Filippo Falorni

Luc quantified FY2027 inflation above $200M on a ~$90 Brent assumption, with broader supply-chain cost pressure.

Luc: Full range of tools, RGM/PPA in some BUs, productivity/cost savings in others, reformulations, supply chain changes. Accelerating some structural savings from FY28 into FY27. Q4 recognizing one-time costs (50bps) to enable that acceleration. Approach differs by BU depending on competitive dynamics and existing pipeline.

Linda: TDPs up 5% in Q3 at aggregate level, on plan. Retailers still resetting through Q4, continued progress expected. Key issue is items in right locations (not just present). Litter got distribution gains but some shelved in wrong places, working with retailers. Glad and Food distribution strong and accelerating into Q4.

Luc: Price/mix ~-1pt for full year (volume slightly ahead of organic). Back half GM expanding vs front half contracting. Three drivers: higher cost savings run rate, ERP stabilization costs coming down (gone by Q4), Glad JV termination ~50bps benefit. Q3 about flat GM, Q4 solid expansion. Timing of manufacturing expenses between quarters.

Linda listed Q1 launches: Glad Fall scent (building on Bahama Bliss platform), Brita pitcher modernization + smaller sizes, Burt's Bees body expansion. Back half: innovations across all major brands including brand-new spaces. Glad/Litter: competitive activity in line with expectations, being surgical on investment, not destroying category value through deep discounting.

Luc said ~$40M based on current tariff rates and USMCA exemption assumption. Plan to offset through sourcing changes, reformulations, productivity, and targeted/surgical strategic pricing (modest magnitude). Situation remains fluid.

Luc outlined midpoint assumes 0-1% categories, slight share pressure in H1 improving in H2. Volume growth close to organic, price/mix -1% (improving from FY25). Phasing: negative low-single-digits front half, positive low-single-digits back half. Linda said promotional environment largely rational except Glad trash and Cat Litter.

Linda confirmed 3-5% algorithm requires category normalization to 2-2.5%. No visibility to when that returns. Growth will reflect suppressed categories until then.

Luc said ~$100M 12-month unmitigated run rate. Q4 impact $10-20M due to inventory buffer. Mitigations: sourcing changes, reformulations, targeted modest pricing. Considers it manageable over time.

Kevin said Kingsford was <1pt of the beat. Primary driver was category growth at top end of 0-1% range plus continued share gains (+1pt). Business strength was the main factor.

Linda said Litter promo in line with expectations. Glad seeing more deep discounting from branded competitor than expected. Already reacted and included in outlook. Growing share in Glad trash despite pressure.

Linda confirmed Glad returned to share growth (+0.7pp), distribution fully restored. Litter also +0.7pp but subscription business still recovering.

Hankinson said pricing discipline is unchanged and pricing stays at the lower end of the range; Q2 net pricing was flat on mix, incentives, couponing and a 25 bps repositioning drag.

Fink called the recovery broad-based with strength in club, but did not split tracked versus untracked channels or address the Hispanic consumer directly.

Fink described the volatile quarter and a modest late-quarter reacceleration, though not back to March growth rates.

Bill outlined aggressive H1 marketing for World Cup and brand momentum. Investing behind Oro/Premier price repositioning, Modelo, Pacifico expansion, and Victoria's younger demographic. Sunbrew had strong first full year.

Bill confirmed 1-2% pricing remains appropriate, Oro and Premier trends improved after repricing. Introduced 7-ounce formats in multiple states to address price-sensitive consumers.

Garth highlighted $500M+ cumulative savings since Investor Day, $105M YTD this year through supplier optimization, rail car innovations, and terms. Beer tariff impact ~$70M and wine ~$20M for the year, tracking with volume.

Garth acknowledged increased promotional activity in the market, confirmed STZ adjusted Oro pricing to target high-end light beer segment. Brand loyalty expected to win through the promotional environment.

Garth listed volume growth, 1-2% pricing, and cost savings as offsets to inflation and depreciation, but provided little new detail beyond reiteration of existing framework.

Garth reiterated 39-40% beer margin framework, noting tailwinds (volume throughput, cost savings, pricing) offset by inflation, depreciation, and capacity absorption.

Garth confirmed hitting $300M cost savings target from Investor Day, noted 90% peso hedged and lower fixed cost absorption expected in H2.

Schulten addressed promotion normalization and said price mix continues as in 20 out of 21 years, but declined to give the explicit volume, price and mix split requested.

Andre confirmed Middle East is only about 2% of global sales with no direct demand impact visible yet. Noted Southeast Asia has more upstream supply chain exposure requiring additional work.

Andre declined margin guidance; said investments split across product performance, consistent media, and trade spend for trial of superior propositions.

Andre attributed relief to petro complex and natural-material exemptions; held the flex to reinvest in integrated superiority given volatility.

Andre attributed destock to channel shift, retailer cash allocation for tariffs and slower consumption; cited 10-point inventory effect in Brazil too.

Andre saw no nationalistic behavior in data; SK-II accelerating to 11%, Olay 2% growth, Canada still at 4%.

Andre described Mexico as more difficult, Brazil/Europe enterprise strong; Middle East still challenging.

Andre expected sequential improvement from annualization but declined to forecast China's pace or quarterly progression.

Peters cited innovation momentum (Blackberry going international and in new sizes), expected distributor-inventory normalization, stabilizing barrel-sale drag, and rational pricing as the bridge to approximately flat organic sales, partly offset by RTD mix pressure.

Whiting framed developed markets around Canada as the biggest drag, called Europe weak but stable at low-single-digit declines with share gains in six of eight markets, and said the U.S. is worse but the last couple months of Nielsen improved by a few points. On pricing he said Brown-Forman has historically repositioned brands up, not down, and intends to hold pricing as a market-pricing reset has not come through the data.

Leanne cautioned against reading single-quarter emerging market moves, pleased with H1 at +12%. Mexico and Brazil continue as strong growth drivers. New Mix will comp strong prior year in H2. For gross margin, full year expansion expected: A&D benefits from Korbel absence and Sonoma-Cutrer TSA completion to more than offset negative price/mix and higher costs. Agave benefits offset by inflation, lower production, and high-cost bulk tequila working through inventory.

Leanne confirmed full year gross margin expansion expected, benefiting from absence of Finlandia/Sonoma-Cutrer TSAs and Korbel. Price/mix expected to largely offset costs. Input cost inflation and lower production volumes remain headwinds, partially offset by lower agave costs. Used barrel normalization from 3 strong years built into guidance.

Lawson noted European spirits takeaway down low to mid-single digits, similar to U.S. Brown-Forman gaining share in many European markets but environment remains difficult. Emerging markets, particularly Brazil and Mexico, continue as highlights. Leanne quantified Korbel exit: $94M top line and ~$12M operating income removed from reported P&L from July 1 forward.

Leanne deferred FY26 inventory guidance to June call. Lawson acknowledged EU tariffs could range from 0% to 50% with no visibility on outcome. Both emphasized multiple risk mitigation plans in place.

Leanne explained the emerging market Schedule D movement reflects absence of prior-year UAE inventory refill, not current-year restocking. H2 trends expected to more closely reflect consumer demand.

Noel credited balanced LATAM growth of about 5% (pricing up 2.8%, volume 2.6%), Brazil and Mexico premiumization, and the Total reformulation issue being behind them.

Stan detailed $300M incremental costs split roughly 2/3 raw materials and 1/3 logistics. Oil byproducts and petrochemicals up more than 20% YoY, logistics up nearly 10%.

Wallace reported Mexico and Brazil up high single digits with strong growth across all 3 categories. Pricing still achievable given brand strength and inflationary environment. Middle segment getting squeezed globally.

Wallace noted GST reduction from 18% to 5% in oral care caused trade disruptions. Expected to benefit consumption long-term. India returning to growth in 2026 with premiumization and core relaunches.

Sutula noted Q2 raw material inflation at 420bps vs 140bps year ago. Palm, veg oils, fats, tallow all up. Largely locked in for Q3. Gross margin guidance maintained at roughly flat.

Wallace noted LatAm pricing announced for Q2-Q4, US pricing improving sequentially, Europe getting pricing through premium innovation. AI-enabled RGM improving pricing precision.

Wallace prioritized reinvestment, then buybacks/dividends. Sutula noted record $4.1B operating cash flow, $1.1B net share buybacks, shareholder returns up 20%+ YoY.

Tim highlighted 9% share, a $1.5 billion run-rate business, and said coffee-versus-energy caffeine shifts have been roughly neutral over 3 to 4 years.

Tim confirmed meaningful incremental distribution points expected particularly in convenience channel with expanded space for GHOST and Bloom. C4 retail sales more than doubled since 2023 distribution partnership. Recent portfolio rationalization of Smart subline with Ultimate repositioned for high-stimulation segment. Underlying core yellow can C4 trends healthy.

Anthony explained 6-9 month lag between market price changes and P&L impact from inventory holding and forward hedging. Q1 peak headwind, lesser in Q2, flip in H2. Tim noted category not overpriced, elasticities tracking to expectations, and expects coffee to return to solid top line with volume/mix contributing.

Bob Gamgort drew on 40-year coffee experience. Category deemed healthy by regulators unlike most beverages. No structural shift despite short-term energy drink competition.

Tim confirmed protein as a white space being evaluated through buy/build/partner lens. Nothing to announce. Dilo acquisition described as opportunistic tuck-in into $4B drink mix category.

Sudhanshu noted Q1 OI in coffee was worse than expected due to slower industry pricing. Tempered segment outlook. Tariffs apply to both green coffee and brewers with brewer price increase announced.

Sudhanshu confirmed modest operating margin expansion driven by volume mix growth, positive pricing, productivity at 3-4% range, and overhead discipline. Aluminum hedged via supplier contracts.