Garth Hankinson: Yeah, so on the first one, in terms of the amount of costs that are peso-denominated for our Beer Business is about 20% to 25% of our costs are peso-denominated. As I said, as we entered this year, we’re hedged at about 80%.
Bill Newlands: And relative to price realization, as you know, a lot of what you see in these types of things depends on when pricing increases or pricing actions were taken. We consistently have said 1% to 2% is our pricing algorithm, and over the course of the whole year, we’re still expecting to see 1% to 2% pricing actions. As you also know, Robert, we do that on a SKU-by-SKU, market-by-market basis, and therefore, you have reflections of different time frames across the year as to when that actually shows up. I don’t think that’s anything that we are concerned about nor any kind of an ongoing trend. And as we said, over the course of the year, we’ll expect to get 1% to 2% as we’ve communicated we would.
Operator: Our next question is from the line of Filippo Falorni with Citi. Please proceed with your question.
Filippo Falorni: Hey, good morning, everyone. I had a question on the overall beer industry and your thoughts as we are about to cycle the big market share shift with the controversy around Bud Light in April of last year. Clearly, your business was growing at these rates well above before this controversy, but there are some concerns that you might have benefited from the market share shift, so maybe you can address some of the impact that you see on your business and how you’re thinking about it as we start to cycle those impacts. Thank you.
Bill Newlands: Well, as we’ve said right along, we probably were not the single biggest gainer as it related to the controversy that you know, but I’d also, again, continue to point out something I said earlier, which is, we’ve got extraordinarily strong brand loyalty, and we only play in the high-end. The high-end is where the growth in the category is at the moment, and we’re fortunate that that’s exactly where we play. When you add in the fact that we’ve seen a significant increase in our shelf presence here during this spring reset program, we think we’re in a great position, recognizing we are coming off the single biggest share gain in the history of Constellation Brands Beer Business. Two points in all total beer and 2.6 points in the high-end. It’s an unprecedented gain and I think it reflects the sheer strength of our brands.
Operator: Thank you. The next question is from the line of Gerald Pascarelli with Wedbush Securities. Please proceed with your question.
Gerald Pascarelli: Great. Thanks very much. Just going back to wine, Bill, the drivers you laid out in your prepared remarks were very helpful, but based on current trends, I think the outlook for the year came in above expectations, definitely above our expectations. So, I guess, in the context of two guide downs last year, if you could maybe provide some more commentary just on your level of confidence this early in the fiscal year in achieving flat revenue performance, that would be great. And then does your outlook embed the assumption that the wine category will ultimately start to improve from current levels this year? Thank you.
Bill Newlands: I think, obviously, Garth and I spent a lot of time with our wine colleagues over the last few months looking carefully at what we thought was critically important. The reflection of an improved performance has several variables involved. One, we’re going to work much more closely and enhance our sales capabilities to support our distributor network. I think we’ve gotten much more aligned as to what our intentions and expectations are, both from distributor to us and us to distributor than where we had been as we came out of last year. Second, we’ve refocused our priorities. There are 11 or so critical brands that did not probably have the right amount of prioritization within our overall portfolio, and we have radically addressed that.
Third, we’re going after efficiencies within the business, and we think there are those to be had. As you know, that was a tremendous success last year in our Beer Business, and we’re putting some of the same resources against our Wine & Spirits business that helped generate that very strong result last year. So there’s a number of elements that we are putting in place recognizing this is going to be a bit of a reset year, particularly at the bottom line for the wine business. However, again, we’ve said, we think the strategy is sound, it’s right, it’s going to get us to our medium-term algorithms as we go forward, and at this point, it’s all about execution. And I think Sam Glaetzer and the rest of the team are going to be crystal focused on execution against our strategy.
Operator: Thank you. Our next question is from the line of Carlos Laboy with HSBC. Please proceed with your question.
Carlos Laboy: Yes, good morning, everyone. Can you please expand further on the state of on-premise activity that you saw towards your end, and more important, currently?
Bill Newlands: You bet, Carlos. I think you saw some interesting volatility, depends on the particular time frame, and we saw some of that. We had an issue for a brief period during this year where we had some issues with kegs, which is now fully behind us. We’re continuing to see strong development in the on-premise, and we’re particularly excited about it heading into Cinco, which is obviously the next big time frame for us, and a time frame when we historically have done very well and made significant share gains, both in the retail and in the on-premise environment. So we’re very optimistic that the on-premise is going to be an important part of what our results are this year. Both Modelo, Corona, Extra and Pacifico are all growing share in that channel and we expect that that continued share of growth is going to continue in this fiscal year.
Operator: Thank you. At this time, we’ve reached the end of the question-and-answer session, and I’ll hand the floor back to Bill Newlands for closing remarks.
Bill Newlands: Thank you, Rob, and thank you to all who joined today’s call. As we wrap up, I want to, once again, thank our colleagues across Constellation, as well as our trade partners, for delivering another strong year of performance in fiscal ’24. Your continued focus and discipline has made Constellation a top-performing growth leader among CPG companies for 11 consecutive years. No other company in recent times can say that, and we’re extremely proud of this achievement. As we head into fiscal ’25, we’re confident in our ability to further build on our momentum and to create additional shareholder value by delivering low-double-digit EPS growth, fueled primarily by our Beer Business, which we expect to generate high-single-digit net sales growth and best-in-class operating margins.
Heightened focus on our commercial and operational execution in our Wine & Spirits business, while maintaining our disciplined approach to capital allocation and continuing to serve as good stewards of our environment and the communities where we operate. As we approach the key summer selling season, we invite you to enjoy some of our great-tasting products as part of your festivities, and we look forward to speaking with you again on our next quarterly call. Thank you very much, and have a good day, everybody.
Operator: This will conclude today’s conference. Thank you for your participation. Have a wonderful day.
