Hello, everybody. Good afternoon. Thank you for joining us. We are delighted to have Constellation Brands here today. I have Bill Newlands, President and CEO of Constellation, here with us. We have a lot to discuss, and I'm sure a lot of you have questions. As a reminder, please use the Pigeonhole link, if you'd like to submit yours. With that, let's get a start on all the questions I'd like to ask, Bill. First, you know, could you talk us through, for those in the room less familiar with Constellation Brands, what are the strategic priorities for you at the moment? Nadine, I'd say we have three things that are sort of critically important for people to know about our business. First of all, we got a great portfolio. You know, our beer business in the most recent 12 weeks was up over 11%. Our wine, high-end wine business was up over 3.5%, and in the last 10 years, we have had, several times, four out of the last six, including last year, where we were the number one CPG growth company. That all really revolves around and comes out of our strategic priorities. We've said we want to be great at building brands. We've said we want to do innovation that's based on consumer insights. We said that we want to be good stewards of capital, and we want to do good work while we do good business. Let me touch on each of those just a little. You know, our beer business has been phenomenal, led by Modelo. Modelo is now the number one, over the last four weeks, the number one dollar business in the beer business. We thought that would take a little longer. We've been very fortunate that that's gone a little quicker than we anticipated, but what a great position to be in on the beer side. Corona Extra continues to be a growth vehicle, up over 3% last year, was the number three share gainer last year, last fiscal year. Pacifico, again, double-digit growth driver, it's doing great, and Cheladas has been just a spectacular piece. Our wine and spirits business, we've done a lot of work to reshape that whole thing, getting out of the lower end of the business, putting a lot more emphasis on the higher end, where you see better growth profile, you see better margin profile. We've also done a lot at a corporate level. When you think about what we've said about capital allocation, you know, we've been very specific, and Garth and I have been very specific about what our expectations were over the last five years. We're gonna invest in the growth of our beer business. We're gonna be investment grade. We're gonna return money to shareholders. You know, we did over $5 billion return to shareholders in exactly the time frame that we said we would do it. We'll do some minor M&A, most likely just bolt-on. We've also done a fair amount of, on our ESG efforts at a corporate level. You know, we made commitments about water. Water is a very important element to us, and we have already met the water commitment that we made just a year ago, well ahead of what the schedule was. Our DE&I work has been very important to us. In fact, we have two pieces of our venture arm. One is focused on businesses that are female-owned or run, another on minority-owned or run. That's been a very strong play in that area, and of course, a lot of change in our governance profile recently with the collapse of the AB shares. I'm sure we'll probably touch on that a bit. The third point that I'd make, and it might be as important as anything I've said up to this point, which is, we're as confident today in the future of this business, being able to continue to say what I just said for the next several years, as we were five years ago when I got in the seat. So many things in your answer that I'd like to touch on, but I'd like to split our discussion for the beer business between the short term and the long term. You alluded to that in your answer here. The short term, you know, Constellation Brands has had a very volatile couple of months for beer, as has the rest of the beer industry more recently. Could you comment in a little bit more detail how your brands are performing today? Sure. Modelo in particular, I pointed out that we're now the number 1 beer by dollar in the U.S. Modelo's just been a phenomenal success. It, it's up double- digit. The most recent time was up over 11%. You know, Corona Extra continues to be a growth vehicle for us. That's up in the 3.5% point range, as I mentioned. Pacifico. You know, Pacifico grew 30% last year. It's still growing in the high 20s. That really looks like a young Modelo, I always say. You know, it feels a lot like the development of Modelo from sort of 15 years ago. We have a lot of excitement there, and the Chelada business is just ridiculous. You know, that started out as 1 24-ounce SKU about 12 years ago, and we'll do more than 20 million cases of Chelada this year, various sizes, exposing ourselves to more consumers, more occasions. You know, that piece of business is all going very well. Then, of course, you talk about some of the new things we're doing. You know, we've just introduced Oro nationally. We did that in a test market last year, and we're very excited about the early days of that, acknowledging that it's early days. Our business is performing very well, and, you know, today's the last day of our quarter, so I obviously have to be mildly careful about what I say. Let's just say we're accelerating out of the quarter, as you probably, for those of you who follow IRI data, you probably have seen that our business is accelerating. The 11% you just gave for Modelo and 3.5% for Corona, what time period was that over? That's 12 weeks. For the latest 12 weeks. The latest 12 weeks. The four weeks is even better than that. All right. Do you know, I think in the last call, you had called out some challenges with California and the very unseasonable weather there, but also California being a very saturated market, and I think you called out Texas and Florida as two other opportunities. What role do you expect California to play in the growth of Modelo or, you know, your entire portfolio? By extension, how much more room for growth does a brand like Modelo have in the US? Sure. California is gonna still be important to us. If you look at it, our share of space and our share of shelf have both gone up in low single digits. This particular quarter, we saw a 9% increase in our draft business in the state of California. It's an area where we still have a lot of upside. Here's what excites me, Nadine, about the Modelo franchise. Back in February, for those of you who are listening, you might have remembered either Garth or I said, "We only have two states in the United States where we have a 10% or greater share for Modelo, even though it's the number one beer in the country by dollars." Today, that's 4. We're up to 4 states. When you think about it's kind of amazing that we have that kind of strength and spread and the opportunities that still exist. You know, our household penetration on Modelo isn't even up to the same level that you have for Corona Extra. There's just so many opportunities to continue to extend that franchise. As you know, we're a big believer in media. We have the loudest share of voice, the biggest share of voice in the industry. We've only really started to advertise to the broader community. Our Hispanic base for Modelo has been very important to us, but we've just started to advertise to the broader community over the last four years. In many ways, we just think we're scratching the surface of where Modelo can go, even though it's as good as it is. Can you dive into that share of voice? I think it's something people will often ask, how do you measure that, especially when there are some brands out there that, by volume standpoints, might be bigger. Help us. Yeah. -understand that? Yeah, you can get any ad agency that's worth their salt, that you have, can tell you that answer. What's the measured media on how much spend occurs by any particular brand across virtually any consumer product category? You know, our algorithm has been very clear over time. We're very disciplined about what our pricing structure is, and we reinvest in our brands, and I think it's paid off for us. You know, when you think about the fighting spirit, you know, it's one of the great advertising campaigns of all time. While your fighting spirit might be somewhat different than mine, just for what, whatever we're into, you know, it can apply to you, it can apply to me. The range of people that can understand and be excited about the fighting spirit is pretty tough to do. You know, normally, any ad campaign has a very narrow focus. I think that one, just the reach that that campaign has been, you know, off the charts good. Mm-hmm. Sticking with the short term, you know, last two months, you've had Modelo Oro out. I don't know how many people here have been able to taste that. A couple of questions on that. Who exactly is the incremental consumer you are targeting with that? Well, as you might expect, we introduced that product for a couple of reasons. One is we had done a fair amount of research that said our core Hispanic male consumer was not satisfied with the light beers that were available to them. Obviously, we have a lot of strength of the franchise in the Hispanic community, so we thought that was gonna be an obvious alternative. Generally speaking, men also fit into that arena as well. As you probably know, we tested it in three test markets last year and made sure we had all the variables that we wanted to have ready to go. It's early days. We've only been out in the market six weeks, eight weeks. We've surpassed the 50 percentile in terms of ACV, and we're really excited. I think, you know, it's early days, knock on something here, but the early days, it's looking very positive. You know, notwithstanding the challenges I should say, unprecedented share shifts that we've seen in light beer. That's a lovely way to put that. If I put that to one side, sometimes I will get asked: What is the role of light beer in America today when we consider the declines that that category has had after the, you know, 25 years of share growth that it had from 1980 onwards? You're clearly stepping into this light beer category. Right. What gave you conviction that there was still room to play in this category, and that it could still be an important part of American consumers' purchasing decisions for beer? I think you can look at it in a couple of ways. I think one of those is, while everything you've just said is true, it's still a huge category. It is, it is a massive category, and therefore, there is plenty of share and plenty of trade-up opportunity for brands like ours that are part of a premiumization trend. It's still a big pool, even though the pool is less than what it once was. I think that's one. Two, if you look at consumer behavior, generally, betterment is an area that's critically important today. That's not unique to the alcohol beverage business. It's, you know, it's more of a truthism, if you will, that betterment is important. A lot of consumers will continue to look for things that are in that zip code. You know, we just introduced Corona Non-Alcoholic. Mm. It fits a particular point of view or someone that wants to not drink and drive or, you know, you can think of a lot of areas why that's important. It fits into that betterment. Oro does the same thing. It fits into a bit of that betterment environment that people are looking for, admittedly, in a very big pool, even if the pool is a little bit smaller than what it once was. You shared in your answer earlier, the importance of what that core Hispanic male drinker wanted. What about the female drinker? That's obviously been something that has led to beer's overall share loss to spirits. Mm-hmm. Where does this fall in for Oro, but also for your, you know, beer portfolio as a whole? Well, I, again, that's a great question. I think one of the things, if you think historically of how many beer brands were advertised, I'd say it wasn't female conducive. Very politely put. Is that nice way to say that? Yes, thank you. I'd say, you know, that is not the approach that we have-. Yeah ... taken relative to our advertising, whether it be Corona, which is a beach state of mind. Mm. -or whether it be, Modelo with the fighting spirit. We have a very broad-based effort in our appeal. I think that's important so that we're not trying to sort of draw lines of whether, you know, your consumer base is male or female. Mm-hmm. Now back to Oro. You know, a key question I get is: How much is it gonna cannibalize in the gap? Sure. Can you answer that? Sure. We were very pleased in the test markets that the cannibalization was. Well, let's flip the other way, 'cause that's the way I always say it. The incrementality was over 60%. Mm. Early days in the full launch, it appears, if anything, it's a little bit even more incremental than that. Which, you know, most consumer products, the view is if you can get a 30% to 40% incrementality, you're doing pretty well. We're pretty excited that this is reaching a different consumer occasion, even if that consumer was already in our franchise. Mm-hmm. you know, if we were having this conversation two months ago, someone would've said the, that biggest competitor would've been a Michelob ULTRA. Mm-hmm. That landscape has changed over the last two months. Does that affect your belief of trial for Oro or your ability to draw new consumers to the brand? No, I don't think so. By that, I mean, because the overarching sort of characteristics that people were looking for, a betterment, is still there. Mm. Yes, there's been some, you know, unique elements, as you point out, in recent times, but I think Oro still fits in a, in a really good spot. You know, if you've looked at either the core packaging or the secondary packaging, we're calling this the gold standard of light beer. It's a great product in the can, I almost said in the bottle. We're only putting it in cans at the moment. It really is a terrific product, which is part of what we think is critically important. You know, our first port of call is the product has to be superb, and we think, you know, the response to the liquid has been outstanding, both in our initial testing, in our test markets, and so far in the in the launch. Okay. What about supply challenges? Have you been able to meet demand? Is demand outstripping your supply? What's the situation there? As Garth probably mentioned more than once on recent calls, one of the things that we've done as we've expanded our production footprint is we didn't have redundancy. Mm. It was a, frankly, it was a bit of a problem because it didn't give us the kind of flexibility that we would have liked to have seen. As we've built out our production footprint, part of what we've done is to create some redundancy in the system, so that in the event that Oro does better than we expected, we can address that need as it presents itself. We're in a much better position today, to meet demand or if the demand shifts, to be able to shift with it, rather than having sort of a set plan for the year, and good luck if anything changes. talking on supply and ability to meet demand, if we expand that question to Constellation as a whole Mm-hmm ... for beer, you know, we've just had Memorial Day. We're heading into the peak summer months. How is that shaping up for you? Very good. We had a great Cinco. You know, one of the beauties of having our brands be critically important during Cinco is it gets you on the floor, it gets you in front of the consumer. What tends to happen is, you don't lose that space. You end up flowing your way into Memorial Day, and it certainly looks like Memorial Day was very positive. We're still getting the final roll-up of that, but it certainly looked like, that was very good for us. Finally, the weather was lovely! Mm-hmm. I don't know where you're all from, but the weather was lovely in most of the country. You know, the correlation between beer consumption and weather is so ridiculously tight, it's beyond belief. You've mentioned shelf space. I know we were discussing this earlier. You know, we have the smaller shelf resets in the fall, the big shelf resets in the spring. Usually, we don't have as many share shifts as we've had over the last two months. Right ... to talk about. Could you share your thoughts on how you expect shelf space to change, if at all? How does that impact Constellation? As the biggest growth driver in the beer category, we continue to need and expect greater shelf position than what we've had. I think we, as you point out now 2 times, we're in a strange environment right at the moment, where there's a quite a bit of shift as to what consumers are doing and brands and so forth. I think that's gonna really open up an interesting window in the back half of this year when shelf sets are done, because, you know, arguably, our brands continually deserve a lot more shelf position because of the velocities that they have. You know, our portfolio is extremely efficient. It's not very wide, but it's extraordinarily efficient, and therefore, we need more shelf space. I think because... You know, retailers today, particularly bigger chain retailers, are very sophisticated in terms of what moves, what data is available, and so forth. As you get to that time frame, I think you could see a much greater shift in what happens at the shelf than what you would normally see, you know, in the back half of the year. All right. Well, that's definitely one to look out for as we go towards that fall. To wrap up our discussion here on the short term of beer, pricing, you know, the big topic for the last year, given input costs. I know you've previously commented on your pricing algorithm, your normal 1% to 2% modest pricing, and Constellation has consistently been a little bit more cautious. Mm-hmm. than some of the other players in the market. Could you walk us through why that is and how that has informed your decision to take modest pricing this year? Sure. Right. As you know, the last couple of years, we've been a bit ahead of our 1 to 2. Mm-hmm. Inflationary pressures have been sort of off the charts versus sort of any kind of normal time frame. We have been a little ahead of that. However, our philosophy has been 1%-2%. We do not do any peanut butter pricing. In other words, we don't spread it everywhere the same amount. Mm. We look at it SKU by SKU, market by market, channel by channel, and look for where there may be opportunities to adjust our pricing. That has worked tremendously well. Take some price, invest back against the business, talk to your consumer, see the growth profile that comes out of that. That has been something that's worked very well for us. We also have a philosophy that's really quite simple. It costs you a lot more money if you've lost your consumer to get them back than never having lost them in the first place. We probably are a bit more judicious. Does that mean we couldn't do something just a bit more in any particular period and have everybody say, "Oh, nice job, you had a great quarter in pricing?" Sure. We, you know, we have a very clear-cut algorithm of what pricing does and doesn't do for our business and what the elasticity impacts of those things are, and we are very focused on doing what we think is right for the longer run, not for just the next 10 minutes. I think that transitions quite nicely to, you know, the concept of what are we seeing for price elasticities? Mm-hmm. A very common question, I think everybody at this conference, from a consumer perspective, is trying to understand the health of the consumer. Yeah, sure. Where are they from a spending standpoint, wallets being squeezed. What are you seeing? Obviously, your portfolio is SKU super premium. Are you seeing any meaningful down trading, changes in consumer behavior in terms of pack sizes, anything that can give us an insight? Yeah, we're fortunate that we have a very loyal customer base, which always helps in these types of situations. We have not seen a lot of trading down. What we have seen is some variability in terms of what the consumer buys when they come in. They may buy smaller size, but more often, which often will correlate to: How much money do I have in my pocket to spend on this? You know, fortunately, many of our consumers view beer as a staple. You know, it's part of what they expect to do. Even in an inflationary environment, it's a bit of an affordable luxury. Alcohol has the benefit of that. you know, we tend to be a bit resistant in a recessionary or an inflationary environment compared to some other categories. It's certainly something we watch very closely. That's part of our overall algorithm that we run to see where are the elasticities against our business in case we need to make any adjustments along the way. Hmm. I think you've hit the nail on the head. I always say alcohol is a hybrid product. Yeah. It's a standard part of many of our shopping every week, but we have very strong emotional attachments to our brands, and it feels like an indulgence from that perspective. It is. I think a big piece of it, Nadine, is, do people feel like they're getting the value that they want? You know, I'll use another example. You know, we've been very carefully thinking about how you have pack sizes that hit various price points. You know, some of the, I'd say, other non-alcoholic beverage companies, I won't call anybody out in particular, have proven to be very good at that. Mm. You know, if you come in and you wanna spend $4 for soda, I've got an option for you. Might be a little less of it. There might be 2 bottles, not 3, or 4, not 6, you know, there's something that you can get at every price point. I think we've taken on to say that's a great opportunity to make sure that if the consumer comes in and has a certain amount of dollars that they can allocate to us, that we would have something available to them. Mm-hmm. Let's shift to the long term. Mm-hmm. I'm gonna refer to my notes here, because I don't want to get the numbers wrong. No. Modelo has, really, you know, continued to defy gravity, especially here. 9.6% shipment growth in 2022, according to Beer Marketer's Insights. Over 20 consecutive years of growing share in U.S. beer. How would you define the factors behind the brand's long-term growth? You know, it's one thing to have tailwinds in sort of, in the sense of consumer demographics, it's another to continue that over such a long period of time. Well, we've touched on two or three. Yeah of them, one of which is that consumer demographic. You know, the Hispanic population is growing at roughly 3% a year. That's over half of our consumer demographic, so you do have a tailwind there. I think the liquid, what's in the bottle and the can, is phenomenal. The fighting spirit has gone on for a long time, and we've been able to evolve it to different situations and different environments. I think that's all been a positive. I think it's part of the premiumization trend that you continue to see in lots of categories. We're fortunate that you have a big pool under us that's interested in trading up, and Modelo has been a recipient of that along the way. The thing that excites me is the little point we made very briefly earlier, which is-... As big as it is, and as growing as it has been, the opportunity remains immense, given it's only got a 10% share or more in four states in the country, which I must say, blows me away every time I think about it, because it just shows that how much opportunity still exists for that brand, even though it's done all the things that you just said. I think that premiumization point is very powerful. I often get asked the question: Why is it that people in the beer industry call light beer premium light? Yeah. I thought these brands were mainstream. The answer is, in 1980, they were premium. Sure. that shows the extent to which premiumization is such a powerful driver of our consumption patterns in alcohol. Yeah. To your point, Modelo fits very nicely in that. I think it's also, you know, we often talk about megatrends. We love to look at what trends are going on elsewhere in sort of consumer businesses, because it often gives you a perspective on what you can expect to see on your own. And there are certain things that are sort of megatrendy. You know, people want more flavor, people want betterment, people want convenience. You know, you see that's not unique to us. Mm-hmm. Part of those things are how do you apply that learning into what we do? I think it's an important piece of where we've had some success. You've done numerous line extensions, Corona, Modelo, to various degrees of success. I think you were reflecting on Premier earlier today as well. Can you walk us through what is the process you go through when deciding what to line extend and when? How do you balance out trading off your brand recognition and brand equity with potential cannibalization or diluting the mother brand? I think you start with a couple of things. One is, anything you do needs to be part or consistent with the brand essence. Mm-hmm. I'll use a silly example. We never put an IPA in Modelo. It just doesn't fit. You know, it's not part of the brand essence, nor would you expect to see that. The consumers likely to look at that and say, "What is that about? I don't follow that." Whatever you do, I think needs to be that. Second, we do a lot of consumer testing. You know, what need does it fill, for whom? So that we're anti-throwing it against the wall to see what sticks. You know, we will only do something if we think it fills a niche, it opens up some white spaces that we have. It fills a different consumer, either a consumer or a consumer need, than what we've done up to that point. Again, it goes back to it's got to fit within the essence of what the brand's all about. All of those things go into how we think about what we might innovate against. I could use Chelada. You know, Chelada is a traditional Mexican liquid that we felt fit perfectly with Modelo. That was before my time, but 12 years ago, that was viewed as a natural extension of what Modelo could bring to the table. In fact, it's worked tremendously, and, you know, the rest is history, as the saying goes, on how well the Chelada business has gone. We are doing a test market right now on Aguas Frescas in Nevada, and that's off to a really good start. Again, it's a product in a liquid that is native to Mexico, that we felt would be very appropriate as an extension into the Modelo franchise. All of those things are done with, I'd say, all of those factors in mind. Almost always, once in a while, we don't, almost always we do a test market so that we learn. You know, you mentioned Premier. One of the things that we learned about Premier early on was, I don't know that we did the best job that we could have, defining that it was a light beer. We now on Oro, on both the primary and the secondary packaging, it says, "The gold standard of light beer." There shouldn't be any debate about exactly what someone's getting when they buy a can of Oro. That was a bit of a learning experience, is I don't know that we did as good a job of explaining that when we initially introduced Premier, as we could have, as an example. Makes sense. Spoke a lot about top line shifting to margin. I know in the past you've mentioned a 39%-40% EBIT margin as your medium-term target. Over the past few years, we've had unprecedented input cost pressures, should investors still be taking that 39 to 40- Mm-hmm as a medium-term target when they're thinking about the business over that period? Well, we haven't changed our algorithm of what we expect to do over time at all. What we have said, and Garth said it many times, we had everything you just said. We had double-digit inflation two years ago, a year ago. This year, it's probably gonna be higher single digit. Most of our planning historically has been in the low to mid single digit inflationary environment. We're bringing capacity online. It increases the depreciation schedule versus what we had historically had. While all of that's going on, we still delivered 38% margin last year, and we expect to do the same this year. I think that's pretty good, given the unique scenarios that we've had. Those are still best in class margins, even though they're a little less than our, than our longer range algorithm. If we get back to more normalcy, we would expect to be in our longer-term algorithm. Okay. Can you provide an update with the brewery at Veracruz? Yeah. When can we expect it to come online? How are you anticipating shipping that beer from the new location to the U.S.? Sure. Veracruz is on schedule. We've broken ground, and we're very pleased with the work that's been done at all levels of the government in Mexico, at the federal level, state, and local governments have been very supportive of that operation. We expect that to come out in fiscal 26. We will likely, we're testing some of what I'm about to say, about how best to ship from there. You know, there's the Port of Veracruz that's close by. One of the reasons that was selected, A, it had tremendous water supply that was high quality. It had great labor availability, high-quality labor characteristics, and it had the shipping Port of Veracruz. It might be slightly different. You know, as most of our other operations go by rail, primarily, this may go by ship out of the Port of Veracruz into the sort of eastern seaboard or south seaboard of the United States. That may be somewhat different. We're actually gonna do some of that testing soon to sort of see how that's gonna work and what the logistics are around that. Even though we're still, you know, a couple of years away from actually shipping it, we will do some testing around that. That'll probably be a highly efficient plant. We'll probably have a smaller number of SKUs that we do out of that, because there may be some minor additional freight involved compared to what we have at the other two facilities, just because of the geography of it. Okay. Before we move on to wine and spirits, just one question that we had here, probably on the back of our discussion on the health of the consumer and certain consumers perhaps going for smaller pack sizes. Someone asked: Could you comment on the profitability profile of smaller pack sizes? Interestingly enough, if you think about single serves, which is a very big item in a, in a convenience environment, the convenience environment is our single biggest channel. Mm. Our share in that channel is the biggest share that we have, and those single serves are actually very, very profitable. Obviously, when you have 38%-39% margin structure, everything's pretty damn profitable. Certainly, those single serves, as an example, can be a very profitable item. All right. Shifting to wine and spirits, you've obviously reshaped the wine portfolio quite a bit over the last few years, with a focus on shifting towards more of the high end, in line with the premiumization trend that you just highlighted. Could you comment on what you view as the strategic role of that segment within Constellation Brands today? It's obviously... you're right, it's changed quite a bit. four years ago, 34% of our business was at the high end, or what we talk about as the high end of the wine category. Today, it's 63%. Mm. The thing's been resorted quite a bit versus where we were, primarily, 'cause that's where the growth is, the margin structure is better. You know, there's about 12 reasons why that's a good thing to do. I think the wine business does a number of things. Well, for a while we talked as a company about total beverage alcohol. I think largely we were talking to ourselves, because even though the consumer does that, in some respect, no one in their right mind ever thinks that way. That was a, that was a, an idea that we had for ourselves. That doesn't mean that having the wine business and the spirit business doesn't allow us to participate in more consumer occasions, and that's a piece of what it does, is it allows you to win more of the occasions where an individual is choosing to have an alcohol beverage. It allows us to play in more of those occasions than it would be if we were more narrow in our portfolio. Okay. We have someone here asking. This is Scarlett. Who's asking questions? Sorry. Cut them off. It's anonymous, so. That's all good. All right. On the wine and spirits portfolio, someone is asking: Would you consider divesting it? Here's what I'd say. We challenge ourselves about our business all the time. That's why we've divested a number of our lower-end wine businesses. You know, there's no sacred cows in our business. There might have been at one point in time, there are no longer. I mean, we've even sold the place where the business was started 75 years ago in one of our recent transactions. There's no sacred cows as to how we look at our business. We expect all of our businesses to perform, to win in the marketplace, and to bring shareholder value, and we challenge ourselves across the board on that every day. Looking beyond the premiumization, the positive mix aspect of reshaping that portfolio, how do you view the drivers of growth for that segment? The growth has largely been driven by things that we bought over the last several years. When you think about Kim Crawford, oh, that's one of the earlier ones. Meiomi, The Prisoner, High West, Casa Noble, you know, our spirit business... Mm has been terrific over the last several years, even though it's relatively small. you know, all of those brands play in areas that are up the price ladder and therefore improve. They've also allowed us to expand. Let's use Kim Crawford. We've added Kim Crawford Illuminate, which is a lower-calorie product. It fits into the betterment thing that we were talking about just a few minutes ago. That has been a tremendous success, and then, and that, those couple of SKUs that fit in that betterment area, are two of the strongest selling in that area. Meiomi now has Bright also, same thing, a lower cal, lower alcohol content of Pinot Noir. So we've been able to broaden the shoulders of some of those critical brands. You know, The Prisoner is 4 times what it was when we bought it. You know, I think, you know, that's performed very, very well for us. We're very pleased with the weighting of our portfolio. We still have a bit of a drag at the lower end, because, you know, a third of the volume is still done at lower price points, and that's not an overly healthy. Mm. subsegment of the wine business. Okay. On the spirits business, you know, if I cast my mind back to the last decade of U.S. alcohol, more broadly. Spirits has been gaining share of throat from. Right. A number of factors driving that. Obviously, you have a spirits capability, just as you said it, you know, quite small, but doing well. Would you consider playing within spirits in a more meaningful way, given the favorable exposure that that category has today with consumers? Broadly speaking, I'd say yes. I think we have started to do that to some degree, in a smaller way. We bought High West. High West has had double-digit compounded growth over the last 5 years, as has Casamigos. We started Mi CAMPO from scratch. You know, the two tequilas last year grew 75% in dollars. Some of our venture investments, if you look at the weighting of our venture investments, they're skewed significantly into the spirits side of the arena. One of the early ones, in fact, one of the very first ones we did in the Female Founders program, was Austin Cocktails, which we've now brought in. Again, that fits into a bit of that prepared cocktail, ready-to-serve convenience scenario, much that we've talked about in other things. I think that's part of what Spirits has done particularly well. Mm-hmm. -is they've given that sort of optionality. We've done pre-made cocktails now with both Mi CAMPO and with High West, and this is a nice problem, I guess, we can barely keep it in stock. Because I think those things meet consumer needs and meet some of those overarching consumer needs that we talked about earlier. I think earlier, in one of your previous answers, when you spoke about capital allocation, you said, you know small bolt-ons. Mm-hmm. Would that be, spirits as a, as a white space that you would consider for small bolt-ons? Or is there other areas that you find interesting? No, we would consider spirits for small bolt-ons. Okay. Some of that, of course, has been done through our venture arms. A couple of, you know, Nelson's Green Brier is another example that initially was part of our... Mm. -venture arm, and we've now brought that into the business as a majority stake. All right. I want to shift to overall business strategy. If I cast my mind back to the last sort of eight months, one of the big catalysts that happened was the reclassification agreement. Mm-hmm. Also the improvements in governance that came along with that. Can you comment or explain on what ways, if any, your decision-making processes at Constellation have evolved since that reclassification agreement? I think this was a really important step for our company. First of all, it creates a one vote, one voice rule, which we didn't have prior. I think that was important. The agreement called for a rotation of our lead director. The chair gets voted on every year by the board of directors. That's obviously changed. That's no longer a birthright. Mm. The Sands retired. That was highly beneficial from a cost perspective that is gonna help us financially going forward. Our two longest-serving directors are both retiring this year and won't stand for election. All of those things, I think, create a much stronger governance profile that, frankly, was what many of our shareholders were looking for and wanted to see out of us. I think that, I think that's only gonna get better as time goes forward. We have a very thorough refreshment process that we're undergoing with our board right now, that analyzes the skill sets that we have on our board. Where can we enhance those skill sets to offer better oversight and guidance for the organization? I think that whole bundle of things has been and will continue to be very valuable for the future success of the company. This refreshment program that you just spoke about. Sure. Can you comment on when did this start? How long do you expect it to last? Someone asking here, you know, can you comment on, what are you looking for in terms of members that might be replaced? What are those qualities that you think would be helpful? Well, one of the things, we've hired an outside firm to do a skills assessment of the board. Which frankly, that's not particularly unusual. Most organizations would do just that. We just hadn't done it before. You know, this gives us a chance to say: What are the skill sets? Mm. Let me give you an example. Mm. Versus when I joined the company several years ago, we have a much broader-based board than what we had back then. We now have two individuals who are from Mexico, one of whom was highly involved with the government. Been very, very helpful from us, with us, in terms of our interaction with the government of Mexico. Mm. We added the chief legal officer from Colgate. She brings a lot of governance experience. She brings a lot of understanding of consumer products. They do a lot of business in Mexico. We have the CEO of Fortune Brands Home & Security, which I know is now is called something else, but he also worked for 20 years in the alcohol beverage industry. We've broadened the range of skill sets that we have. We have more active individuals on our board, but that doesn't mean we're still not challenging ourselves about what else can we do. Mm-hmm. as I said, we have hired an outside firm to help us with that assessment, and that's, you know, no big secret. I think it's, again, just a good governance thing to do to make sure you have all the right thinking and the right voices to make sure you're doing everything you can to win. Okay. Then one question here: Can you give us an update on how you're thinking about the cannabis space today? Obviously, quite a lot has happened with Canopy over the last two years. Mm-hmm. increasing states legalize recreationally in the U.S., although not at the federal level. If you could just give us an update on how are you viewing that sector today? Sure. We're trying to view it as little as humanly possible. That was a horrible investment that we made. It was, now, do I think that one of these days, cannabis is not going to be big? Of course, I do think it's gonna be big at some point in time. We are focused very clearly on building a strong beer and a strong wine and a strong spirit business. As you know, as soon as Canopy gets through their process of being able to have exchangeable shares, we will do that, which would keep the upside in that investment, should Canopy prove to be a winner in that space. I hopefully, it's been made crystal clear that there's been no more investment from Constellation in that particular arena. If I could just maybe push slightly. That was clear, I think. That was clear. Oh, good. If I could just push slightly on the question this person asked here, you know, what learnings did you take from that experience, on that decision process that happened to step into that cannabis realm? Sure. What were the learnings from that? Well, you know, not to blame anybody else, but that was done before the current management was in place. What I would say is this, all joking aside on that topic, you know, there was an assumption that legalization would go way faster than it has. You know, the politics of everybody wants to get it done, but they all want the other side to get credit. Well, it's been interesting to watch. We'll be polite. You know, some of those assumptions, I think, probably the optimism with which that was looked at the particular time, was probably through a little bit of rose-colored glasses, I would say. Unfortunately, the reality has been something radically different than that. Yeah. Very difficult to get anything done in the government at the moment. That would be fair. One of the frequent questions I get from investors regarding Constellation is the concentration, both in terms of the geographic exposure to the U.S. and within, you know, the exposure to the beer portfolio of Mexican imports. Sometimes that's a concern an investor might raise. To any investors that are having that concern here today in the room, what would you say to them? I think I'd point out two or three things. One is, if you wanna be overinvested in a particular market, you'd like that to be the biggest single profit pool in the world. That's where we are, one. Two, I look at some of the opportunities that still exist for our portfolio, and, you know, we've touched on some of those today. Everything from ready to serves, to finding, you know, convenience packs, to betterments, to, you know, the opportunities that are right in our wheelhouse, within either right on top of our portfolio or very close to it, remains immense. One of the things that we've done aggressively over the last several years is build an innovation capability to bring outstanding products with outstanding brand recognition around those, to the table. We have a lot of things in the queue that we believe can be very enhancing and interesting in that biggest profit pool in the world. You know, I would argue that all of those things go together to say, we have a lot of upside and a lot of runway, not only with our existing brands, but with some things that are very close in. Mi Campo is a great example, you know? That didn't exist a few years ago. We did that from scratch, and as I said, our tequila portfolio last year was up 75% in dollars. We've proven we can do new things and add them into categories that are growth categories. All right, with the two minutes that we have left, the question I always like to end on is. Uh-oh. Yes? What do you think the single most misunderstood or underappreciated thing is about Constellation today? I think. That's a great question. I think one of the things that I think is really important is one we just touched on, which is, we have a tremendous runway ahead of us. Mm. I think it's very easy to say, "Oh, you had a bad two weeks because it rained cats and dogs in California, and half the coast is falling in the ocean," and miss the big picture, that things are going great. We gained share all the time that the ocean was getting more dirt in it. I think it's important to recognize that we have a lot of runway. Second, as good as we've done, and I think we've done very well, we challenge ourselves each and every day. There's nobody in our business, that's probably exaggerated. There's very few people in our business that are complacent. We wanna win, we expect to win, and we play to win every day. We do it in a good way, I like to think. Fantastic. Well, I think that's a great place to end. Great. Thank you for such a wonderful discussion. Pleasure. Thank you, everybody.