and new restrictions that have been put in place, really the momentum really has leveled out in the U.S. Overseas, I think it's picked up a bit, and we’ll give information a bit later on that, but it has picked up a bit. It depends on the market of course, and all this is dictated by -- or determined by market where it might be performing or it's not. But I think really importantly, it's something we've been talking about and looking at. I'm sure you've seen this as well. That just the overall consumption -- and this is a U.S. comment, by the way, just the overall consumption of -- probably it’s still spirits pre-COVID -- this is on a volumetric value basis -- we’re going value basis as well too of course, but on a volumetric basis, it's higher, even with 60% declines in the on-premise, which is pretty amazing. And it's remained steady and for us we have seen similar trends in terms of our volumes in the U.S., offsetting the on-premise closures and shutdowns and even the declines. Hope that gives you a little bit of color.

Yes, following on to it, which is a good spot to make sure that everyone sort of understands this point. Volumetric -- if you just take the U.S. as the example market, having the on-premise closed down, which is basically a 1 liter sized product and a lot of the volume moving into 1.75s, volumetrically looks pretty good, but the margins are weaker on the 1.75. And so, that is one of the factors that's putting pressure on our gross margins, and just want to make sure everybody sort of understood that, that will reverse at some point when the on-premise comes back again and we'll take the results -- or getting for now, but they're pretty big different margins between the two sizes.

I appreciate that. Just one follow-up, if I may. Just with respect to advertising, which is obviously down pretty sharply year-over-year, do you expect it to be up for the entirety of the year, and maybe give us a little bit of help if you would not mind just on the cadence for the balance of the year and sort of the quarterly sequencing, I think that would be helpful? And I'll pass it on. Thank you.

Yes, sure. I'll try to do that, Kevin. It's such a volatile environment now, and as you can imagine, we're watching it closely and being thoughtful in terms of when and where we invest and behind what brands and channels and alike. So, what we did in the first quarter, as you noted, not surprisingly in terms of how our quarter fell, which was so close to the beginning of COVID, we really did step back and paused and reflect and evaluate what consumer is listening, what the appropriate type of spending programs and so forth. And so, as you did know that the advancement -- we do not -- as both Lawson and I mentioned, we do not expect it to be down for the year, like it was in the first quarter. Where we land in the year? We're going to be very agile about this. You will see quite a bit an acceleration in our second quarter. Lawson mentioned this because this is also when we're going to be launching some new creative, the shift of the Derby, if you will, from the first quarter to the second quarter, will be noticeable pick up in spending there. And just the number of activities that we've got going on that we believe we’ll be funding behind. In terms of trying to get down to any quarterly phasing, that's as far as I can go now, we expect to pick up in the second quarter or the third quarter, for sure. Remember, last year's fourth quarter was down, because of the on-premise closures, the cancellation of events, and we'll be cycling against that in the fourth quarter. But as always, we want to be thoughtful, prudent, agile, and just accordingly where the consumer is, and that's all I can give you right now, it’s very uncertain.

Next question comes from the line of Steve Powers with Deutsche Bank.

Could you talk a little bit more about the ready-to-drink launch that you began this past quarter in the U.S. and where we are in that relative to it being a fully national rollout? And more generally on the ready-to-drink portfolio as it evolves -- and this is sort of with a global lens. Can you just dimension for us a bit as to how you think that's going to impact your P&L from a margin perspective?

Okay. I'll start with the U.S. RTD thing, and I'm not repeating what I said to a question a couple of minutes ago. But Country Cocktails remains the majority of our RTD business in the U.S. and it is on fire. And it is up significantly over this past quarter. The spirit-based part, not the malt-based product, the spirit-based RTD which I think what you're asking about is still less than 50,000 cases. It's in 14 states, and it's -- I mean, we're seeing it now and it is everything. This is actually on fire in the RTD space these days a little bit, and our timing I think was pretty good. But it is -- as to why I think is maybe a good part of the question as all of a sudden these things have gone from sort of lukewarm growth rates to really spiking up and a lot of it's just fitting lifestyles that are out there right now, it's obviously people are at home and they want it to be simple. And so people really do turn to these both simple RTDs, simple drinks. Obviously, you're just opening up a can or even very mixable products that we have, which is why we think Honey, as an example is doing so very, very well right now and our Apple launch is actually doing quite well right now. So, we have -- we're getting a lot of interest in it. But as I say it's only in 14 states. So these are early days while we figure out what the consumer is willing to pay for in pricing, and more flavors they like the best.

And the spirit-based RTDs in the U.S. are now growing, as are the malt-based. So I'll just pick up on part two of your question and just building on Lawson’s comments about the RTDs playing an important role in this environment for the home consumption and convenience occasion and the cocktails and so forth. But what you're asking I believe is about the degradation on margins. And I will say, in the first quarter, we talked about the degradation at both channel and portfolio having about 1 percentage point, 100 basis point impact. And a big piece of that is related to the portfolio for the RTDs but more specifically with really the New Mix RTDs which we expect -- and as we said in our script, was one-time we think in nature because of the temporary disruption in other beer industry in Mexico. With that being said, we have fretted about this for some time, but in the environment like this we think the volume and the sales generation vehicle for our brands are more important. Are you increasing your demand for your product? Absolutely we are, you can say that. And importantly, if you look at the economics of an RTD, it’s something we do frequently, and we convert it to what we call a drink equivalent basis, on a whiskey basis, the economics are phenomenally even better than our full strength. And so that's a couple of ways that we think about it. And in this environment, we think small amount of degradation in the margins, not material, is 100% makes sense and we want to be there for the consumer.

I guess if I could just one more, looking down the P&L, over the past two years in response to things like first tariffs, and now COVID, you've done a great job of managing down SG&A expense. I think you’ve taken I think like 500 basis points out of that line item this past quarter versus, say, 2017. If you think about that, and you think about the go forward, how much that do you view as a structural efficiency that is capable of enduring versus just progressive belt tightening that at some point likely come back as things sort of renormalize?

The whole look is changing, I can't answer that fully but definitely what you saw on the quarter was largely driven by just the absence of travel and entertainment, quite frankly. Yes, we had some hiring freezes going on as well but it's largely our discretionary spending. And I think we've all learned that you can work differently in this environment and where it goes and what might come back is yet to be seen. And so I think this is something that we're all going to learn a whole lot about as we look ahead. I don't really have a 100% answer to that at this point. But we definitely know that we can work differently and have been working effectively differently.

Yes, I mean I will add a little more color to it. Just thinking back, if we go back four, five years ago, and I think we were pretty public with this that we made a conscious effort to restrain SG&A growth and get more advertising dollars and more brand expense dollars out there. And we've been pretty successful at doing that. Now we weren't predicting a pandemic and halting and travel and all that kind of stuff. And certainly comp is way down too. So there will be -- I mean, SG&A will grow from here. It's just, I think as Jane said, there are a lot of things we're learning as a company that you can do differently, and so it's hard to forecast out that many years, but we'll look it back to where it was, probably not -- not in the -- at least not in the T&E book. I think there's probably a permanent change in the way that people do business. And we'll have to see how the life unfolds a little bit. But SG&A, I think we feel pretty good about the way we've managed through the balance between those two different operating expenses.

Your next question comes from the line of Eric Serotta from Evercore.

Lawson, I wanted to get your thoughts on the performance of Tennessee Whiskey in the U.S. Jane mentioned that the growth rate in the quarter was similar to pre-COVID levels. I heard you say in the past that, that level of growth was sort of below your long-term aspirations or what you hoped for -- or what you expect for the brand. Could you talk a little bit about plans to accelerate that growth? How dependent upon the reopening of on-premise, those plans are? Certainly your overall portfolio growth in the U.S. was phenomenal, especially in light of what Tennessee Whiskey did in the quarter. But just want to get some color as to how you're thinking about Tennessee Whiskey going forward?

Sure. Well, I mean a couple things. One to point out, the Jack Daniel’s family growing, not the U.S. but globally was still plus 3%. So in the middle of a pandemic, generating 3% sales growth on the entire family, I think we're pretty happy with that. Now focusing just on Tennessee Whiskey itself and I was talking about the whole world for a second, then I will go more to the U.S.. But keep in mind Jack Daniel’s Tennessee Whiskey, so Black Label is one of the largest on-premise brands in the world. I mean, it is in nearly every bar around the world. And so that business -- that's why that number is down somewhere around 7% down for the quarter on a global basis, a lot of that is on-premise. In the U.S. itself, 30%-ish of its volume is in the on-premise and that went down drastically. So making it up with pretty dynamic off-premise growth, I mean that feels pretty good. I think the Nielsen numbers on Jack are somewhere in the high teens now, something like that. So you're getting on a brand that's north of 5 million cases to get that much off-premise growth, that’s a pretty -- I mean it’s a big number. So now, how or what are we going to do differently a little bit about it? You're right, it’s -- we aren’t happy with the growth rates that we've been seeing on Jack or on Black Label the last couple of years. A lot of it does have to do with -- we're going to rely further on these new campaigns that are coming out. We've been working with this new advertising agency, since while they were hired in January. So obviously, they went in shutdown mode, but bringing out an entire new campaign with a whole bunch of money behind it is in our plans for the next six months. And so, we're doing a lot more other things than that. Obviously, the brand building model is on hold -- not on hold, but I mean the way you do is going to be very different in this environment than a normal. And you've got to find ways to get to consumers that are outside of the bars. But I think we will be pretty effective in communicating that and getting that to them. And as I say, I think the U.S. Jack Daniel’s business is in pretty good shape. I'd also highlight, Gentlemen Jack as an example, which is largely U.S. brand. It's up 17% for the quarter. That's the best growth rate we've seen on Gentlemen Jack in a long, long time. And then Tennessee Honey, so we talked about that a little bit earlier, but that brand is also on fire. So the family stuff, I think we feel pretty good about it.

And actually just build on what Lawson said, the volumes in the U.S. were flat. That's pretty -- I mean, it's basically unchanged pre-COVID, yes. But we have even as -- even though Tennessee Whiskey is higher skewed toward the on-premise than the rest of the American whiskey, I think that’s 30% versus 17%, 18%, we were able to offset that loss of that business, which I think is pretty strong for the brand in this environment. And then more importantly, just to build on Lawson's comment about the full family of brands, he just referenced Honey, we're in a 9th year of that brand and it's growing high-single-digits, which is fascinating and amazing as we're approaching 2 million cases. And the brand is actually bigger outside the U.S., it's over 1.1 million cases than it is in the U.S. and have both grown high-single-digits, which leads us to the comment about -- and the performance about the brand and how we think about the innovation that we just did last year which was Jack Daniel’s Tennessee Apple. Because we're seeing in a number of markets overseas where we've introduced it is we’re performing at or above right at the same point in at as Honey, which holds well for that brand in markets outside the U.S.

Great. That's really help -- sorry.

We’ll, look at the whole franchise.

Great. Just that's really helpful. One follow-up in terms of the pricing and promotional environment. Earlier in the year, I guess pre-COVID, there were some comments about the degree of competitive promotion moderating a little bit in the TDS market. Now, I realize there's been a lot of noise since COVID with brand owners and retailers pulling back on promotions, when everyone was trying to keep the shelves stocked. But I guess more recently, what are you seeing in terms of the promotional environment and the competitive intensity, particularly from some of the players that have been aggressive at times?

The promotional environment hadn't changed a lot compared to where it was two or three months ago. It's still -- we have used the line customers are -- they're buying, they're not shopping. They're going into the stores with their masks on and their hats on. And everybody wants to get in and out as fast as they can. And so, the retailers have pulled so many promotions. And, they don't want to pocket at a lot of that different margin right now. And so, we need to do a better job at getting our own piece of that. And I know there's a lot of effort behind that right now. Because I do think this is an environment where we want to see pricing going up. And that's an effort that we're going to have really around the world over the next few quarters that we are going to push pretty hard and kind of see some margin improvement there.

Your next question comes from the line of Bill Chappell with Truist Securities.

Just a quick question on -- back on gross margin. Trying to understand with RTDs will the impact get better or not as bad as you scale up or are you putting investments behind RTDs where it won't be as dilutive to margins over time? And also with that in mind, can you give us some kind of guidance on what the divestitures due to gross margin for the next year?

I'll start with the last part of your question in terms of Early Times and Canadian Mist. They've very, very small impact on our business.

Yes.

They will have a slight benefit to our top-line and to our gross margins. But very slight, I wouldn't count on a couple of tenths of a point, if any, more than that. So, just to knock that out of the way. In terms of the RTD business and where it might go and whether it will have a more pressure on margins or not? What I was referring to in the first quarter was we had an outsized impact from New Mix, and it was our number one driver of growth in the quarter. If you look at on a standalone brand basis and that we don't expect that margin pressure or that margin item to continue. But even with so, we're still looking at this as I said earlier from the growth, and appealing to consumers and our top-line growth is important in this environment.

I mean, we've had sort of internal conversations on it. Right now in this environment, if you take the dollar, its impact is a percentage, a little bit. But at this point, we'll take it -- and it's not -- you mentioned -- there really are not going to be margin improvements within the RTD world if you get efficiencies and things like that. It's more just that the fact it's becoming a bigger part of our business and they inherently have lower gross margin so.

And then Lawson, just can you remind us just on the new advertising firm, stepped up advertising, kind of what the main goal is? And when I say that, is it trying to keep up with some of the U.S. competitors that have advertised more over the past few years? Is it a new demographic or new target audience that you're trying to reach? Was it just more -- or just trying to understand as we see the commercials, they do look different a little bit than some of the past messaging. And so, maybe just what the goal is over as it gets restarted what that means?

Well, I mean, it is what we want to give back our share of voice, which admittedly, we've lost a few spots in that over the last couple of years. And so, we're pretty adamant about gaining on our share of voice and particularly in the U.S. market, but that does include other places too. And so, there's a couple of different ways we're coming. I mean, obviously with the on-premise closed and events not happening and all that, you get incremental money there, and I imagine every competitor in industry will have -- will get back to. But a lot of it is also -- you think about how much we took it down in Q1, and we're saying we're going to get back -- I don't know -- we'll have to see what the full year turns out to be. But it will be pretty dramatic increases between now and by Christmas, and we'll see what happens. It's not really going at -- by the way a new -- not really going out to a new consumer necessarily. We've always felt that, we've got sort of legal drinking age all the way to -- LDA to DND or legal drinking age to damn-near dead, that’s still into play, and we're going to work hard at getting that back again.

Our final question comes from the line of Bryan Spillane with Bank of America.

So just two for me. One, Lawson, you made a comment in your prepared remarks about not -- maybe not expecting to see as much trade down in this sort of episode versus what we've seen in prior recessions. I'm assuming you were talking about the U.S. or/and developed international. But just a little bit more color on why you think that would be the case, especially if we get to a point where there's less fiscal help that governments are providing for consumers?

Yes, I mean -- okay. As you think, one, we have not seen down trading in our own portfolio, and it's although -- it's probably worth pointing out too. Over the last 10 years, we have shed most of our brands that were sort of less than premium. And so, we don't have a lots of trade down too. But I think in the broader question of across the whole of TDS, certainly the stimulus money is a big part of it. And that travels all the way through to Europe and some other places. And as you say, in the emerging markets, there is some trading down, I think, in the emerging markets that we have seen and a lot of that would be stimulus related too. But also think in this environment, now, back to the U.S. a little bit more, we're also in the right categories. So tequilas and whiskies are places where consumers are really buying these days. And those consumers are -- a lot of the consumers -- while unemployment may be high, it is high right now, there's a lot of consumers in the United States that are saving money from not traveling and not vacationing and not doing all those sorts of things. And they've got money and about the only thing that's fun to do is a little home party or sit at -- mix cocktails and make, all that kind of thing. And so, those tend to be very super premium consumers and that's what they're spending their money on. And so, for us things like Woodford Reserve, Double Oaked, or within Old Forester’s the more premium line extensions there, those things are all on fire. And they have been for a while, but they've remained very, very strong. And so we just happen to be the recipients of it, we're with the trends. Our portfolio matches up with the consumer trends these days. And we're getting some benefit from that.

Okay, thanks. And then perhaps, maybe just one more just -- is worth thinking about on-premise and maybe like a couple years out, and especially if we get it to a point where less T&E, right, we're all traveling less. Just is your expectations that the on-premise revenue pool three years out will ultimately still be smaller than where it was pre-COVID? Just trying to understand how you're thinking about later recovery and kind of what on-premise could look like over a multi-year period?

Yes, I mean -- look, I am going to be guessing or forecasting, because I don't know any better than you would. I mean, the -- certainly, I think over the next 6 to 12 months, the on-premise is still going to be way down. And I think you're going to see a lot of restaurants closed and all those kind of things. But I'm also a strong believer that humans are very social animals, and they miss it. And people, really miss going out to dinner and socializing. And so I don't really see a permanent change in that. I just think it's going to take a while to just sort of rebuild itself back up again. So, I don't know, as I say I think it'll be pretty weak for the next 6 to 12 and then you'll be comping against such easy periods as restaurants open back up again, you're probably going to get a period of pretty good acceleration with three to five -- three, four or five years out, I just don't know.

Well, we won't hold you to your prediction for on-premise recover, but we may hold you to your Derby predictions. So good luck. Alright. Have a good Labor Day, everyone.

We have reached the time for allotted questions. Have any closing remarks, please?

Thank you, Dorothy. And thank you, Lawson and Jane and to all of you for joining us today for Brown-Forman's first quarter fiscal 2021 earnings call. If you have any additional questions, please feel free to contact us. For those of you in the United States, we wish you an enjoyable long Labor Day weekend. Thank you.

Thank you, ladies and gentlemen. That does conclude today's conference call. We thank you for your participation and ask that you please disconnect your lines.