Constellation Brands (STZ) Q2 2027 earnings call transcript

Thank you, Rob, and good morning, all. Welcome to Constellation Brands Q2 Fiscal 27 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 yourself to one question per person, which will help us to end our call on time. Thanks in advance, and now over to you, Nick.

Thanks, Claire. Good morning, everyone. Before we get into the Q&A, I want to take a minute, for those of you who may not be out of head of trust, to read our posted commentary, to summarize a few key takeaways from this quarter's results, which beat our expectations.

First, we are reiterating our fiscal 2027 guidance, including comparable EPS of $11.20 to $11.90 per share. And if the positive September trends that we saw continue, we would expect to land at the high end of that range.

Second, our increased investments and focus on marketing are working. We were the number one dollar share gainer in beverage alcohol this quarter. Our beer business outperformed and accelerated meaningfully quarter to quarter. Pacifico became a top ten beer brand with a very long distribution runway ahead of us. We're significantly outperforming the industry, and we are seeing marketing-driven green shoots across the board.

Finally, our inventory levels are healthy. We have spent much of the first half rebuilding distributor inventory levels, and while there's always going to be month-to-month variability, September depletions are turning in the right direction. Days on hand remain lower than our long-term average, and we entered the third quarter in a much better position. We feel good about where we are for the first half, and this entire team is incredibly focused on executing from here.

With that operator, let's please open the line for questions.

Sure, Nick, happy to try to unpack that. And, you know, I'd just start by saying, you know, we feel really good about the trajectory given the results in the first class. And the trends in September, which is why we expect now to come in at the high end of the guide should those trends continue. Now, you're absolutely right. There was timing, Labor Day timing between August and September this year. We saw that shift, but a lot of that timing was offset by an extra cell day in Q2. So think of Q2 as neutral, and we actually saw non-timing-related acceleration in the month of September. As our college football and other programming took place, we're seeing a very healthy response to that.

So at this point, we feel there'd be a real reversal in trends for us to contemplate the low end of the guide, and there's nothing we're seeing today on either the top line or the bottom line to indicate that things are going in that direction. That said, we do want to continue to be prudent in our assumptions and forecasts, and we are just unbelievably focused on delivering for our shareholders.

And that's just going to come back to our evolved focus on marketing, our launch execution, discipline, and pushing the organization to continue to deliver. So, Garth, I don't know if you have any color to add.

No, Nick. I mean, I think, as you said, we feel good about how we've delivered the first half and Q2, Q2, and we are confident on where we sit for the rest of the year. As we look at Q2 and we think about had we not shipped to the levels we did to rebuild inventories, if we hadn't done that, we still would have come in above our expectations for the quarter, and that's what gives us confidence that we're in a good position to deliver on the rest of the year, and as you said, if September trends continue to be at the high end of the guidance range.

Sure, Peter. Happy to do that. And Garth, if you're going to add in some color. Here's the headline I'd start with, which is distributed inventories are now in a great position, and they're actually still lower than historical averages. So, you know, we saw an overcorrection of inventories in FY26, and we entered FY27, frankly, too light, and that resulted in us testing the lower limits of how low days on hand can go, and it actually created a number of inefficiencies in our channel, We were doing a lot of work to make sure that we were covering off and keeping shelves full and consumers satisfied everywhere.

But, you know, albeit with some inefficiencies as we were working hard to move stuff around. And so we needed to ship during the quarter to close out distributor order backlogs and avoid out-of-stocks. I'd say, Matt, if you take the undershipment in 26 and you look at what we had to ship this year to date, we're about normal for where we would be. First half of the year to meet our expectations for building inventory into the summer and then into the fall sports season, et cetera. So I would expect the back half of the year to look pretty normal compared to any other year. And, you know, for the full year, we would expect ships and depletes to track, you know, within 99% of each other.

Sure. I'll take two parts. I'll start with the growth opportunity and the brands. As we discussed, I came in very enthusiastic knowing that we had an exceptional portfolio of brands and talent. And I'll tell you that spending time out in the field and spending time with our customers and spending time with our sales folks as well as our marketing teachers, et cetera, has only reinforced that. And actually getting into some of the data behind our brands has only left me more enthused. This is an incredibly healthy portfolio.

You know, there's no question. We're a growth business, and we need to get that engine humming again. And that's going to take sustained work across marketing, brand positioning, commercialization, products, packs, etc. And I think we talked about it at the conference as well. There are opportunities for us to get more organized and tighter in our execution and discipline behind that brand work. And so if I start and look at our scaled brands, there are jobs to be done there that are different to the work that we're doing scaling our new wave brands. And we've started that work, and we're starting to see some of the green shoots come across from that. And I think, and I talk about this often because I think it will be a great case study.

You know, take Corona, for example. You know, we put more behind Corona. We got more focused on what I call granular execution of that brand. It's not a brand that requires awareness driving. It's a brand that requires saliency. And we're seeing some green shoots already. Share has stabilized. If I look at Circona data, our 12-week is better than our 52-week, and our 4-week is better than our 12-week. So I'm not satisfied with where it is, but it's trending in the right direction, a lot better than it was a year ago. I'm looking at Medela. You're seeing a nice stabilization of that business, and we know that there are pockets of growth that we can go after, both with our Hispanic consumer.

But you think about the fall, getting into football season. That's the middle of the country. The general population, where awareness of this brain is actually incredibly low, a lot of opportunity go there. And so it's different to what might have gotten us here and how we go about now building those brains. You then move over to the middle, which is scaling that next wave of brains. And this is where the company's playbook is second to none, just world-class. And you can see what Pacifico, you know, compounding it at something like a 20% growth rate year to date as the number 10 brand already. It's not a small brand. And yet, you know, it's powered at that kind of growth rate.

And, you know, you have Victoria performing similarly behind that. And then we said, you know, we're going to have to access some areas where the consumer is and where the growth is. And you know whether we doing that organically through things like our NA portfolio which is gaining more and more traction You got Corona NA now number three by the way not satisfied with it being number three But there a whole lot more we can put behind that and you see us do that And then, you know, something like Slack Day, which is the hottest subcategory of the subcategory right now. And, you know, we've been able to get into a leading position in a very disciplined way with a huge runway ahead of us to take the Constellation machine and muscle And go build that business.

So, you know, I'm feeling, as you can tell, quite enthusiastic about the growth opportunities ahead of us. And then the second part of your question about, you know, the state of the organization in terms of its ability, you know, is it lean? Can it fuel this? You know, we've done a great job over the last several years driving cost efficiencies. I think about $600 million since Investor Day. Okay, but I believe we can be more systematic and programmatic about how we go after that, you know, and the best consumer companies have a multi-year continuous improvement program, and that is built up where, you know, we would have visibility to the activities that are going to drive margin and fuel for growth, you know, four years from now.

And, you know, with the team in place, we're now putting that, and I think that is going to turbocharge our ability to sustain margins as well as reinvest for future growth.

So, Garth, I don't think you have anything to add. Well, yeah, and as we've said previously, and I think as you've all seen in our results, you know, getting our capacity to build behind us has freed us up to focus on driving those sustainable efficiencies on our business as well as stepping up our free cash flow generation. And, you know, as we've evolved from a builder to an operator, we've already generated significant savings in our results. And as Nick just mentioned, the $600 million since Investor Day. And we're not done there. There's still a lot of opportunity for us as we continue to take the company on a more focused journey and increasing our level of operating excellence.

So certainly more to come.

Morning, Chris. I wanted to go back to, you know, recent expectations and guidance, kind of this topic. I think there was a view coming out of the conference earlier, you know, or last month that there was incremental pressure on inflation in the back half of the year, and that was going to impact your gross margins specifically. I think, you know, today, based on the guidance, and correct me if I'm wrong, gross margins are implied to be up in the back half of the year, which I think is surprising to some people today. Can you just give us a sense of, you know, did people interpret the back half gross margin expectation wrong? What is, you know, delivering that expansion into the back half of the year?

And I think, you know, maybe what's underlying the question is whether you have kind of good cost exposure this year and whether that's going to, you know, inflation will kick up going into fiscal 28 when perhaps you have a bit more depreciation coming on on Veracruz. So I know that's a lot, but I think that's a key theme this morning, and I would just love for you to dig a bit deeper into that and help contextualize this dynamic for us. Thank you.

Yeah, Chris, as you said, there's a lot there on PAC, so let's try, and Nick, you can weigh in here too, you know, if you like. So first, you know, I think that there probably was a little bit of confusion coming out of the conference last month. As we noted those headwinds, we also noted that we expected to deliver the business in line with guidance, which we said at the conference, And obviously, we're saying here again today. As you look at the second half of the year and our expectations for beer margins, we expect to come in in the second half at 34.5 to 35.5% of operating margins. This is pretty normal for us from a seasonality perspective.

As you know, the second half of the year is our lowest volume period of the year, so we have less fixed cost absorption in the second half. This is also the point of year where we go through maintenance capex, which has an impact on margins. We do expect to have a higher percent of SG&A in the second half year, as was in our commentary.

That should be around 7% in the second half year. That's driven largely by short-term incentive compensation, where last year we had a lower level of accrual, And so it's an overlap issue for this year. We also intend in the second half of the year to continue to support the brands as Nick laid out. We're seeing real green shoots from the marketing initiatives that we have underway. And, you know, we're confident in the results that they are providing. And that's evidenced by our leading share gains as we come through the first half of the year. And so from a marketing perspective, in the second half of the year, we expect marketing to be about 10% of net sales.

But in the third quarter, this will be above 11% as we continue to lean into our investments in Major League Baseball and NCAA football.

You brought up next year and the impact of Veracruz. I'd like to just say we are progressing nicely on Veracruz. We had expected to bring Veracruz online this fiscal year. Progress continues. We're about 85% done with the site. There's still some work to be done on utilities, site works on roads, and things of that nature.

So our expectation now is to bring that online in the first part of our fiscal year. When we do bring that online, the depreciation impact on an annualized basis will be about $75 million, And on an annualized basis, that's about 90 basis points of margin headwind.

Thank you.

Yeah, Bonnie, thanks for the question. I mean, I think as you can see in the results, we remain very active in repurchasing shares in the second quarter. And year to date, we've now bought back $530 million worth of shares. I think over the last few years, we've developed a strong track record of buying shares back in a programmatic way, but also through accelerating repurchases when we see a dislocation in our stock price versus its intrinsic value.

And that approach is going to continue. You can expect that to remain the case. Given our strong cash flow generation and the $2.5 billion that we have left on our repurchase authorization that runs through FY28, we have the flexibility and the capability to repurchase more shares. And I think we've demonstrated that we're very shareholder friendly, and we continue to expect to be so.

Anything you want to add, Nick? Yeah, just to add with respect to the M&A part of your question, we feel we're going to have the flexibility. I will now turn the call over to management for the Constellation Brands. Next year, and yet we've gotten this done for probably somewhere in the same zip code as it would take to develop and launch a new organic innovation without a track record of success already. And so I look at something like that, and I'm like, here's an example of we'll be happy to pay for it if it's hyper-successful, and if not, we've already gotten something that's got some real momentum behind it that will be accretive next year.

And we've done it in a highly disciplined way. And I think, you know, I've looked to that as an indication of how we're thinking about M&A going forward.

Thank you.

I'll share some perspectives and maybe some more color on the reinvestment rate. I started the headline. We believe we're reinvesting at a healthy rate now. We're a branded company. I talked a little bit earlier about this company needs to be a growth engine, and that growth is going to be driven by our brains and the relevance and saliency of our brains to our consumers. And there are specific things we can do, right, drive distribution, drive awareness, drive relevancy that we know how to do.

And marketing is critical to that. You know, you brought the World Cup so interesting around a major event that wound up being disappointing from industry expectations. You know, so what was the learning from that event from us? I mean, you know, a couple things. You know, firstly, I think we did it in a, again, a very thoughtful and disciplined way. And the way we went about executing that, we came away as, I'm going to say it, the winner of World Cup, because we had three times more market share gains in beer than the next best competitor, which was 400 basis points of outperformance versus the category. And we did that with significantly less spend on other people.

So it was an execution machine. Now, we won't have a big lap in World Cup next year, because most of the benefit we got from World Cup was share gains on premise. You know, we saw the off-codes be fairly flat, but what we did learn from it is it's an opportunity to reengage consumers and younger consumers around the bureaucracy, around sports. And so, you know, it doesn't have to be every four years. It can be the operating model through which we engage consumers in the category. So you'll see us continue. College football is coming up, right? We talked about we saw a really healthy September as that programming started to roll out, and the teams think forward from that.

I expect more from us over the next coming weeks and months as we talk about how we're going to use this type of programming to drive awareness all the way through to a shelf and the kind of activation that you might see above the line all the way through the line into retail, at store. And a big takeaway from it is this is an opportunity for us to continue to win through the space and that we know how to do that. So it doesn't imply higher spending. It implies that we think we're at good levels, and you're going to see us continue to drive the portfolio outperformance with our brains and our know-how.

Yeah, I mean, I think the only thing that I would add to that is, as Nick has said, we've tested the limits on a number of things. And I would say that we feel comfortable with the amount of marketing spend that we going to have this year on a full year basis In the last couple years we probably underspent a bit from where we should have been And so we getting that marketing spend back to what we think are the most healthy levels in order to drive the top line in the manner in which we want to drive the top line That being said we hold ourselves very accountable and have a very disciplined approach to how we measure the effectiveness and the returns generated by our marketing spend And we continue to do that But again, at this point, we feel good with the levels that we'll have on a full-year basis.

I'd say that the September recovery we saw was pretty broad-based. As I said earlier, it went well beyond just the timing of Labor Day. If you just count that on a growth basis, it was a very strong recovery. We kind of filled that out and go, there was some very healthy growth in September. But it's broad-based. We saw consumers across the board engaging in the category. I think as we look at channels right now, we are continuing to see some strength in club in particular. I think particularly with fuel prices, it's been a place that we've seen consumers go, and that leans really well into our relationships there. And so that's a place where we'll continue to lean in.

Of course, in the National Council, but even in C-Store, getting that mix right and getting their consumer proposition with the right product, right pack at the right place for that consumer is key to winning in those channels where consumers are looking for different things at different moments. And so the short answer is pretty broad-based, but our ability to dial in the right mix and right portfolio and right offering within the channels I think is also helping the cause here.

And then just with price, I'll say a quick few words correctly. It was a bit more color. But I'd say philosophically, we believe in this portfolio. It's a strong portfolio of brands, and we believe in our long-term ability to drive our pricing algorithm. We also have the financial flexibility to move up and down. We talk about our pricing algorithm somewhere between 1% to 2%, generally speaking, in the long run. I think you'll see us in there. If we think we can sharpen competitiveness by being at the lower end, we have the financial flexibility to do that. And so we're spending a lot of time looking deeply at elasticity of the consumer, the opportunity, the pack price architecture.

Are there price gaps, places we can go, value we can offer? And I think you'll see us get much sharper at that over time, which in turn will also help us drive the growth of our larger brands.

Yeah, just to pick up from where you left off, Dick, I mean, there really is no change to our pricing discipline. I mean, we continue to think that we've got the right approach on a very disciplined and methodical basis, looking at markets, looking at brands, looking at SKUs. As we entered into this year, you know, we did say that we intended to be at the lower end of that range as we've been selective with our pricing actions, you know, given the macroeconomic backdrop and the impact that that's having on our consumer. And as we've always said, it's much more cost effective to retain your consumers than it is to try to regain your consumers.

Now specific to Q2, in Q2, pricing net of mix was roughly flat. That is reflective of an impact of mix headwinds, commercial investments to support demand through distributor incentives and couponing, and then the carryover from our high-end light beer portfolio repositioning, which was a 25 basis point headwind in the quarter.

Sure. And why don't I start the second part of your question first, and I'll talk about selected in particular. On the category itself, look, I've said from the outset, we have to remain relevant to our consumers and to our customers. Now, there is no question in my mind that the vast majority of the value creation in our portfolio is going to come from beer, and we are steadfastly focused on beer. And we have a family of brands that are incredible and powerful. And if I can get some growth out of the big ones and continue the journey of the Pacifico and Victoria, that alone will create enormous value. But that doesn't mean that there isn't capacity in our system to dial in other areas of growth.

And just as a reminder, our portfolio is so simple today. We have one-fifth the complexity of the next least complex competitor. And so what our distributors are telling us is there are spaces that are growing, and we want you to get into those spaces. By the way, they're going to distribute these products whether they're owned by us or not. So it's an opportunity to dial up. And so I think as we look at that, we see the opportunity, but very conscious of the point that you just raised, Which is, you know, what is the sustainability of these brands? You know, where do we think things are going to last over a long time? Where is it worth putting in the investment?

And this is a discussion that's happening, not just on M&A, but on the organic things that you will see us put into market and launch as we access points of growth. I'll tell you, flavors aren't new. Flavors have been around forever. However, what's new is the amount of iteration around it, the amount of shelf that's given to it, the consumer's desire to experiment.

And so as we look at that, we go, look, the long-term trend is there. It's always been an access point. What we can do is leverage that access point to find new occasions. It might be our consumer, in a different occasion, might look for a product like this. And so, you know, we will look at this space. We'll be very disciplined about where we choose to participate because, to your point, some things aren't sustainable and we don't want to chase things in rabbit holes. And, you know, Spike Day is a great example of that. I mean, we've looked at plenty of things. I mean, particularly Spike Day, there's a very long list of things that we would not do.

But we looked at this one and we saw something that was the first mover in the category, category that is actually differentiated, brings something new and different to the consumer, mimics an existing consumer behavior, right? Aid and BACA we know is being mixed on certain occasions, and so now this is just a more convenient format. A brand positioning that's incredibly telegraphic tells the consumer exactly what it is. From a value creation standpoint, a wide open runway for Constellation to go flex its muscle and demonstrate what it can do from both a brand building perspective where we think we can bring some value and also a distribution runway perspective where this is still wide open and our distributors are primed and ready to go off to this and make this the winning brand in the category.

And so, you know, those capabilities are there. What we'll also have to be able to demonstrate is that we can also come with the type of iteration, pack price architecture, extensions if necessary to keep the brand fresh and relevant. So we're well aware of that. And finally, we'll also be demonstrating our integration capabilities, which we've honed in other parts of the business. And actually, at this point, I have a pretty good track record of taking smaller businesses, integrating them, and scanning them really well. And we're going to take that capability and deploy it on this. And so I think this will be a good case study for what we can do.

Yeah, and the only thing I want to add to that, Nick, is that given our strong cash flow generation, we have the ability to be able to do this very disciplined M&A, finding the right target, striking the right deal, We are now structuring it in the right nature to enhance our portfolio, and we have the ability to continue to return cash to shareholders through share purchases and our dividend policy.

Yeah, well, I'll give you some thematic thoughts around it just for a starter and add some color. But before I even actually answer the question of Victoria itself, I think what I want to highlight about Victoria as well as the other brands in the beer portfolio is the work that we're doing to develop very distinct lanes for each of our brands. Because if we have distinct range for each of our brands, they will play as a portfolio with significantly more incrementality than if they sit on top of each other. So that's how we're developing them. So you'll see specific work from Corona. You'll see specific work from Medela.

Pacifico, just been through the marketing and activation plans for next year, highly differentiated from the other brands will play in a really exciting space. And then Victoria so that your question is really going to live in the space of a very authentic Mexican brand We only advertise today in Spanish It is our consumer who might travel across the portfolio but in that particular occasion of either sitting with family discovering the culture over to management for prepared remarks And they're living in very different spaces. And what gets me excited about it is that, you know, the fact that we can co-develop those things and access different occasions and different spaces.

You know, you said so, dream the dream. I mean, the dream is you build these things alongside each other really for different occasions, and they can live and play together with the rest of the portfolio, Corona Modelo, and continue to build. You know, it's still, I guess, but it's still very strong out west in that, you know, like a Pacifico and, in fact, like a Modelo also gives us a lot of runway to build distribution and awareness very deliberately kind of around the coast and then into the center of the country. Is that anything?

No, I think that's pretty complete. All right. Thanks.

All right, so I'll start and give you some conceptual things. We don't currently have midterm guidance out there, so I don't want to get ahead of it too much, but I'll give you some thoughts, which is if you look at scaling our next wave brands, you can see the growth there, right? I talked about what Pacifico is doing. I talked about what Victoria is doing. By the way, we have MECOMPO, which homegrown innovation, launched from scratch, compounding at 50% right now. Expect that to be a multimillion case, a full-strand spirit sprint. Spent a lot of time in spirit, so I know how hard that is to do. Our distributors are fully behind it. And so, you know, there's not just a couple.

I mean, there's a track record here about our ability to take things that, you know, have momentum and scale them.

You know, next wave, I mean, you can see what the category is doing. I will now turn the call over to management for the Constellation Brands. Just getting started, so you can start to dimensionalize at those growth rates, what might happen there. And then to come back to the core of your question, okay, so you've got some stuff that's scaled.

What do you do with that? You know, I've spent the better part of the last six months, you know, peeling every piece of data back on our big brands and looking at, you know, where's the chicken in the armor? And I've got to tell you, these are some of the healthiest brands I've ever seen in my career. And so then the question comes, well, what else should we be doing? And I think that comes down to a more mature set of capabilities around running things that are large and at scale. And the point of things like pack price architecture, residency, showing up every day in people's lives, not just from an awareness perspective, but activating at their point of consumption.

It's dialing in that toolkit. And when I look at that, and when I look at the brand shares, when I look at historically how some beer brands have been able to grow, when you've had leadership in the industry engaging consumers, which we may not have had for a long time, notwithstanding the fact that I think Constellation's brought that, but now it's getting to a scale of, you know, it can really lead the industry.

There's a lot of runway on the growth of our bigger brands. I mean, you know, you take our biggest market, California, Vodela's 20s, that's by no means the ceiling for a beer brand. You then go to, you know, markets like New York and Miami where it's big, but plenty of them to go. And then you go to the middle of the country, and, you know, awareness doesn't even register, which is why you see us doing things like, you know, college football and accessing people. Similarly with Corona, as we started to turn the dial on Corona, we're seeing a really great response in markets like New York and Miami, which are culturally important markets, where the brand's now starting to gain share again, and consumers are reengaging with it.

And I'll tell you, that was a pretty blunt instrument of coming in and saying, we're going to focus on these things. After our marketing plans were set for the year, and really Garth and I worked to kind of dial up the investment and challenge the team to come up with new ideas, the plans that they've set for 28 now with the benefit of some time to work on that are much more granular. And so, you know, longer term, to cue the headline, I expect that part of the business to grow. It's not going to grow at the same rate as Pacifico, but we expect that part of the portfolio to grow.

Yeah, and on the point around Veracruz, so I appreciate the opportunity to clarify that we expect to put Veracruz in service in the beginning of our fiscal 28, and the depreciation and impact on margins that I articulated will start to occur when we put that in service, and again, that is in fiscal year 28. As it relates to some of the other costs that we're managing across the P&L, we've been very active in terms of managing our commodities and currencies. As we've seen opportunities throughout the fiscal year at moments of weakness, and there have been periods of time where there have been weakness, we've layered in incremental hedges for this year. And in this fiscal year, we are highly hedged across all commodities and currencies, over 90% or at 90% for most, with the exception of diesel, where we're kind of fully hedged for the year.

And we've used the opportunities of weakness to layer and incremental hedges to protect the P&L for FY28 and beyond, as is typical with our normal hedging process.

I'll just add on that point, because it's come up a couple of times. As we think about inflation, I'd say that I'm not sure there's been a year in my career as a female manager that hasn't been subinflation. Go all the way back to remember when healthcare inflation was off the charts. What great companies do is get ahead of that and run across the agenda to offset their inflation, to sustain their margins, and drive fuel for growth. I just want to make that point very simply, because we've had a great program to date, but I think you're going to see it get more programmatic, more systematic, And that's part of our jobs.

Yeah, I think that's a great question, right? And so, you know, you go through all the brand data, and you're like, okay, well, you know, what's the chicken armor? You know, is it what's got high awareness, but it's not relevant to people? And I tell you, we're happy to share some of this stuff, but we go through it. You find great awareness. Most love beer brand. Most love beer brand by Gen Z. You know, most famous Hispanic brand in the world. And I could go on and on and on. And so you step back from it and go, and I think it should be a challenge to us, right? If you have that kind of an asset, why aren't we seeing greater performance on it?

That's a challenge to put to the team. And in my mind, it is part of what is the playbook that you use to go after this. And so it could be everything from, you know, when you talk about fancy utility relevance, I mean, I agree, a consumer is more occasion-based, right? Don't depend on the repertoire, like what's the moment, how are they coming together, and then are we present there, right? So we do a lot of big awareness building, but do we still own the bucket at the beach bar? You know, have we given some of that up? And so do we need to redirect some of our dollars into doing things like that? And you're going to see us be more active in music, sports, at the beach, actually showing up in those moments and being part of that cultural fabric.

But it also goes beyond that. We have to look at our pack price architecture. Do we have the right product at the right price point in the right channel for the right consumer? We're the leader in small sizes, the massive share of small sizes. We're the leader in large sizes, the massive share of large sizes. How do we pull those levers to be much more granular about how we use those sizes and packs to show up exactly where our consumer is? And so, you know, those are the types of challenges put to the team and the gain. You know, I think sort of we saw a rapid response this year, and I'm not satisfied with the result, but I'm encouraged that we're bending the trend.

And you're not seeing it in the share loss column, and we're gaining share in two of the most culturally relevant markets that we're in, as well as, you know, whatever period you look at, the data is getting better. What I really want to see as we get into next year, and I'm now seeing the plans, is a step more granular in how we deploy the dollars to do the kinds of things I just described. And I'm pretty encouraged that we will see that brand respond well. Well, why I am passionate about it is as we can prove that we can do this under Corona, we'll be able to prove we can do this on any other large-scale brand, and we intend to build large-scale brands in this company.

Thank you.

All right. Well, thank you, everyone. I really appreciate you joining the call today and the thoughtful questions. I'd also like to thank the Constellation team who has shown exceptional focus as we've executed across these strategies. And I'm really excited about what we're seeing in the business. I'm confident in our path forward, and I think there is plenty of goodness to come.

So with that, thank you, everyone, and have a good day.