Diplomatico Brand Acquisition Fits Broader Brown-Forman Strategy, No Change to Exemplary Allocation

Wide-moat Brown-Forman announced the planned acquisition of Dimplomatico Rum, a super-premium rum brand that should dovetail nicely with the remainder of the firm's spirits portfolio. Diplomatico generates the lion's share of its sales in the French, German, and U.S. markets, suggesting that the Western European market may be a renewed point of focus for the firm—particularly when considered in tandem with the recently announced acquisition of Spanish brand Gin Mare earlier in the quarter. We plan to maintain both our $78 fair value estimate and Exemplary capital allocation rating for the name.