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Welcome to the Constellation Brands Fiscal Year 2027 first quarter earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. At this time, I turn the conference over to Blair Veenema, Vice President of Investor Relations. Thank you. You may now begin, Blair.

Thank you, Rob. Good morning, all, and welcome to Constellation Brands Q1 Fiscal 2027 conference call. I'm joined this morning by Nick Fink, our CEO, and Garth Hankinson, our CFO. Before we proceed, we trust you had the opportunity to review the news release and CEO CFO commentary made available in the investor section of our company’s website, www.cbrands.com. On that note, as a reminder, reconciliations between the most directly comparable GAAP measure and any non-GAAP financial measures discussed on this call are included in the news release and website.

We also encourage you to refer to the news release and Constellation’s SEC filings for risk factors that may impact forward-looking statements made on this call. Before turning it over to Nick to kick things off, please keep in mind that, as usual, answers provided today will be referencing comparable results unless otherwise specified. Lastly, in line with prior quarters, I would ask that you limit yourselves to one question per person, which will help us to end our call on time. Thanks in advance. Now over to you, Nick.

Thanks, Blair. Good morning, everyone, and thank you for joining us. Before we get into the Q&A, I'd like to share a few observations from my first two and a half months as CEO of Constellation Brands. Having spent significant time in the market over the last several months, I am increasingly confident in the enduring strength of our brands and the role they continue to play in consumers' lives, even in periods when discretionary spending is more challenged.

Over time, we have repeatedly shown an ability to create demand and scale brands through a combination of consumer insights, commercial execution and disciplined investment. That capability is reflected in the strength of our portfolio today. Whether it's Modelo, Corona, Pacifico, Kim Crawford, or Mi CAMPO, these are brands with strong identities, deep consumer connections, and enduring relevance. I also believe some of our greatest opportunities remain directly in front of us.

As brands become larger and more established, it is important to find new ways to remain relevant in consumers' lives. That requires a deeper understanding of behavior, motivations, and the moments that matter most to consumers. That's an area where I believe we have significant strengths and meaningful opportunity. Leveraging strong commercial capabilities, rich consumer insights, and increasingly powerful data and technology tools that can help us move faster and make effective decisions. My focus is on ensuring that we continue to build on those advantages. Lastly, I believe the most successful companies are willing to challenge their own assumptions about where future incremental growth will come from while still executing with excellence in the core.

We have a strong portfolio and attractive positions today we also need to maintain a forward-looking perspective about where consumer demand is heading and how we can leverage our capabilities to continue to create value through disciplined investment and execution. Across all three areas, one common theme is the importance of developing world-class insights. The better we understand consumers and emerging trends, the better positioned we'll be to allocate resources, execute effectively, and create sustainable growth. While the quarter reflected a continuation of the dynamic consumer backdrop that we have been operating of as late, my confidence in the long-term opportunity for this business remains strong. We have exceptional brands, outstanding people, and a set of capabilities that position us well for the future. Now back over to you, operator, for any questions.

Thank you. We'll now be conducting a question and answer session. In the interest of time, we ask you please limit yourself to one question. If you'd like to ask a question, you may press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question is from the line of Nadine Sarwat with Bernstein. Please proceed with your question.

Morning, guys. Thank you for taking my question. Nick, your prepared remarks touched a lot on your refined strategy for Constellation. Perhaps a two-part question from me on strategy. First, you intend to deploy a different playbook to sustain growth at scale versus scaling emerging brands. How could that different playbook look like in practice? Second, you called out exploring white spaces where you have a right to win. Is this organically, through acquisitions? What white spaces are you seeing as most attractive today? Thank you.

Thank you for the question. Be happy to give some perspective, Nadine. I think there's little doubt about our capability to scale brands. We've got this incredible track record, and as I've spent time much deeper into it with the teams, as well as just getting out into the market with our distributors talking about it, there is an execution playbook. It's disciplined, and, you know, frankly, it's the best I've seen. It's thoughtful, it's considered, and there is a way in which we build distribution, we build awareness, we do it in a sustainable fashion that we know is going to hold over the very long run. You've seen us do that over many decades, brands like Corona now continuing the job of Modelo and some great rising stars in the portfolio. We will continue to do that.

A little doubt, and I'd say that's a clause ability there. You then go to some of the places where we've scaled a brand, and I look at a brand like Corona, where the brand metrics are phenomenal. Most loved beer brand. We've got great distribution, we've got great awareness. Really, brand health sort of green across the board. The way to continue to maintain and grow a brand like that will be different to the playbook in which we're driving awareness and driving distribution, and there's still opportunities there. It becomes much more about saliency and relevance, connecting with the consumer where they are, understanding RGM and price pack architecture, connecting into the right cultural moments, being visible in the places where they are in the way that they want to interact, connecting into the right types of occasions.

It is a different playbook, but it is one that many great consumer products companies do at scale and do very well. I think it's a place where we'll continue to sharpen the capability and get after that. If we can do both of those things, there is a ton of value creation to be had there. There's no question in my mind. Then you go to the third place you referenced, which is white spaces, and we have a consumer that's evolving quickly. We have a customer that's evolving quickly. We have shelves that are evolving and look very different to the way they looked five years ago, 10 years ago. There is a lot happening.

Being open-minded to what is happening in those spaces, what are fads and what are trends, being able to know the difference between those things, knowing what's sustainable, what's not sustainable, seeing where momentum exists, and then in a thoughtful and disciplined way, being able to get after that. An example for already in our portfolio, you take Corona non-alcohol. Here's a brand that we have strong double-digit growth behind. We're now number four in the category. That's a space we weren't playing in. Should we be putting more fuel on that fire because the fire is burning? That's a great example of white space didn't really exist for this company. Now we've got a toe in the water.

Do we want to go double down on something that we've already got some real momentum behind, and be willing to invest, again, in a disciplined way? I'm not talking about going out and making huge bets and hoping it comes, but we, and I think have done a much better job over the last couple of years of developing test and learn capabilities, ways to go try one market versus a different market, see what works, see where we're going to accelerate, see where we want to be agile and change. That would be an example of a place where we might go do something like that.

Our next question is in the line of Filippo Falorni with Citi. Please just give us your question.

Hi, good morning, everyone. You called out in the prepared remarks as being pretty volatile start of the year, strong March, then softer April and May. I was hoping you can give us a little more color what you're seeing in June, especially given the gas prices have moderated a bit more recently. Are you seeing an improvement in consumption trends as gas prices come down? Also, obviously, in June, we've had three weeks of World Cup, maybe you can give us some perspective there on the consumption on your brand around World Cup and whether we should see a further potential improvement in the on-premise business where a lot of those occasions potentially reside. Thank you so much.

Sure. I'll be happy to jump in with some perspective, and Garth can perhaps share some color as well. There's no question it's a volatile quarter. You saw, and you can see it in all the Circana and other data, a very strong March out of the gates and I would say in a more normalized consumer environment, a lot of great interaction with both us and the category, but particularly, our brands resonating very strongly. A massive spike in gas prices, and we did see the consumer respond by slowing down. I think that to be unexpected, and that's not just us. As we've talked to even other companies in the consumer field, traffic's down, a lot of choices being made.

As we ended the quarter, got into the early part of this quarter, some of those headwinds have moderated, we've started to see a modest re-acceleration, I wouldn't say back to where we were in March, but a healthy return to some growth rates. The Circana data, just even for the last week, was very encouraging. Not just category, but really around our brands, which are somewhat more premium positioned and very attractive to the consumer. We saw some very strong numbers as consumers get to make the choices that they want to make and would like to make. Encouraging in a somewhat more normalized environment that the portfolio is more than holding its own and performing really well.

Certainly, it's been great to see both World Cup and some of the energy that we saw in one of our key markets like New York around the Knicks, which was, to me, I think, yes, some lift from that. Even just more importantly, consumers engaging in that beer occasion, coming together in the on-premise, in the off-premise. The pictures from New York, I thought, were remarkable. Just to see young people being together, watching the game projected on the sides of buildings, and those are beer occasions, right? It's just a great reminder to that consumer of the role that this category can play in their lives. I think having these great events rolling through the summer could be quite meaningful in that regard. Garth, I don't see anything to add?

I think you hit it all, Nick.

All right. Thank you.

The next question is in the line of Lauren Lieberman with Barclays. Please proceed with your question.

Great. Thanks so much. Good morning. Just getting to the quarter itself, I was struck by the fixed cost leverage that looks like you enjoyed this quarter with the gross margins, the margins for beer at 39%. I just wanted to talk a little bit about the drivers of that. The 1.8% shipment growth is certainly better than what was anticipated, but it's a high bar for the margin with volumes still sub 2%. Just kind of curious as we think about that going forward, you're absorbing incremental depreciation, but again, the strength of the margin in the quarter was particularly strong. I just want to understand the building blocks better so we can think about the path forward. Thanks.

Hey, Lauren, thanks for the question. Really, you hit on it. We had about 30 basis points of benefits this quarter versus last year, really due to fixed overhead absorption, largely due to fixed overhead absorption, as you say, related to the higher shipment. In addition to that, we also continue to make great progress on our cost savings agenda, that was certainly a benefit. We also had 20 basis points of favorability due to pricing net of mix.

That was offset by about 30 basis points of currency headwinds and other small things that will flow through cost of goods. That really is what drove the favorability on gross profit margins. On operating margins, we declined 10 basis points. We had the 20 basis points of favorability on gross margin expansion, we had 20 basis points headwinds on increased SG&A.

Similar to last year, as we've added employees to support Veracruz going live later this year, we've brought those folks online, until Veracruz commissions, they will sit in SG&A rather than COGS. Then we had 10 basis points of headwinds related to incremental marketing, mostly to support the World Cup that is happening now, as we indicated at our April earnings call. As we look forward into Q2 and Q3, we would still expect gross margins to be strong, we will see some incremental headwinds as it relates to operating margins.

Keeping in mind, we've increased our marketing spend expectations for the full year to drive incremental marketing investment, particularly around the World Cup and college football and the NFL. You'll see in Q2 and in Q3 a spike in marketing as a percent of net sales. As we said in our prepared remarks, that'll be over the 10% in those two quarters. In Q2 and Q3, we will see SG&A increases. They're a bit more material in Q1. A big part of that is lapping last year's lower compensation benefits related to incentive income or incentive compensation.

Our next question is in the line of Dara Mohsenian with Morgan Stanley. Please proceed with your question.

Hey, good morning. You mentioned in the prepared remarks you're looking to extend participation across more occasions. Just high-level, can you give us a bit more detail there on how you execute that? Is it more marketing on base brands and refining that? Is it more through innovation? Is it more through moving into new areas or the white spaces through M&A? Just wanted to get a bit more detail on how specifically you do that. Obviously moving into white spaces potentially is a piece of that. So how significant a focus do you expect the white space expansion to be just relative to driving base business brand trends? Thanks.

Yeah, I'll start with that. Look, I think the headline is there would be no greater way we can create value than nailing this with our core brands and core portfolio, period. So, when I talk about and understanding consumer occasions, it's really sort of taking the blinders off of not just thinking about our brands as they compete versus another beer or to be even more narrow, Mexican beer.

Actually, how do you look more broadly at what is the choice that your consumer is making in that moment. The team does some fantastic work. We have a whole wheel of identified different consumer occasions. Then we make focused choices, like here's where we want to compete, and here's the moments where maybe we're happy if you take our product, but we're not spending to go win that moment in the same degree.

Understanding against other, not just other beers for the beer brands, but could apply to the wine spirits as well, but not just within your category, but what choices as consumers increasingly cross over, what choices are they making? How do you remain salient and do you win even with the core portfolio in that moment? If you can do that, you can actually Even within the beer portfolio, start to create some differentiation amongst our brands. They have different brand personas. They have a lot of similarities, but appeal to slightly different consumer groups, different age cohorts, maybe different moments. You see some of the work that we're doing behind Pacifico, which is more lifestyle oriented, more around adventure. Doesn't necessarily play in some of the same moments.

If we're able to do that, you expand the aperture of what these brands can do, how they can play and frankly, I think you can offer a larger addressable moment, and compete in a greater way as a portfolio, as opposed to duplicating some of the activities. That's first and foremost. To the extent that within that as well, we identify other opportunities where the consumer is looking for something, and we think that is a space in which we can participate in a meaningful but disciplined way. I think we should consider that as well, and I gave the example earlier of Corona Non-Alcoholic. That business is growing strong double digits. Our consumers are telling us they love the product. We haven't put a ton behind it yet.

Should we start to participate at that, not just think of it as a product, but what is the occasion in which they're consuming that product? Is it an occasion where they don't want alcohol at all? Is it an occasion where they're actually combining use of it with some of our alcoholic products and extending the occasion? I think having that very strong consumer insight then definitely leads to an ability to execute in a much more targeted way and grow both the addressable moment as well as our share of that moment.

Next question is from the line of Chris Carey with Wells Fargo. Please share with your question.

Hi, good morning, everyone. I wanted to ask about, I guess, the complexity of, or the complexion rather, of the portfolio. Modelo Especial remains sluggish. Corona Extra has obviously been a bit of a challenge. You're seeing tremendous growth in other parts of the portfolio that are lifting up the portfolio just a bit. I think the sustainability of some of those faster growth offerings feels quite durable, but there remains question marks around most importantly, Corona Extra, and then Modelo Especial just getting back to a bit of growth. Can you just give us a bit more context on how you see these two brands specifically and a bit more detail on what you're doing to re-accelerate and maybe most specifically with Corona Extra, given the duration of the headwinds that the brand has seen? Thanks so much.

Yeah, sure. Happy to do so. I'll start off by vehemently agreeing with you on the sustainability of the things in the portfolio that are growing as strongly as they're growing. I say that because of the very disciplined way in which the team's going about achieving that growth, driving awareness, driving distribution, but doing those two things in concert with each other and making sure that we don't get ahead of ourselves so that we're building it in a very disciplined way. I've been incredibly impressed as I've spent time with our team and our distributors, how they do that. I've seen it done differently with less discipline and less sustainability. I think the way that we're doing it is best in class. Really agree with you on that.

You're right to point out some of the challenges, and the headwinds on Especial and Extra, and I think that's fair. That goes to my earlier point of, once things are scaled, the toolkit for continuing to both maintain and then grow those brands becomes different. In the case of Modelo Especial, there is still room to grow. We haven't finished the job scaling that brand. There is still a significant gap to distribution. Unaided awareness is remarkably low given that this is the number one value brand by value in the marketplace, which is actually quite an incredible opportunity as we continue to drive awareness, and it becomes more and more of a general population brand. The job is yet to be finished on Modelo Especial.

We will finish the job, but we need to develop the very sharp toolkit of what do you do as that becomes fully scaled, and how do you continue to drive saliency and relevance, which gets us to Corona and developing that playbook on Extra. That will be a playbook that will then deploy for anything that is scaled, and that becomes a bit of a different playbook. You're not driving awareness and distribution anymore. You're driving saliency, relevance, connecting with consumers in the moment, and really being both available to them, which is top of mind awareness and distribution. Activating in that moment, being the thing that they choose. That is a somewhat different skill. One that there are plenty of companies out there that have developed really well, and that we need to demonstrate that we can bring.

I will tell you, over the course of my career, I've worked on some tired brands. I've rebuilt some tired brands and rejuvenated tired brands. Our brands are not tired. They have some of the most, and I'm just saying this sincerely, remarkable brand health of any brands I've ever seen. You start with Corona Extra To start with most loved beer. Most loved beer, right?

Still number one in New York City, one of the cultural icons of this country, still number one in Miami. You're starting from this really powerful foundation. We need to dial up the everyday activation switch, I have absolute confidence that with the right focus there, that is something that we can do that will not just help Corona Extra, will allow us to continue to deploy those capabilities against anything else we scale over time.

The next question is in the line of Rob Ottenstein with Evercore ISI. Please proceed with your question.

Great. Thank you very much. In a way, this is kind of a follow-on to the last question. As you said, I think we'd all agree, you have some amazing brands. The performance has been tough. Obviously, there's a lot of macro factors that are out of your control. Let's just focus on things that are in your control, I do know it's early days for you. For over a year, you didn't have a head of sales, right? Bill Newlands, very well regarded, left, I think, in March of 2025. Now you've hired Jack Edwards from Diageo Beer, who has a fantastic reputation, I think started about a month or two ago. You got the great brands. You're in a great category in many ways.

Have you had a chance to sit down with Jack yet and talk about what is under your control in terms of driving execution with distributors, with retailers, to make sure that you're best leveraging the remarkable brands that you actually do have? Again, I know it's early days on this, are there a couple of things that maybe you can point out that are areas in which you're going to be working with Jack and look like reasonable wins and objectives over the next six months that can improve the trajectory in terms of what you can control? Thank you.

I'm happy to share a few thoughts. Don't want to be overly telegraphic about some of the competitive ideas that we have, but rest assured that they're there. Firstly, I'll start by acknowledging your point. I think, yes, indeed, macro headwinds, we talked about both, generally in the economy and some of the things we saw both in the quarter. By the way, our consumer, even more adversely impacted by that.

While that gap has improved, there is still a gap that we're seeing within the Hispanic zip codes relative to gen pop. We're cycling through those headwinds. That said, you're right. We don't sit and make excuses. We think about what it is that we have that's under our control that we can go execute. I've talked about there are things like, still distribution gaps on Modelo. Still awareness gaps.

We can continue to drive those. That is within our control. There is more I think we can do on a brand like Corona Extra. We just talked about that, right? That might be getting more tactical in the field, in the on-premise, in the places where our consumers live and breathe. I think that is with our control. As Jack is coming on board and we're spending more time together, it's really some of that in-field execution, which has been really good, but we can always push ourselves to improve more. Thinking about our pack price architecture, thinking about our revenue management. How do we meet the consumer where the consumer is in an increasingly K-shaped economy, right?

We're seeing some really interesting activity across our pack sizes, where we have by far the largest share of both the small pack size and the larger sharing pack size. I think that's a really interesting place to play, but you got to make it really available to your consumer and make sure they can find it and discover it. Does that start to get our portfolio to a place where, notwithstanding some of the headwinds, it is more accessible? Those are some of the ideas that we're working on. Again, I think it is early days. Jack has been out on the road nonstop since he started, I think as he absorbs and digests everything he's seeing, we'll continue to generate new ideas. We're very excited to have him on board. He's a real talent.

Thank you. The next question is in the line of Bonnie Herzog with Goldman Sachs. Please proceed with your question.

All right. Thank you. Good morning, everyone. I had a question on your FY 2027 guidance. You maintain your beer net sales guidance despite strong shipments in the quarter, comparisons do become pretty favorable in FQ2 and Q3. I guess I wanted to understand if the decision to maintain guidance reflects, I don't know, an abundance of caution regarding the dynamic consumer environment, and I guess, maybe touch on that, especially with the Hispanic consumer. Are there specific distribution or maybe shipment headwinds in the next few quarters that we should be thinking about? Thank you.

Sure, Bonnie. Thanks for the question. I'll start, Nick, you can weigh in, too. I mean, look, we're off to a solid start to the year. There's no denying that. As we look to the balance of the year, and as we laid out in April, this continues to be a rather dynamic operating environment, right? With, in some instances, low visibility. Nick referenced earlier around how we started the quarter and then how we ended the quarter and, again, how things kind of moved around.

The impact on gas prices in Q1, right? If you look at the end of our fiscal year, at the peak of Q1, gas prices were up well over 50% across the U.S. on average. That was more than $1.60 a gallon, if you look at it on that rate. In a market like California, gas prices at its peak were up 40%, Illinois, 70%, New York, Florida, Texas, up over 50%. Inflation was up largely due to a few prices, there were other things that kept inflation a bit higher than anyone would like.

That's a little bit long-winded to say there are a lot of things that are going around in the market that just give us uncertainty. While we're off to a good start, we don't think that after one good quarter that we want to change what the outlook is for the full year, just given some of the limited visibility we have on those macroeconomic metrics. Anything you want to add?

No, completely agree.

Our next question is from the line of Peter Grom with UBS. Please proceed with your question.

Thank you, operator, and good morning, everyone. I wanted to follow up on your response to Filippo's question earlier. Nick, I think you mentioned thus far in June, you've kind of seen a return to healthy growth rates, but not at March levels. Look, this may be a hard question to answer, but when you think about the improvement, is there a way to parse out how much of that's related to World Cup or maybe some of these unique events that are ending here in a few weeks versus maybe signs that the consumer pressure is abating? I guess the premise of the question is really just trying to understand whether you think this improvement we've seen kind of quarter to date is durable as we look ahead. Thanks so much.

Yeah, look, it's a great question, and it's one that we're asking ourselves, and we're gonna continue to do the work and the analysis to really get our heads around as we see how the rest of the year develops and then how we can continue to drive the momentum where the momentum's sustainable. I will tell you from the early reads, and yet, by the early, right, we're just like still a few weeks. I know we're a few weeks in, but we're just a few weeks in. It does seem to us to be pretty broad-based, right?

We can get to some account data or some on-premise data where you do see big spikes around a game or in that particular geography, but it's not like you then look to the rest of the country, and you're seeing a vastly different result as an average. You can see a big spike here, but it's not moving the needle for everything. I'd say it's fairly broad-based. Texas and California continue to be Sorry.

Texas and Florida, I should say, continue to be challenged. California has been pretty good. That hasn't necessarily changed as a result of the World Cup. We think that is more of a macroeconomically led headwind for our consumer, in particular, in those geographies. We've seen that sort of continue notwithstanding the improved performance. It does look like the return of health to us might be more to do with some of the headwinds abating than any kind of one-time tailwinds.

As I said earlier, it still doesn't hurt that you certainly have the World Cup event, that you have the mix of major market, and that people are just getting together and enjoying that occasion, which we think is also just a key future unlock of people remembering how important it is to come together to socialize and the role that our products can play in that.

Our next question is from the line of Peter Galbo with Bank of America. Please proceed with your question.

Hey, good morning, guys. Maybe just to put a finer point on those last few questions around Q2. Garth, I was hoping just for maybe a little bit more clarity on the shipment side for Q2. There's a lot of, I think, moving pieces in the quarter. Your kind of over-shipped, I think, in Q1 ahead of where you normally seasonally would be. You have the lap versus last year where I think there was some destocking. Maybe you can just help us think through the relationship for Q2 between absolute shipments and depletions, because I know that the growth rates between the two can be a bit wonky. Thanks very much.

Yeah, just to start on that, let me just say that on a full year basis, we would expect, as we always do, that shipments and depletions would align with one another, very closely align with one another. In Q1, which is typical for us in every fiscal year, we ship ahead of depletions to support the key summer selling season. That's fairly typical. We move through the year, we will see some of that become more in line with one another, again, supporting the fact that when we get to the end of the fiscal year, shipments and depletions will essentially equal one another.

Thank you. Our final question is from the line of Michael Lavery with Piper Sandler. Please proceed with your question.

Thank you. Good morning. Just as you think about the consumer and occasions, one of the things we've seen, just as kind of a stepped-up level of innovation focus is higher ABV, mostly in RTDs, but certainly in the consumer's mind, some of the lines get blurry, and it's in the same consideration set very often. It, in most situations, wouldn't seem like it has a different consumption effect on the consumer. It's more, it looks like a volume headwind, if they get more bang for the buck with maybe only a modest mix lift.

It would seem at a high level to be category value dilutive. How do you think about just competing against that, participating in it? How do you weigh some of maybe the trade-offs and maybe risks or opportunities in terms of just how that innovation thread evolves?

It's an interesting question. Look, we talk a lot about K-shaped economy, and you also see sort of K-shaped consumer behavior, right? You're seeing that behavior, which I agree with you, I think is a value-driven behavior. You're seeing other parts of the K where it's sort of a, I want a great premium product, like think about what's happening in Corona Non-Alc where we've got very strong double-digit growth, no alcohol, right? It's about I'm willing to pay more to have a very premium experience with a great tasting liquid. We continue to see those both ends of that K. I think for us, we just need to be thoughtful about where we want to play and participate.

I'd say we have a toe in the water on the higher ABV stuff, with both small RTD brand as well as some of the stuff that we're doing with our Chelada business, which now would be the third largest RTD business if we measured it that way. A good example of this company's ability to innovate into something like RTDs but do it in a way that is thoughtful and sustainable and true to our brands. Our Spritzer product plays there. We need to be thoughtful about what is that impact on the whole portfolio. Are we meeting the consumer where they are with what they drink and what they would like? Then to the earlier question about controlling the controllables, then how do we go execute that in field?

You've got to make sure if you want to play in something like that the consumer knows that you are there and can find you, which I think is probably some of the work to do. I think we need to be thoughtful about these emerging trends and be choiceful about which are the ones that we want to participate in or not. Garth, I don't know, on a perspective whether it's more or less dilutive, I'm not sure. I think it's probably just a consumer occasion.

I agree with that.

Thank you. Ladies and gentlemen, this concludes our question and answer session, and we'll also conclude today's conference. We thank you for your participation. You may now disconnect your lines. Simon, have a wonderful day.