Q4 2020 Earnings Call

April 3, 2020

[music].

All participants I'd be pleased when he was.

Following the prepared remarks, the call will be open for your questions instruction.

I'll now turn the call overcapacity.

Senior Vice President Investor Relations. Please go ahead.

Patty Yahn-Urlaub: Thanks, Josh. Good morning and welcome to Constellation's year-end fiscal 2020 conference call. I'm here this morning with Bill Newlands, our CEO, and Garth Hankinson, our CFO. As a reminder, reconciliations between the most directly comparable GAAP measure and any non-GAAP financial measures discussed on this call are included in our news release or otherwise available on the company's website at www.cbrands.com. Please refer to the news release and Constellation's SEC filings for risk factors which may impact forward-looking statements we make on this call. Before turning the call over to Bill, similar to what we've done in prior quarters, I would like to ask that we limit everyone to one question per person, which will help us to end our call on time. Thanks in advance, and now here's Bill.

Thanks, Josh good morning.

Deletions yearend 2020 conference calls and here this morning.

Yeah.

As a reminder, reconciliations between most directly comparable GAAP measure and non-GAAP financial measures.

On this call are included in our news release or otherwise.

He's website at Www Dot brand stuck.

Please refer to the news release at constellation of T. SEC filings for Big factors, which may impact forward looking statements we make on.

David Brown: Before turning the call over to Bill, similar to what we've done in prior quarters, I would like to ask that we limit everyone to one question per person, which will help us to end our call on time. Thanks in advance, and now here's Bill. Thank you, Patty. Let me add my welcome as well. Let me quickly frame up the key themes you're going to hear from Garth and me today. First, we delivered strong performance in fiscal 2020 led by our beer business, which generated double-digit operating income for the year with accelerating IRI trends as Q4 progressed. That momentum has continued in the early stages of fiscal 2021.

Before turning the call Liberty Bell.

Similar to what we've done in prior quarters I would like asked that we live in every one to one question per person, which will help under <unk>.

Thanks in advance enough yourself.

Bill Newlands: Thank you, Patty. Let me add my welcome as well. Let me quickly frame up the key themes you're going to hear from Garth and me today. First, we delivered strong performance in fiscal 2020 led by our beer business, which generated double-digit operating income for the year with accelerating IRI trends as Q4 progressed. That momentum has continued in the early stages of fiscal 2021.

Thank you Patty let me add my welcome as well.

Let me quickly frame up the key themes, you're going to hear from Garth and me today.

First we delivered strong performance in fiscal 20 led by our beer business, which generated double digit operating income for the year with accelerating I write trends as Q4 progressed.

Well Matt.

Tenure in the early stages fiscal 21.

David Brown: We have ample brewing capacity to continue fueling the growth of our beer business in the medium term, and we're working with local authorities and government officials in Mexico to ensure we have ample long-term capacity as our business continues to grow and evolve. Second, our high-end power brands and successful new product launches fueled performance in fiscal 2020 that drove accelerating depletion trends in Q4 for our wine and spirits business as our premiumization strategy continues to take hold. And third, our strong performance and financial discipline generated record cash flow, reduced our outstanding debt, and built solid momentum heading into fiscal 2021. We'll talk in more detail about each of these areas, but before we go any further, I'd like to take a minute to address current circumstances related to the COVID-19 outbreak.

We have ample brewing capacity to continue fueling the growth of our beer business in the medium term, and we're working with local authorities and government officials in Mexico to ensure we have ample long-term capacity as our business continues to grow and evolve. Second, our high-end power brands and successful new product launches fueled performance in fiscal 2020 that drove accelerating depletion trends in Q4 for our wine and spirits business as our premiumization strategy continues to take hold. And third, our strong performance and financial discipline generated record cash flow, reduced our outstanding debt, and built solid momentum heading into fiscal 2021. We'll talk in more detail about each of these areas, but before we go any further, I'd like to take a minute to address current circumstances related to the COVID-19 outbreak.

We have ample brewing capacity to continue fueling the growth of our beer business in the medium term and we're working with local authorities and government officials in Mexico to ensure we have ample long term capacity as our business continues to grow in a ball.

Second.

Hi, good power brands and successful new product launches field performance in fiscal 2000, <unk> the drove accelerating depletion trends in Q4 for wine and spirits business.

Premiumization strategy continues to take hold.

And third our strong performance and financial discipline generated record cash flow reduced our outstanding debt.

Solid momentum heading into fiscal <unk> 21.

Well talk in more detail about each of these areas before we go any further I'd like to take a minute to address current circumstances related to the cobot 19 outbreak.

David Brown: First and foremost, our thoughts and prayers go out to those affected by this terrible virus and to the first responders and healthcare professionals working to help those in need. We sincerely hope the increased efforts to more fully contain this virus gain strong traction soon. With this in mind, we operate with a customer-focused mindset, a genuine concern for people, and a desire to make a positive difference in our communities that is core to our DNA, even more important today as our industry and communities face substantial hardships. As such, Constellation Brands, along with a number of our brands, has committed more than $2.5 million toward COVID-19 relief efforts that will directly benefit our business partners and communities now and through their recovery. Specifically, we are supporting the National Restaurant Association Educational Foundation Restaurant Employee Relief Fund, the U.S.

First and foremost, our thoughts and prayers go out to those affected by this terrible virus and to the first responders and healthcare professionals working to help those in need. We sincerely hope the increased efforts to more fully contain this virus gain strong traction soon. With this in mind, we operate with a customer-focused mindset, a genuine concern for people, and a desire to make a positive difference in our communities that is core to our DNA, even more important today as our industry and communities face substantial hardships. As such, Constellation Brands, along with a number of our brands, has committed more than $2.5 million toward COVID-19 relief efforts that will directly benefit our business partners and communities now and through their recovery. Specifically, we are supporting the National Restaurant Association Educational Foundation Restaurant Employee Relief Fund, the U.S.

First and foremost our thoughts and prayers go out to that was affected by this terrible virus and to the first responders and health care professionals working to help those needs.

We sincerely hope the increased efforts to more fully contain this virus gained strong traction.

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This is Mike we operate with a customer focused mindset.

Genuine concern for people and their desire to make a positive difference in our communities.

Core to our DNA, even more important today as our industry in communities face substantial hardships.

Such constellation along with a number of our brands has committed more than 2.5 billion toward cobot 19 relief efforts that will directly benefit our business partners and communities now and through their recovery.

Specifically, we're supporting the National Restaurant Association Educational Foundation restaurant employee really bond.

David Brown: Bartenders Guild, and first responders who continue to support those in need in communities across the US. I'm also extremely proud of the Constellation team for their continued efforts to meet the needs of consumers and to help keep the economy going while also keeping our people safe. The health and well-being of our employees is our number one priority, and we've taken a number of preventative measures and provided a number of protections to keep our employees safe in our operations and out at retail and to ensure our continued ability to meet the needs of the market. Our production facilities in the US, Mexico, Italy, and New Zealand are operational, and our distributors are up and running.

Bartenders Guild, and first responders who continue to support those in need in communities across the US. I'm also extremely proud of the Constellation team for their continued efforts to meet the needs of consumers and to help keep the economy going while also keeping our people safe. The health and well-being of our employees is our number one priority, and we've taken a number of preventative measures and provided a number of protections to keep our employees safe in our operations and out at retail and to ensure our continued ability to meet the needs of the market. Our production facilities in the US, Mexico, Italy, and New Zealand are operational, and our distributors are up and running.

The U.S. bartenders Gill and first responders, who continue to support those in need communities across the U.S.

I'm also extremely proud of the constellation team for their continued efforts to meet the needs of consumers and to help keep the economy going well also keeping our people shape.

Health and wellbeing of our employees is our number one priority and we've taken a number of preventative measures by the number of protections to keep our employees safe and our operations and out at retail and to ensure our continued ability to meet the needs of the market.

Our production facilities in the U.S., Mexico, Italy, and New Zealand, our operational in our distributors are up and running.

David Brown: Our teams are also working hard to ensure our distributor and retail partners have ample supply of our products to meet consumer demand, particularly in the off-premise, which has seen accelerated growth as many restaurants and bars have suspended dine-in services to help mitigate spread of the virus. The off-premise channel represents 85% to 90% of depletion volume for both our beer and our wine and spirits businesses and over-indexes to the rest of the beverage alcohol industry in the US versus the on-premise channel. These trends are reflected in recent IRI data ending 22 March 2020, which shows accelerating consumer takeaway trends in off-premise channels. Specifically, we've seen IRI dollar sales growth for our beer business increase to 24% in the four-week period ending 22 March 2020 versus 12-week and 52-week trends of 17% and 12%, respectively.

Our teams are also working hard to ensure our distributor and retail partners have ample supply of our products to meet consumer demand, particularly in the off-premise, which has seen accelerated growth as many restaurants and bars have suspended dine-in services to help mitigate spread of the virus. The off-premise channel represents 85% to 90% of depletion volume for both our beer and our wine and spirits businesses and over-indexes to the rest of the beverage alcohol industry in the US versus the on-premise channel. These trends are reflected in recent IRI data ending 22 March 2020, which shows accelerating consumer takeaway trends in off-premise channels. Specifically, we've seen IRI dollar sales growth for our beer business increase to 24% in the four-week period ending 22 March 2020 versus 12-week and 52-week trends of 17% and 12%, respectively.

Our teams are also working hard to ensure our distributor and retail partners.

Ample supply of our products to meet consumer demand, particularly in the off premise, which has seen accelerated growth.

Many restaurants and bars have suspended dining services.

Mitigate spread the buyers.

The on premise channel represents 85% to 90% of depletion volume for both our beer and wine and spirits businesses and over indexes to the rest of the beverage alcohol industry in the U.S. versus the on premise channel.

These trends are reflected in recent data ending 322, which shows accelerating consumer takeaway trends in off premise channels.

Specifically, we've seen Iowa, <unk> dollar sales growth for our beer business increased to 24% in the four week period, ending 322 versus 12 week in 52 week trends 17, and 12, respectively.

David Brown: For our wine and spirits power brands, we're also seeing accelerating growth of 23% in the latest four-week period versus 12- and 52-week trends of 7% and 4%. During this time, we are focused on the channels the consumer is choosing, namely Three-tier E-commerce, Direct-to-Consumer, and the Off-premise, especially big-box grocery, mass, and club channels, where we are working diligently to ensure high-in-stock positions for our key SKUs. We've also adjusted our marketing approach to ensure our consumer messaging is in tune with current realities and by shifting our focus to digital and social media platforms as sporting events and other major gatherings are suspended. Bottom line, we are well-positioned to continue meeting the needs of consumers as well as our retailer and distributor partners.

For our wine and spirits power brands, we're also seeing accelerating growth of 23% in the latest four-week period versus 12- and 52-week trends of 7% and 4%. During this time, we are focused on the channels the consumer is choosing, namely Three-tier E-commerce, Direct-to-Consumer, and the Off-premise, especially big-box grocery, mass, and club channels, where we are working diligently to ensure high-in-stock positions for our key SKUs. We've also adjusted our marketing approach to ensure our consumer messaging is in tune with current realities and by shifting our focus to digital and social media platforms as sporting events and other major gatherings are suspended. Bottom line, we are well-positioned to continue meeting the needs of consumers as well as our retailer and distributor partners.

For our wine spirits power brands, we're also seeing accelerating growth of 23% and the latest four week period versus 12, and 52 week trends seven and for.

During this time, we're focused on the channels the consumer is choosing namely treat your ecommerce direct to consumer and the off premise, especially big box grocery mass and club channels, where we're working diligently to ensure high in stock position for our key skews.

We've also adjusted our marketing approach to ensure our consumer messaging is into what current realities.

Shifting our focus to digital and social media platforms sporting events and other major gout gatherings or suspended.

Adam line, we're well positioned to continue meeting the needs of consumers as well as our retailer and distributor partners.

David Brown: We will continue to manage our business with focus and discipline while remaining flexible and are willing to adapt as needed to shifting consumer behaviors. I remain extremely optimistic about the long-term prospects for our business. Now, let's get back to those themes that I highlighted at the top of the call. As mentioned, our beer business once again delivered exceptional results in fiscal 2020 and continues to be the leader in the high-end and a cornerstone of growth in the US beer industry. Imports continue to be one of the primary growth drivers in the high-end and the total beer category, with Constellation driving 100% of the growth in this segment. The primary drivers of our beer portfolio growth continue to be our Modelo and Corona brand families.

We will continue to manage our business with focus and discipline while remaining flexible and are willing to adapt as needed to shifting consumer behaviors. I remain extremely optimistic about the long-term prospects for our business. Now, let's get back to those themes that I highlighted at the top of the call. As mentioned, our beer business once again delivered exceptional results in fiscal 2020 and continues to be the leader in the high-end and a cornerstone of growth in the US beer industry. Imports continue to be one of the primary growth drivers in the high-end and the total beer category, with Constellation driving 100% of the growth in this segment. The primary drivers of our beer portfolio growth continue to be our Modelo and Corona brand families.

We will continue to manage our business with focus and discipline, while remaining flexible and are willing to adapt as needed to shifting consumer behaviors.

And I remain extremely optimistic about the long term prospects for our business.

Now, let's get back to those themes that I highlighted at the top of the call.

As mentioned our beer business once again delivered exceptional results.

Fiscal 20 and continues to be the leader in the high end any cornerstone of growth in the U.S. beer industry.

Imports continue to be one of the primary growth drivers in the high end and the total beer category with constellation driving 100% of the growth in this segment.

The primary drivers of our beer portfolio growth continued to be arm, Adele and Corona brand family.

David Brown: The trio of brands that comprise the Modelo brand family includes Modelo Especial, Modelo Negra, and Modelo Chelada, and is one of the biggest forces in beer, delivering more than 20 million cases of growth to the US beer category last year. Modelo Especial led the way as the top non-seltzer share-gaining beer brand in the US beer industry, achieving depletion growth of more than 16%, an acceleration over the previous year's trend of 12%. Modelo Especial is now the number four beer brand overall in the US beer market and the best-selling beer in major markets like Chicago as well as the states of Nevada and California, where sales of the brand are greater than the two biggest premium domestic light brands combined.

The trio of brands that comprise the Modelo brand family includes Modelo Especial, Modelo Negra, and Modelo Chelada, and is one of the biggest forces in beer, delivering more than 20 million cases of growth to the US beer category last year. Modelo Especial led the way as the top non-seltzer share-gaining beer brand in the US beer industry, achieving depletion growth of more than 16%, an acceleration over the previous year's trend of 12%. Modelo Especial is now the number four beer brand overall in the US beer market and the best-selling beer in major markets like Chicago as well as the states of Nevada and California, where sales of the brand are greater than the two biggest premium domestic light brands combined.

The tree or brands to comprise the cost. So madella brand family includes modelo, especially out Dello Negra Modelo Chelada and is one of the biggest forces in beer delivering more than 20 million cases growth should the U.S. beer category last year, but.

Especially out went away at the top non seltzer share gaining beer brand in the U.S. beer industry.

Do you think depletion growth of more than 16% an acceleration over the previous years trend of 12%.

Delo, especially out is now the number for beer brand overall in the U.S. beer Mark.

And the best selling beer in major markets like Chicago as well as states of Nevada in California, where sales of the brand are greater than the two biggest premium domestic light brands combined.

David Brown: We plan to invest at record levels this year for Modelo to reach more consumers and to increase the brand's appeal among total market consumers. We'll accomplish this through innovation, investment in Spanish-language media, and targeted programming. We'll extend the brand through new pack sizes such as our 7-ounce Modelito, a popular format, particularly in C stores. Innovation with new product offerings like Modelo Chelada, Mango y Chile. We're testing new spirits, barrel-aged offerings, on a smaller scale that remain true to the essence of the Modelo brand and align with consumers' desire for more flavor. I'm talking about Modelo Reserva, which is a golden, sessionable, refreshing lager with a 5.5% ABV that will be available in test markets in tequila- and bourbon-barrel-aged options.

We plan to invest at record levels this year for Modelo to reach more consumers and to increase the brand's appeal among total market consumers. We'll accomplish this through innovation, investment in Spanish-language media, and targeted programming. We'll extend the brand through new pack sizes such as our 7-ounce Modelito, a popular format, particularly in C stores. Innovation with new product offerings like Modelo Chelada, Mango y Chile. We're testing new spirits, barrel-aged offerings, on a smaller scale that remain true to the essence of the Modelo brand and align with consumers' desire for more flavor. I'm talking about Modelo Reserva, which is a golden, sessionable, refreshing lager with a 5.5% ABV that will be available in test markets in tequila- and bourbon-barrel-aged options.

We plan to invest at record levels. This year from adult to reach more consumers into increase the brands appeal among total market consumers.

Well accomplish there's through innovation.

Investment in Spanish language media and targeted programming.

And we'll extend the brand through new pack sizes, such as our seven announced.

Most alito a popular format, particularly in C stores.

Innovation with new product offerings, like Deloatch, Lotto, Mango, Chile, and we're testing new spirits barrel, aged offerings on a smaller scale that remain true to the essence of them della brand.

<unk> with consumers desire for more flavor.

I'm talking about Modelo reserve, which is a golden sustainable refreshing blogger with a 5.5% HBV.

That will be available in test markets into killer and Bourbon barrel aged options.

David Brown: Modelo's strength with Hispanic consumers continues to fuel the growth of this brand, and with more than 1 million Hispanics reaching legal drinking age each year, combined with our continued efforts to broaden our appeal with general market consumers, we believe we're only scratching the surface of where this brand can go. Our flagship Corona brand remains the number one imported brand family in the US, selling just shy of 150 million cases in fiscal 2020. In fiscal 2021, we'll embark on a comprehensive master brand restage for the Corona brand family that drives a more cohesive look and greater consistency in marketing communications across sub-brands, as well as new heritage and experiential programs designed to strengthen the bonds consumers already have with Corona. We're also excited to launch a new cause marketing program focused on protecting our beaches through our partnership with Oceanic Global, a leader in ocean conservation.

Modelo's strength with Hispanic consumers continues to fuel the growth of this brand, and with more than 1 million Hispanics reaching legal drinking age each year, combined with our continued efforts to broaden our appeal with general market consumers, we believe we're only scratching the surface of where this brand can go. Our flagship Corona brand remains the number one imported brand family in the US, selling just shy of 150 million cases in fiscal 2020. In fiscal 2021, we'll embark on a comprehensive master brand restage for the Corona brand family that drives a more cohesive look and greater consistency in marketing communications across sub-brands, as well as new heritage and experiential programs designed to strengthen the bonds consumers already have with Corona. We're also excited to launch a new cause marketing program focused on protecting our beaches through our partnership with Oceanic Global, a leader in ocean conservation.

The dollar strength with Hispanic consumers continues to fuel the growth this brand and with more than a million Hispanics right, reaching legal drinking age each year combined with our continued efforts to broaden our appeal with general market consumers. We believe we're only scratching the surface aware this brand can go.

Yeah.

Our flagship Corona brand remains the number one imported brand family in the U.S. selling just shy of 150 million cases in physical 20.

In fiscal 21 will embark on a comprehensive master brand restage for the coverage for the Corona brand family that drives more cohesive luck and greater consistency marketing communications across sub brands as well as new heritage and experience will programs designed to strike.

The bonds consumers already have with Corona.

We're also excited to launch the new caused marketing program focused on protecting our beaches through our partnership with oceanic global leader in Ocean Conservation.

David Brown: We believe this program will further deepen the emotional connection Corona consumers have with the brand. Corona Extra is the seventh-largest brand in the U.S. beer category and remains the number 1 brand in New York City, Miami, D.C., and is the top three brand in 8 other major U.S. markets. Brand equity for Corona Extra remains extremely strong, and sales have accelerated in IRI, with 4-week and 12-week trends outpacing their corresponding 52-week trends. We remain bullish on Corona Extra's future potential, knowing that there are several large DMAs that, based on per capita income, are right for Corona Extra growth. In only its second year as a national brand, Corona Premier grew depletions nearly 19% in fiscal 2020 to 10 million cases and became the number 5 growth brand in the U.S. beer category, with distribution continuing to grow double digits.

We believe this program will further deepen the emotional connection Corona consumers have with the brand. Corona Extra is the seventh-largest brand in the U.S. beer category and remains the number 1 brand in New York City, Miami, D.C., and is the top three brand in 8 other major U.S. markets. Brand equity for Corona Extra remains extremely strong, and sales have accelerated in IRI, with 4-week and 12-week trends outpacing their corresponding 52-week trends. We remain bullish on Corona Extra's future potential, knowing that there are several large DMAs that, based on per capita income, are right for Corona Extra growth. In only its second year as a national brand, Corona Premier grew depletions nearly 19% in fiscal 2020 to 10 million cases and became the number 5 growth brand in the U.S. beer category, with distribution continuing to grow double digits.

We believe this program will further deepen the emotional connection chronic consumers have would the brand.

Corona extra is the seventh largest brand in the U.S. beer category and remains the number one brand in New York City, Miami D. C and is a top three brand in eight other major U.S. markets.

Brand equity for Corona extra remains extremely strong sales had accelerated and I are right with four week 12 week trends outpacing the corresponding 52 week trends.

We remain bullish on Corona extra future potential knowing that there are several large de amazed that based on hyper cabin income are right.

Corona extra growth.

You don't need second year as a national brand Corona Premier grew depletions nearly 19% in fiscal 22 10 million cases and became the number five growth brand in the U.S. beer category with distribution continuing to grow double digits.

David Brown: In just 2 years, Corona Premier has achieved an ACV of almost 75, which is similar to some brands that have been around for decades. This brand is perfectly positioned to capitalize on the macro trends of betterment and premiumization as consumers trade up from domestic lights, and we have plans in place to continue building traction for this brand, including winning with Hispanic consumers who comprise about 30% of its consumer base. In fiscal 2020, Corona Refresca became a 3 million case brand in its first year, with the variety pack becoming the number 5 top-selling new beer in IRI. This now gives Corona an ownable play in the ABA space, delivering tropical flavors to a range of consumers.

In just 2 years, Corona Premier has achieved an ACV of almost 75, which is similar to some brands that have been around for decades. This brand is perfectly positioned to capitalize on the macro trends of betterment and premiumization as consumers trade up from domestic lights, and we have plans in place to continue building traction for this brand, including winning with Hispanic consumers who comprise about 30% of its consumer base. In fiscal 2020, Corona Refresca became a 3 million case brand in its first year, with the variety pack becoming the number 5 top-selling new beer in IRI. This now gives Corona an ownable play in the ABA space, delivering tropical flavors to a range of consumers.

Just two years grown a premier has achieved a nice TV almost 75, which is similar to some brands that have been around for decades.

This brand is perfectly positioned to capitalize on the macro trends a betterment premiumization as consumers trade up from domestic flights.

We have plans in place to continue building traction for this brand.

Putting winning with Hispanic consumers, who compromised about 30% of its consumer base.

Fiscal 20 thrown in for Frasca became a 3 million case brand in its first year with the variety pack, becoming been number five top selling new beer.

And I are right.

This now gives corona and Ownable play in the aviation space delivering tropical flavors to a range of consumers.

David Brown: To capitalize on the success of Refresca, we will be extending the brand into the high ABV FMB space this fall with the launch of Corona Refresca Más, 24-ounce cans with 8% ABV in tropical berry, and mango citrus flavors. We are very excited about this year's Corona hard seltzer launch, which is off to a strong start and has already achieved an ACV approaching 50 in its first month of national launch. As we said before, the hard seltzer category continues to grow at a breakneck clip, and we believe it's here to stay. As an aside, our recent venture investment in PRESS Seltzer provides a wonderful complement with a unique value proposition and price point, as we believe the hard seltzer segment will price stratify over time. Our Pacifico brand grew depletions more than 13% in fiscal 2020, which represents an acceleration over the previous year.

To capitalize on the success of Refresca, we will be extending the brand into the high ABV FMB space this fall with the launch of Corona Refresca Más, 24-ounce cans with 8% ABV in tropical berry, and mango citrus flavors. We are very excited about this year's Corona hard seltzer launch, which is off to a strong start and has already achieved an ACV approaching 50 in its first month of national launch. As we said before, the hard seltzer category continues to grow at a breakneck clip, and we believe it's here to stay. As an aside, our recent venture investment in PRESS Seltzer provides a wonderful complement with a unique value proposition and price point, as we believe the hard seltzer segment will price stratify over time. Our Pacifico brand grew depletions more than 13% in fiscal 2020, which represents an acceleration over the previous year.

To capitalize on the success upper Frasca, we will be extending the brand into the high HBV FNB space. This fall with the launch of Corona fresco minus 24 ounce cans with 8% HBV tropical Barry and mango citrus flavors.

We're very excited about this year's Corona hard stops or watch, which is off to a strong start and has already achieved an ACB approaching 50 in its first month of national lunch.

Yes, we said before hard sheltered category continues to grow at a break that clip and we believe it's here to stay.

As an aside our recent venture investment impressed Seltzer provides a wonderful toppled with a unique value proposition and price point as we believe the hard seltzer segment, well priced stratify overtime.

Our Pacific up ramp fruit depletions more than 13% in fiscal 20, which represents an acceleration over the previous year.

David Brown: Pacifico is the seventh beer overall in California, where it continues to grow double digits. In fiscal 2021, our plans will focus on continuing to win in California while further expanding awareness and trial in key DMAs across the country. This includes a 40% increase in digital marketing investment, including our first national YouTube buy, a new sponsorship with the LA Chargers, and continued partnerships with the Summer and Winter X Games, which will help us to do just that. In addition to our continued focus on accelerating growth for our core beer franchises, we're also leveraging innovation and domestic production capabilities to launch new-to-world brands that allow us to compete in growing sectors of the high-end. Our recent launch of Two Lane in partnership with country music star Luke Bryan is a great example.

Pacifico is the seventh beer overall in California, where it continues to grow double digits. In fiscal 2021, our plans will focus on continuing to win in California while further expanding awareness and trial in key DMAs across the country. This includes a 40% increase in digital marketing investment, including our first national YouTube buy, a new sponsorship with the LA Chargers, and continued partnerships with the Summer and Winter X Games, which will help us to do just that. In addition to our continued focus on accelerating growth for our core beer franchises, we're also leveraging innovation and domestic production capabilities to launch new-to-world brands that allow us to compete in growing sectors of the high-end. Our recent launch of Two Lane in partnership with country music star Luke Bryan is a great example.

So the goal is the number seven beer overall in California, where it continues to grow double digits.

In fiscal 21, our plans were focused on continuing to win in California, while further expanding awareness and trial in key de amazed across the country.

This includes a 40% increase in digital marketing investment, including our first national you to buy.

He knew sponsorship with the only Chargers and continued partnerships with the summer in winner X games.

Which will help us to do just that.

In addition to our continued focus on accelerating growth for our core beer franchises were also leveraging innovation and domestic production capabilities to watch noodle world brands that allow us to compete in growing sectors of the high end.

Our recent launch of two lane in partnership with country Music Star Luke Bryan is a great example.

David Brown: This beer plays in the domestic high-end sessionable space and delivers on the refreshing taste consumers want, with only 99 calories, 3 grams of carbs, and 4.2% ABV. In fiscal 2021, Two Lane will be available in select markets in the Southeast. In support of our efforts to build brands consumers love, our commercial team continues to work with our three-tier partners to ensure we deliver world-class execution at retail. This includes increasing adoption of shopper-first shelf principles by making it easier for consumers to shop, by organizing shelf flow in ways that help maximize growth and profitability, and by meeting consumers where they are going by allocating space based on future growth opportunities and ensuring highly incremental packages with high velocity are represented with adequate holding power.

This beer plays in the domestic high-end sessionable space and delivers on the refreshing taste consumers want, with only 99 calories, 3 grams of carbs, and 4.2% ABV. In fiscal 2021, Two Lane will be available in select markets in the Southeast. In support of our efforts to build brands consumers love, our commercial team continues to work with our three-tier partners to ensure we deliver world-class execution at retail. This includes increasing adoption of shopper-first shelf principles by making it easier for consumers to shop, by organizing shelf flow in ways that help maximize growth and profitability, and by meeting consumers where they are going by allocating space based on future growth opportunities and ensuring highly incremental packages with high velocity are represented with adequate holding power.

Disappear place in the domestic high and sustainable space and delivers on the refreshing taste consumers want was only 99 calories three grams of carbs and 4.2% HBV in fiscal 2001, Dwayne will be available in select markets in the southeast.

In support of our efforts to build brands consumers love our commercial team continues to work with our treat your partners to ensure we delever world class execution at retail.

This includes increasing adoption of shopper first shelf principles by making it easier for consumers shop like organizing shelf flow in ways that help maximize growth and profitability and by meeting consumers wherever they are going out.

Allocating space speech on based on future growth opportunities and ensuring highly incremental packages with high velocity a represented with adequate holding power.

David Brown: We currently have 6,000 retailers that have implemented shopper-first shelf principles, and those who have embraced this program have seen solid increases in overall growth and profitability for their category. As you can see, we believe fiscal 2021 holds great promise for our beer business, with a healthy core, master brand innovations, and emerging brands poised to grow. From an operational perspective, we continue to make strategic investments in our beer business to ensure we have the capacity, quality, control, and flexibility to support the continued growth of our business in the medium term based on our forecasts. The capacity we've built in Nava plus Obregón when completed at the end of this year will enable us to provide more than 400 million cases of beer, which is ample supply for several years to come.

We currently have 6,000 retailers that have implemented shopper-first shelf principles, and those who have embraced this program have seen solid increases in overall growth and profitability for their category. As you can see, we believe fiscal 2021 holds great promise for our beer business, with a healthy core, master brand innovations, and emerging brands poised to grow. From an operational perspective, we continue to make strategic investments in our beer business to ensure we have the capacity, quality, control, and flexibility to support the continued growth of our business in the medium term based on our forecasts. The capacity we've built in Nava plus Obregón when completed at the end of this year will enable us to provide more than 400 million cases of beer, which is ample supply for several years to come.

We currently have 6000 retailers that have implemented shopper first shelf principles and those who have embraced this program I've seen solid increases in overall growth and profitability for the category.

As you can see we believe fiscal 21 holds great promise for our beer business with a healthy core.

Master brand innovations and emerging brands poised to grow.

From an operational perspective, we continue to make strategic investments in our beer business to ensure we have the capacity.

Colony control and flexibility to support the continued growth of our business in the medium term based on our forecast.

The capacity, we built and Nava plus over gone when completed at the end of this year will enable us to provide more than 400 million cases, a beer, which is ample supply for several years to come.

David Brown: We also completed construction of furnace number 5 at our glass plant adjacent to our Nava brewery, which now supplies 60% of the glass needs for that brewery, resulting in significant logistics savings. Earlier this week, I met with Mexican President López Obrador and his team in Mexico to discuss our brewery construction project in Mexicali. Our discussions were constructive and surfaced several options for consideration. We will continue to work with local authorities and government officials in Mexico to reach an optimal solution for our business. We've had a positive, mutually beneficial relationship with Mexico for more than 30 years, and we fully expect this to continue. Some of you have asked about our operations. Let me just say that we are being exceedingly careful to protect our people and to maintain ultimate safety.

We also completed construction of furnace number 5 at our glass plant adjacent to our Nava brewery, which now supplies 60% of the glass needs for that brewery, resulting in significant logistics savings. Earlier this week, I met with Mexican President López Obrador and his team in Mexico to discuss our brewery construction project in Mexicali. Our discussions were constructive and surfaced several options for consideration. We will continue to work with local authorities and government officials in Mexico to reach an optimal solution for our business. We've had a positive, mutually beneficial relationship with Mexico for more than 30 years, and we fully expect this to continue. Some of you have asked about our operations. Let me just say that we are being exceedingly careful to protect our people and to maintain ultimate safety.

We also completed construction of furnace number five at our glass plant adjacent to our Nava brewery, which now supply 60% of the glass needs for that brewery, resulting in significant logistic savings.

Earlier this week I met with Mexican President Lopez over door and his team in Mexico to discuss our brewery construction project in Mexico.

Our discussions were constructive and surface several options for consideration.

We will continue to work with local authorities and government officials in Mexico to reach an optimal solution for our business.

We've had a positive mutually beneficial relationship with Mexico for more than 30 years and we fully expect this to continue.

Some of you have asked about our operations. Let me just say, we're being exceedingly careful to protect our people and to maintain ultimate safety.

David Brown: With that said, over the past several weeks, we've taken steps to build ample product supply across our warehouse and distributor network in the US. We have close to 70 days in the system, and we've shifted resources to accelerate production of high-volume SKUs for key off-premise accounts. Our facilities are currently operating, and we remain confident in our ability to continue meeting the needs of US consumers and do not expect any near-term service disruption to retailers. Shifting now, our wine and spirits premiumization strategy continues to show promise as our business closed out fiscal 2020 in a position of strength, posting accelerating power brand depletion growth and operating margin improvement in the fourth quarter.

With that said, over the past several weeks, we've taken steps to build ample product supply across our warehouse and distributor network in the US. We have close to 70 days in the system, and we've shifted resources to accelerate production of high-volume SKUs for key off-premise accounts. Our facilities are currently operating, and we remain confident in our ability to continue meeting the needs of US consumers and do not expect any near-term service disruption to retailers. Shifting now, our wine and spirits premiumization strategy continues to show promise as our business closed out fiscal 2020 in a position of strength, posting accelerating power brand depletion growth and operating margin improvement in the fourth quarter.

With that said over the past several weeks, we've taken steps to build apple products supply across our warehouse and distributor network in the U.S.

We have close to 70 days in the system.

And we've shifted resources to accelerate production up high volume skews for key off premise accounts.

Our facilities are currently operating and we remain confident in our ability to continue meeting the needs of U.S. consumers and did not expect any near term service disruption to retailers.

Shifting now our wine and spirits Premiumization strategy continues to show promise as our business closed out fiscal 20 in a position of strength.

Hosting accelerating our brand depletion growth and operating margin improvement in the fourth quarter.

David Brown: Q4 power brands family depletion growth accelerated to more than 4%, led by double-digit growth for Kim Crawford, Meiomi, and The Prisoner brand family as this collection of brands continued to outpace the total US wine market. Operating margin expansion was driven by our focus on more efficient price promotions with our mainstream power brands, as well as market share gains in the higher end of our portfolio, with Meiomi and The Prisoner family contributing strong mixed trends. Innovation continues to fuel growth as we capitalized on innovation trends in consumer-driven growth segments. Our introduction last quarter of Unshackled by The Prisoner Wine Company has been extremely well received. We further capitalized on barrel-aged wine trends with the introduction of new offerings from both Woodbridge and Cooper & Thief.

Fourth quarter power brands family depletion growth accelerated to more than 4% led by double digit growth for Kim Crawford May All me and the prisoner brand family. This collection of brands continue to outpace the total U.S. wind market.

Q4 power brands family depletion growth accelerated to more than 4%, led by double-digit growth for Kim Crawford, Meiomi, and The Prisoner brand family as this collection of brands continued to outpace the total US wine market. Operating margin expansion was driven by our focus on more efficient price promotions with our mainstream power brands, as well as market share gains in the higher end of our portfolio, with Meiomi and The Prisoner family contributing strong mixed trends. Innovation continues to fuel growth as we capitalized on innovation trends in consumer-driven growth segments. Our introduction last quarter of Unshackled by The Prisoner Wine Company has been extremely well received. We further capitalized on barrel-aged wine trends with the introduction of new offerings from both Woodbridge and Cooper & Thief.

Operating margin expansion was driven by our focus on more efficient price promotions with our mainstream power brands as well as market share gains and the higher end of our portfolio would meiomi and prisoner family contributing strong mix trends.

Innovation continues to fuel growth as we capitalize on innovation trends in consumer driven growth segments.

Our introduction last quarter I'm unshackled by the prisoner wine company has been extremely well received.

We further capitalized on barrel waste wine trends with the introduction of new offerings from both Woodbridge and Cooper in theory.

David Brown: Since launching our first barrel-aged wine series a little more than 2 years ago, we have sold well over 2 million cases, and that number continues to climb. In response to the consumer-led trend around convenience, we launched Kim Crawford Wine in a Can, and our Crafters Union brand remains the number one growth driver in the can wine segment. We're also excited about the recent launches of SVEDKA Botanical Flavors and Ruffino Organic Prosecco, which align with consumer trends for flavor, betterment, and sustainability. Bottom line for fiscal 2020, our wine and spirit transformation focused on premiumization continues to gain traction. Our higher-end power brands are driving mix and margin expansion. Our mainstream power brands are outgrowing the competition, and our innovation initiatives are fueling growth through velocity and distribution gains.

Since launching our first barrel-aged wine series a little more than 2 years ago, we have sold well over 2 million cases, and that number continues to climb. In response to the consumer-led trend around convenience, we launched Kim Crawford Wine in a Can, and our Crafters Union brand remains the number one growth driver in the can wine segment. We're also excited about the recent launches of SVEDKA Botanical Flavors and Ruffino Organic Prosecco, which align with consumer trends for flavor, betterment, and sustainability. Bottom line for fiscal 2020, our wine and spirit transformation focused on premiumization continues to gain traction. Our higher-end power brands are driving mix and margin expansion. Our mainstream power brands are outgrowing the competition, and our innovation initiatives are fueling growth through velocity and distribution gains.

Since launching our first barely swine series, a little more than two years ago, we have sold well over 2 million cases and that number continuous decline.

In response to the consumer led trend around convenience, we launched Kim Crawford wind and it can and our Crafters Union brand remains the number one growth driver in the can wind segment.

We're also excited about the recent launches spoke of botanical flavors and were Pheno organic precise.

Which aligned with consumer trends for flavor betterment and sustainability.

Bottom line for fiscal 20 or wine spirits transformation focused on Premiumization continues to gain traction.

Our hiring power brands are driving mix and margin expansion.

Our mainstream power brands are outgrowing the competition and our innovation initiatives are fueling growth through velocity and distribution gains.

David Brown: Heading into fiscal 2021, we are committed to investments in bold innovations, compelling marketing campaigns, and immersive brand experiences, with a specific focus on top markets and accounts in priority DMAs. We'll continue building momentum by further leaning into our premiumization strategy and maximizing growth opportunities for our power brands through compelling marketing campaigns for Woodbridge, Kim Crawford, Meiomi, SVEDKA, and The Prisoner. We're instituting greater pricing discipline, consistent with strategies that have proven very successful in building strong brands in other parts of our beverage portfolio. We'll continue to leverage the power of existing brands with strong equity. We remain committed to mix and margin accretive innovation in growing sectors of the wine and spirits categories that align with consumer trends.

Heading into fiscal 2021, we are committed to investments in bold innovations, compelling marketing campaigns, and immersive brand experiences, with a specific focus on top markets and accounts in priority DMAs. We'll continue building momentum by further leaning into our premiumization strategy and maximizing growth opportunities for our power brands through compelling marketing campaigns for Woodbridge, Kim Crawford, Meiomi, SVEDKA, and The Prisoner. We're instituting greater pricing discipline, consistent with strategies that have proven very successful in building strong brands in other parts of our beverage portfolio. We'll continue to leverage the power of existing brands with strong equity. We remain committed to mix and margin accretive innovation in growing sectors of the wine and spirits categories that align with consumer trends.

Heading into fiscal 21, we're committed to investments and bold innovations compelling marketing campaigns and immersive brand experiences with the specific focus on top markets in accounts in priority Damasio.

Well continue building momentum by further leaning into our Premiumization strategy and maximizing growth opportunities for a power brands through compelling marketing campaigns for Woodbridge, Kim Crawford Meiomi.

And the prisoner.

We're instituting greater pricing discipline consistent with strategies that have proven very successful and building strong brands in other parts of our beverage portfolio.

And we'll continue to leverage the power of existing brands with strong equity.

We remain committed to mix and margin accretive innovation growing sectors of the wine and spirits categories that align with consumer trends.

David Brown: We have a strong innovation pipeline planned for the coming year, including upcoming line extensions for Ruffino and SVEDKA Vodka in the RTD space, the launch of a new High West premix cocktail in the spirits space, and the expansion of our highly successful barrel-aged wine program. You can also expect us to introduce new-to-world brands in the wine category. In addition, we plan to leverage the success of Shopper-First Shelf initiative developed by our beer business by adapting and implementing this program for wine and spirits retailers in fiscal 2021. We recently took pricing on our Woodbridge brand beginning 1 March, and to date, we have seen no negative impact from this action due to the consumer need to stick with tried and true brands in this time of uncertainty.

We have a strong innovation pipeline planned for the coming year, including upcoming line extensions for Ruffino and SVEDKA Vodka in the RTD space, the launch of a new High West premix cocktail in the spirits space, and the expansion of our highly successful barrel-aged wine program. You can also expect us to introduce new-to-world brands in the wine category. In addition, we plan to leverage the success of Shopper-First Shelf initiative developed by our beer business by adapting and implementing this program for wine and spirits retailers in fiscal 2021. We recently took pricing on our Woodbridge brand beginning 1 March, and to date, we have seen no negative impact from this action due to the consumer need to stick with tried and true brands in this time of uncertainty.

We have a strong innovation pipeline planned for the coming year, including upcoming line extensions for female instructor biking, and the our T.D. space.

The launch of a new high West Premixed cocktail and the spirit space and the expansion of our highly successful barrel aged blind program.

You can also expect us to introduce new to world brands in the wine category.

In addition, we plan to leverage the success of shopper first shelf initiative to both by a beer business by adapting and implementing this program for wine and spirits retailers in fiscal 21.

We recently, we took pricing on our Woodbridge brand beginning March 1st and today, we have seen no negative impact from this action due to the consumer need just stick with tried and true brands and this time of uncertainty.

David Brown: We are actively supporting this price increase with marketing investments, including national TV, as well as digital and social advertising. We are in the final phase of completing the revised Gallo deal, and we continue to work with the FTC primarily on the brands that have been excluded from the original deal. We have communicated our intent to retain the Cook's and J. Roget brands, and the FTC is currently reviewing our business plans to support these brands in the future. In addition, the FTC is vetting the potential buyers we have identified for Paul Masson Grande Amber Brandy and our concentrate business. We continue to work in collaboration with Gallo to satisfy all FTC obligations, and both companies are fully committed to getting this deal done.

We are actively supporting this price increase with marketing investments, including national TV, as well as digital and social advertising. We are in the final phase of completing the revised Gallo deal, and we continue to work with the FTC primarily on the brands that have been excluded from the original deal. We have communicated our intent to retain the Cook's and J. Roget brands, and the FTC is currently reviewing our business plans to support these brands in the future. In addition, the FTC is vetting the potential buyers we have identified for Paul Masson Grande Amber Brandy and our concentrate business. We continue to work in collaboration with Gallo to satisfy all FTC obligations, and both companies are fully committed to getting this deal done.

We are actively supporting this price increase with marketing investments, including National TV, as well as digital and social social advertising.

We're in the final phase of completing the revised Gallo deal and we continue to work with the FTC primarily on the brands that have been excluded from the original deal.

We have communicated our intent to retain the cookson Jay Roget brands and the FTC is currently reviewing our business plans just important step to support these brands in the future.

In addition, the FTC are studying the potential buyers, we have identified for Palma Sun Grand Denver, Brandy and our concentrate business.

We continue to work in collaboration with go to satisfy all FTC obligations and both companies are fully committed to getting this deal done what each step we're marching closer to the finish line, we expect to close the deal around the end of our first quarter.

David Brown: With each step, we are marching closer to the finish line, and we expect to close the deal around the end of our Q1. Finally, we're very encouraged by the steps David Klein is taking in his new role as CEO of Canopy Growth. David and the Canopy team recently announced they are focused on four key areas: improving Canopy's connection with consumers, instilling greater focus and discipline across the organization, defining a visible path for profitability and positive cash flow, and building the company's credibility with key stakeholders. Canopy continues to be the global leader in total cannabis sales with a leading market share in Canada. The company recently took steps to right-size its business to better align with consumer demand and position the company for long-term success.

With each step, we are marching closer to the finish line, and we expect to close the deal around the end of our Q1. Finally, we're very encouraged by the steps David Klein is taking in his new role as CEO of Canopy Growth. David and the Canopy team recently announced they are focused on four key areas: improving Canopy's connection with consumers, instilling greater focus and discipline across the organization, defining a visible path for profitability and positive cash flow, and building the company's credibility with key stakeholders. Canopy continues to be the global leader in total cannabis sales with a leading market share in Canada. The company recently took steps to right-size its business to better align with consumer demand and position the company for long-term success.

Finally, we're very encouraged by the steps David Klein is taking in his new role as CEO of cannot be growth.

David canopy team recently announced they are focused on four key areas improving canopies connection with consumers.

Still in greater focus and discipline across the organization.

Finding a visible past path for profitability positive cash flow and building the company's credibility with key stakeholders.

Canopy continues to be the global leader in total Canada sales with a leading market share in Canada.

The company recently took steps to right size its business to better align with consumer demand and position the company for long term success.

Canopy, just launched its first cannabis beverage product Tweed houndstooth, and soda, which has received overwhelmingly positive consumer response, and they plan to roll out additional beverage products over the last few months and I can tell you. They are awfully good fees are.

David Brown: Canopy just launched its first cannabis beverage product, Tweed Houndstooth and Soda, which has received an overwhelmingly positive consumer response, and they plan to roll out additional beverage products over the last few months. I can tell you, they are awfully good. These are game-changers. They also have completed their first shipments of cannabis-infused edible chocolates and Juju Power 510 batteries in December of 2019. We expect further revenue growth as products like vape, edibles, and beverages gain traction in the marketplace now that Rec. 2.0 products have been legalized in Canada. Canopy remains best positioned to win long-term and to face challenges associated with its current economic environment as many competitors without access to capital show signs of trouble. In closing, we reached the conclusion of an excellent year in fiscal 2020.

Canopy just launched its first cannabis beverage product, Tweed Houndstooth and Soda, which has received an overwhelmingly positive consumer response, and they plan to roll out additional beverage products over the last few months. I can tell you, they are awfully good. These are game-changers. They also have completed their first shipments of cannabis-infused edible chocolates and Juju Power 510 batteries in December of 2019. We expect further revenue growth as products like vape, edibles, and beverages gain traction in the marketplace now that Rec. 2.0 products have been legalized in Canada. Canopy remains best positioned to win long-term and to face challenges associated with its current economic environment as many competitors without access to capital show signs of trouble. In closing, we reached the conclusion of an excellent year in fiscal 2020.

Game changers.

They also have completed their first shipments of Canada's infused edible chocolates and juju power 510 batteries in December of 2019.

We expect further revenue from its products like they edibles and beverages gain traction in the marketplace now the RAC 2.0 products have been legalized in Canada.

Canopy remains best positioned to win long term.

And to face challenges associated with this current economic environment as many competitors without access to capital show signs of trial.

In closing.

We reached the conclusion of an excellent year in fiscal 20.

David Brown: Our path to these impressive results was paved with great execution and consumer obsession in growing our core business supported by investments to enhance our portfolio and our operations. We are now facing an increasingly challenging operating environment and rapidly changing market conditions. As you can see from our press release, we are not providing formal guidance. However, we provided the targets that are included in our original fiscal 2021 plan prior to the COVID-19 crisis. My goal in doing this is to reiterate that our strategy remains unchanged and to provide the confidence we have in the growth prospects for our core business as I continue to feel very optimistic about our long-term opportunities. When we look at the beverage alcohol category, we are generally a recession-resistant industry. In previous recessions and downturns, the TBA industry has generally been non-cyclical and only minimally affected.

Our path to these impressive results was paved with great execution and consumer obsession in growing our core business supported by investments to enhance our portfolio and our operations. We are now facing an increasingly challenging operating environment and rapidly changing market conditions. As you can see from our press release, we are not providing formal guidance. However, we provided the targets that are included in our original fiscal 2021 plan prior to the COVID-19 crisis. My goal in doing this is to reiterate that our strategy remains unchanged and to provide the confidence we have in the growth prospects for our core business as I continue to feel very optimistic about our long-term opportunities. When we look at the beverage alcohol category, we are generally a recession-resistant industry. In previous recessions and downturns, the TBA industry has generally been non-cyclical and only minimally affected.

Our path to these impressive results was paid with great execution and consumer obsession in growing our core business supported by investments to enhance our portfolio and our operations.

We're now facing an increasingly challenging operating environment and rapidly changing market conditions.

As you can see from our press release, we're not providing formal guidance. However, we provided the targets that are included in our original fiscal 21 plan prior to the covert 19 crisis.

Michael in doing this is to reiterate that our strategy remains unchanged and to provide confidence we have in the growth prospects for our core business as I continue to feel very optimistic about our long term opportunities.

When we look at the beverage alcohol category, we are generally a recession resistant industry.

Previous recessions and downturns the TV a industry has generally been non cyclical and only minimally affected.

David Brown: Bottom line, we manage our business for the long term, making tough but necessary decisions to adapt to consumer trends while always looking forward to deliver what's next. We will continue to quickly adapt to rapidly evolving market dynamics, which is a continuation of who we've always been. Now, with that, I'd like to turn the call over to Garth, who will review our financial results for fiscal 2020 and our financial focus for 2021. Garth? Thank you, Bill. And hello, everyone. Fiscal 2020 marked another great year for Constellation Brands. We produced strong beer operating performance and cash flow results, while our wine and spirits power brand strategy continued to gain momentum as marketplace performance for these brands outpaced the overall US wine and spirits category for fiscal 2020. Specifically, in fiscal 2020, we grew comparable diluted EPS excluding Canopy equity earnings by 6%.

Bottom line, we manage our business for the long term, making tough but necessary decisions to adapt to consumer trends while always looking forward to deliver what's next. We will continue to quickly adapt to rapidly evolving market dynamics, which is a continuation of who we've always been. Now, with that, I'd like to turn the call over to Garth, who will review our financial results for fiscal 2020 and our financial focus for 2021. Garth?

Bottom line, we manage our business for the long term, making tough, but necessary decisions to adapt to consumer trends well always looking forward to de lever what's next.

We will continue to quickly adapt to rapidly evolving market dynamics, which is a continuation of who we've always been.

With that I'd like to turn the call over to guard Who'll review, our financial results for fiscal 20, and our financial focus for 21 God.

Garth Hankinson: Thank you, Bill. And hello, everyone. Fiscal 2020 marked another great year for Constellation Brands. We produced strong beer operating performance and cash flow results, while our wine and spirits power brand strategy continued to gain momentum as marketplace performance for these brands outpaced the overall US wine and spirits category for fiscal 2020. Specifically, in fiscal 2020, we grew comparable diluted EPS excluding Canopy equity earnings by 6%.

Thank you Bill and Hello, everyone.

Fiscal 2000, Mark another great year for constellation brands, we produce strong beer operating performance and Cashcall results, well, our wine and spirits power brand strategy continued to gain momentum as marketplace performance for these brands outpaced the overall U.S. wine and spirits category for fiscal 20.

Specifically in fiscal 20, we grew comparable basis diluted EPS, excluding canopy equity earnings by 6%.

David Brown: In addition, we generated record operating cash flow of almost $2.6 billion and record free cash flow of $1.8 billion. We also reduced debt by more than $1.4 billion and came within our target leverage range. And we returned over $600 million of cash to shareholders in dividends and share repurchases. Before going into further detail on the fiscal 2020 results, I want to take a moment to discuss the rapidly changing market conditions due to the impact of COVID-19. To echo Bill, while the COVID-19 outbreak and situation is unprecedented and creates a lot of uncertainty and volatility, one thing remains clear: we will continue to be agile in the marketplace and actively manage and responsibly navigate our way through this crisis. Constellation is a strong cash flow generator, has ample liquidity, financial flexibility, and significant capacity under our $2 billion revolving credit facility.

In addition, we generated record operating cash flow of almost $2.6 billion and record free cash flow of $1.8 billion. We also reduced debt by more than $1.4 billion and came within our target leverage range. And we returned over $600 million of cash to shareholders in dividends and share repurchases. Before going into further detail on the fiscal 2020 results, I want to take a moment to discuss the rapidly changing market conditions due to the impact of COVID-19. To echo Bill, while the COVID-19 outbreak and situation is unprecedented and creates a lot of uncertainty and volatility, one thing remains clear: we will continue to be agile in the marketplace and actively manage and responsibly navigate our way through this crisis. Constellation is a strong cash flow generator, has ample liquidity, financial flexibility, and significant capacity under our $2 billion revolving credit facility.

In addition, we generated record operating cash flow almost $2.6 billion and record free cash flow of $1.8 billion.

We also reduced debt by more than $1.4 billion and came within our target leverage range.

And we were turned over $600 million of cash to shareholders and dividends and share repurchases.

Before going into further detail on fiscal 20 results I want to take a moment to discuss the rapidly changing market conditions due to the impact of cobot My team.

To Echo Bill well to cope with my team outbreak and situation is unprecedented and creates a lot of uncertainty and volatility one thing remains clear.

We will continue to be agile in the marketplace and actively manage and responsibly navigate our way through this crisis.

Constellation is a strong cash flow generator.

Ample liquidity financial flexibility and significant capacity under our $2 billion revolving credit facility.

David Brown: Additionally, we remain committed to maintaining our investment-grade credit rating, which allows for flexible access to capital markets at more favorable rates. Furthermore, as Bill mentioned, we continue to work in collaboration with Gallo to satisfy all FTC obligations, and both companies remain fully committed to finalizing this transaction. As such, upon close of the Gallo transaction, we expect to receive approximately $850 million in cash, which we plan to use for debt paydown to further advance and progress to further advance the progress we've made to reduce our leverage and maintain it within our targeted range. More on fiscal 2021 in a minute as I want to continue to expand on the fiscal 2020 financial performance we delivered before the COVID-19 impacts began to unfold, where I'll generally focus on comparable basis financial results.

Additionally, we remain committed to maintaining our investment-grade credit rating, which allows for flexible access to capital markets at more favorable rates. Furthermore, as Bill mentioned, we continue to work in collaboration with Gallo to satisfy all FTC obligations, and both companies remain fully committed to finalizing this transaction. As such, upon close of the Gallo transaction, we expect to receive approximately $850 million in cash, which we plan to use for debt paydown to further advance and progress to further advance the progress we've made to reduce our leverage and maintain it within our targeted range. More on fiscal 2021 in a minute as I want to continue to expand on the fiscal 2020 financial performance we delivered before the COVID-19 impacts began to unfold, where I'll generally focus on comparable basis financial results.

Additionally, we remain committed to maintaining our investment grade credit rating, which allows for flexible access to capital markets at more favorable rates.

Furthermore, as Bill mentioned, we continue to work in collaboration with Gallo to satisfy all FTC obligations and both companies remain fully committed to finalizing this transaction.

As such upon close of the Gallo transaction, we expect to receive approximately $850 million in cash, which we plan to use for debt pay down to further advance and progress to further advance the progress we've made to reduce our leverage and maintain it within our targeted range.

More of fiscal 21 in a minute as I want to continue to expand on the fiscal 2000 <unk> financial performance, we delivered before the Cobiz 19 impacts again wonderful.

Well generally focused on a comparable basis financial results.

David Brown: Starting with beer, net sales increased 8% primarily due to shipment volume growth of 6% and favorable pricing. Depletion volume growth for the year came at 7.5%, while depletion volume growth for our import portfolio grew 8%. As expected, depletion volume growth was higher than shipment volume growth primarily due to the FY19 year-end shipment timing benefit that reversed during our fiscal '20, most of which occurred in Q4. Beer gross margin increased 120 basis points to 55.6%, driven by favorability in pricing and FX. Our operational cost and efficiency initiatives helped offset the impact of inflation on costs such as materials, labor, and freight.

Starting with beer, net sales increased 8% primarily due to shipment volume growth of 6% and favorable pricing. Depletion volume growth for the year came at 7.5%, while depletion volume growth for our import portfolio grew 8%. As expected, depletion volume growth was higher than shipment volume growth primarily due to the FY19 year-end shipment timing benefit that reversed during our fiscal '20, most of which occurred in Q4. Beer gross margin increased 120 basis points to 55.6%, driven by favorability in pricing and FX. Our operational cost and efficiency initiatives helped offset the impact of inflation on costs such as materials, labor, and freight.

Starting with beer.

Net sales increased 8%, primarily due to shipment volume growth of 6% and favorable pricing.

Depletion volume growth for the year came at 7.5% well depletion volume growth for import portfolio grew 8%.

As expected accretion five growth was higher than shipment volume growth, primarily due to the f. widen 19 year end shipment timing benefit that reversed during our fiscal 20, most of which occurred in Q4.

Beer gross margin increased 120 basis points at 55.6% driven by favorability in pricing and FX.

Our operational cost and efficiency initiatives helped offset the impact of inflation cost such as materials labor and freight.

David Brown: Marketing as a percent of net sales increased 70 basis points to 10%, primarily driven by increased investment for the Modelo and Corona brand families and in support of our innovation activities, including Corona Hard Seltzer, which came in at the higher end of our previous guiding range. As a result of the above-mentioned factors, we achieved record full-year operating margin of 40% and improvement of 70 basis points. Moving to wine, net sales declined 6% on shipment volumes down approximately 8%. Full-year net sales results outperformed our previous expectations, primarily due to stronger mix benefits from our power brands in Q4, driven by The Prisoner, Unshackled, and Meiomi. Depletion volume declined 5%, while power brand depletions were up 2%. We remain confident that our premiumization strategy is working as power brand trends accelerated as we finished fiscal 2020.

Marketing as a percent of net sales increased 70 basis points to 10%, primarily driven by increased investment for the Modelo and Corona brand families and in support of our innovation activities, including Corona Hard Seltzer, which came in at the higher end of our previous guiding range. As a result of the above-mentioned factors, we achieved record full-year operating margin of 40% and improvement of 70 basis points. Moving to wine, net sales declined 6% on shipment volumes down approximately 8%. Full-year net sales results outperformed our previous expectations, primarily due to stronger mix benefits from our power brands in Q4, driven by The Prisoner, Unshackled, and Meiomi. Depletion volume declined 5%, while power brand depletions were up 2%. We remain confident that our premiumization strategy is working as power brand trends accelerated as we finished fiscal 2020.

Marketing as a percent of net sales increased 70 basis points to 10%, primarily driven by increased investment for the Modelo and krona brand families and in support of our innovation activities, including Corona hard Seltzer, which came in at the higher end up our previous guidance range.

As a result of the Bob mentioned factors, we achieved record for your operating margin of 40% an improvement 70 basis points.

Moving to why.

Net sales declined 6% I shouldn't volumes down approximately 8%.

Full year net sales result, outperformed our previous expectations, primarily due to stronger mix benefits from our power brands in Q4, driven by the prisoner Unshackled and May on me.

Depletion volume decline, 5%, while power brand Depletions were up 2%.

We remain confident that our Premiumization strategy is working as power brand trends accelerated as we finished fiscal pointing.

David Brown: Operating margin decreased 50 basis points to 26% as mixed benefits and favorable SG&A were more than offset by higher COGS, primarily reflecting increased grape cost and an increase in marketing as a percent of net sales, driven by our premiumization and innovation activities. Corporate expenses came in slightly better than our previous guidance, finishing at $224 million, up approximately 13% versus last fiscal year. The increase was primarily driven by an increase in insurance costs, higher incentive compensation, and a ramp-up in IT spend to support our SAP S/4HANA implementations. Those increases were partially offset by a reduction in consulting costs. Comparable basis interest expense for the year increased 11% to $429 million. This primarily reflects additional interest expense related to the funding of our incremental investment in Canopy Growth in November 2018, partially offset by our debt paydown during fiscal 2020.

Operating margin decreased 50 basis points to 26% as mixed benefits and favorable SG&A were more than offset by higher COGS, primarily reflecting increased grape cost and an increase in marketing as a percent of net sales, driven by our premiumization and innovation activities. Corporate expenses came in slightly better than our previous guidance, finishing at $224 million, up approximately 13% versus last fiscal year. The increase was primarily driven by an increase in insurance costs, higher incentive compensation, and a ramp-up in IT spend to support our SAP S/4HANA implementations. Those increases were partially offset by a reduction in consulting costs. Comparable basis interest expense for the year increased 11% to $429 million. This primarily reflects additional interest expense related to the funding of our incremental investment in Canopy Growth in November 2018, partially offset by our debt paydown during fiscal 2020.

Operating margin decreased 50 basis points to 26% as mix benefits and favorable SGN a were more than offset by higher Cogs, primarily reflecting increased grey card cost and an increase in marketing as a percent of net sales driven by our premiumization and innovation activities.

Corporate expenses came in slightly better than our previous guidance, finishing at 224 million up approximately 13% versus last fiscal year.

The increase was primarily driven by increased in insurance costs higher incentive compensation and a ramp up in high Ti spend to support our sep as for holiday implementations.

Those increases were partially offset by a reduction in consulting costs.

Couple of <unk> basis interest expense for the year increased 11% to 429 million. This primarily reflects additional interest expense related to the funding of our incremental investment and cannot be growth in November 2018.

Partially offset by our debt pay down during fiscal <unk>.

David Brown: Our comparable basis effective tax rate, excluding Canopy equity and earnings, came in at 16.1% versus 18.2% last year. This improvement was driven by lower effective rates from our foreign businesses, partially offset by a lower level of stock-based compensation benefits. While stock-based compensation benefits were lower on a full-year basis, the benefit came in higher than expected during Q4, which drove the tax rate favorability versus our previous guidance. Now, let's review Q4 results. Beer net sales increased 9%, primarily due to shipment volume growth of 7% and favorable pricing. Depletion volume growth for our import portfolio showed continued strength, growing over 11%. When including an unfavorable impact from Ballast Point, total beer depletions were up 10.8%, including the benefit of an additional selling date in Q4.

Our comparable basis effective tax rate, excluding Canopy equity and earnings, came in at 16.1% versus 18.2% last year. This improvement was driven by lower effective rates from our foreign businesses, partially offset by a lower level of stock-based compensation benefits. While stock-based compensation benefits were lower on a full-year basis, the benefit came in higher than expected during Q4, which drove the tax rate favorability versus our previous guidance. Now, let's review Q4 results. Beer net sales increased 9%, primarily due to shipment volume growth of 7% and favorable pricing. Depletion volume growth for our import portfolio showed continued strength, growing over 11%. When including an unfavorable impact from Ballast Point, total beer depletions were up 10.8%, including the benefit of an additional selling date in Q4.

Our copper basis effective tax rate, excluding cannot be equity earnings came in at 16.1% versus 18.2% last year.

This improvement was driven by lower effective rates from our foreign businesses, partially offset by lower level of stock based compensation benefits.

While stock based compensation benefits were lower on a full year basis. The benefit came in higher than expected during Q4, which drove the tax rate favorability versus our previous guidance.

Now, that's where you Q4 results.

Beer net sales increased 9%, primarily due to shipment volume growth of 7% and favorable pricing.

We should find growth for our import portfolio showed continued strength growing over 11%.

Including an unfavorable impact from ballast point total beer depletions were up 10.8%, including the benefit of additional selling day in Q4.

David Brown: Beer operating margin decreased 120 basis points to 39.3% as increased marketing and SG&A spend was partially offset by benefits from pricing and COGS. Marketing as a percent of net sales was 8.7%, or 230 basis points higher than Q4 last year, driven by marketing investments and spend timing. Wine and spirits net sales were up 1% for Q4, while shipment volume was down approximately 1%. As stated earlier, power brands continue to drive mixed benefits. Operating margin increased 120 basis points to 28.9%, primarily due to mixed benefits and lower marketing and SG&A spend. Moving to fiscal 2020 free cash flow, which we define as net cash provided by operating activities, less CapEx, we generated a record $1.8 billion compared to $1.4 billion last year. This represents an impressive 34% increase.

Beer operating margin decreased 120 basis points to 39.3% as increased marketing and SG&A spend was partially offset by benefits from pricing and COGS. Marketing as a percent of net sales was 8.7%, or 230 basis points higher than Q4 last year, driven by marketing investments and spend timing. Wine and spirits net sales were up 1% for Q4, while shipment volume was down approximately 1%. As stated earlier, power brands continue to drive mixed benefits. Operating margin increased 120 basis points to 28.9%, primarily due to mixed benefits and lower marketing and SG&A spend. Moving to fiscal 2020 free cash flow, which we define as net cash provided by operating activities, less CapEx, we generated a record $1.8 billion compared to $1.4 billion last year. This represents an impressive 34% increase.

Beer operating margin decreased 120 basis points to 39.3% as increased marketing and as she and I spend was partially offset by benefits from pricing in Cogs.

Marketing as a percent of net sales was 8.7% or 230 basis points higher than Q4 last year, driven by marketing investments and spend timing.

Wine and spirits net sales were up 1% for Q4, well shouldn't volume was down approximately 1%.

As stated earlier power brands continue to drive mix benefits.

Operating margin increased 120 basis points to 28.9%.

Primarily due to mix benefits and lower marketing and SJ spend.

Moving to fiscal 2000 free cash flow, which we defined as net cash provided by operating activities less capex, we generated a record 1.8 billion.

Compared to 1.4 billion last year.

This represents an impressive 34% increase.

David Brown: Free cash flow improvement reflects strong operating cash flow and lower CapEx in the beer segment. CapEx totaled $727 million, or 18% below last year's spend, and in line with our most recent guidance. This included approximately $520 million of CapEx for our Mexico beer operations expansion. Furthermore, through fiscal 2020, we've cumulatively spent approximately $700 million in capital related to our Mexico expansion project. Moving to our full-year fiscal 2021 P&L and cash flow targets. Given the unprecedented COVID-19 events that began to abruptly and dramatically impact consumers and the marketplace, almost concurrently with the start of our fiscal year, and given the related uncertainty, volatility, and fast-moving developments that have evolved over the month of March, we do not believe it is prudent or appropriate to provide formal financial guidance for fiscal 2021 at this time.

Free cash flow improvement reflects strong operating cash flow and lower CapEx in the beer segment. CapEx totaled $727 million, or 18% below last year's spend, and in line with our most recent guidance. This included approximately $520 million of CapEx for our Mexico beer operations expansion. Furthermore, through fiscal 2020, we've cumulatively spent approximately $700 million in capital related to our Mexico expansion project. Moving to our full-year fiscal 2021 P&L and cash flow targets. Given the unprecedented COVID-19 events that began to abruptly and dramatically impact consumers and the marketplace, almost concurrently with the start of our fiscal year, and given the related uncertainty, volatility, and fast-moving developments that have evolved over the month of March, we do not believe it is prudent or appropriate to provide formal financial guidance for fiscal 2021 at this time.

Free cash flow improvement reflects strong operating cash flow and lower capex in the beer segment.

Capex totaled $727 million or 18% below last year's spend and inline with our most recent guidance.

This included approximately 520 million of Capex for Mexico beer operation expansion.

Furthermore, through fiscal 20, Weve cubo be spent approximately 700 million in capital related to our Mexicali expansion expansion project.

Moving to our full year fiscal 21 piano and cash flow targets.

Given the unprecedented covert 19 events that began to abruptly and dramatically impact consumers in the marketplace almost concurrently with the Starbucks fiscal year.

Given the related uncertainty volatility and fast moving developments that have evolved over the month of March.

We do not believe it is prudent where appropriate to provide formal financial guidance for fiscal 21 at this time.

David Brown: With that being said, we thought it would be helpful to highlight some of our key financial targets, assuming a normalized environment for fiscal 2021 prior to COVID-19, as referenced as you think through your modeling and scenario work given the changing marketplace dynamics. For pre-COVID-19 fiscal 2021, the beer business targeted net sales growth of 7% to 8%, which includes 1% to 2% of pricing within our Mexican portfolio. Including the impact of the Ballast Point investment, organic net sales growth is 8% to 10%. Operating margin in the 39.5% to 40% range as investments for the Corona Hard Seltzer launch, as well as inflation headwinds primarily related to glass, raw materials, transportation, and labor costs in Mexico, are expected to be greater than the benefits from product pricing and productivity initiatives. Moving to wine and spirits.

With that being said, we thought it would be helpful to highlight some of our key financial targets, assuming a normalized environment for fiscal 2021 prior to COVID-19, as referenced as you think through your modeling and scenario work given the changing marketplace dynamics. For pre-COVID-19 fiscal 2021, the beer business targeted net sales growth of 7% to 8%, which includes 1% to 2% of pricing within our Mexican portfolio. Including the impact of the Ballast Point investment, organic net sales growth is 8% to 10%. Operating margin in the 39.5% to 40% range as investments for the Corona Hard Seltzer launch, as well as inflation headwinds primarily related to glass, raw materials, transportation, and labor costs in Mexico, are expected to be greater than the benefits from product pricing and productivity initiatives. Moving to wine and spirits.

With that being said, we thought it would be helpful to highlight some of our chief financial targets, assuming a normalized environment for fiscal 21 prior to cope with 19.

As referenced as you think through your modeling and scenario work given the changing marketplace dynamics.

For pre Cobot 19 fiscal 21, the beer business targeted net sales growth of 7% to 8%, which includes 1% to 2% of pricing within our Mexican portfolio.

Including the impact of the ballast point Divesture organic net sales growth is 8% to 10%.

Operating margin into 39.5% to 40% range as investments for the Corona hard Seltzer lodge as well as inflation headwinds primarily related to glass raw materials transportation and labor costs, Mexico are expected to be greater than the benefits from product pricing and productivity program.

Activity initiatives.

Moving to wine and spirits for pre Cobot 19 fiscal 21, the wine and spirits business target net sales and operating income declined approximately 30% to 35%.

David Brown: For pre-COVID-19 fiscal 2021, the wine and spirits business targeted net sales and operating income decline of approximately 30% to 35%. This assumes the revised wine and spirits divestiture transaction with Gallo and the separate divestitures of Paul Masson Grande Amber Brandy and the Concentrate business close around the end of Q1 fiscal 2021, while the separate but related agreement to divest the Nobilo wine brand to Gallo closes by the end of Q2 fiscal 2021. Lastly, the plan to retain the Cook's and J. Roget Sparkling wine brands is also included in our pre-COVID-19 target for fiscal 2021.

For pre-COVID-19 fiscal 2021, the wine and spirits business targeted net sales and operating income decline of approximately 30% to 35%. This assumes the revised wine and spirits divestiture transaction with Gallo and the separate divestitures of Paul Masson Grande Amber Brandy and the Concentrate business close around the end of Q1 fiscal 2021, while the separate but related agreement to divest the Nobilo wine brand to Gallo closes by the end of Q2 fiscal 2021. Lastly, the plan to retain the Cook's and J. Roget Sparkling wine brands is also included in our pre-COVID-19 target for fiscal 2021.

This assumes the revised wine spirits Divesture transaction would go up and a separate divestitures of palms timeframe never brandy and the concentrate business close around the end of Q1 fiscal 21.

Well the separate but related agreement to divest the Novela wind ran figallo closes body end of Q2 fiscal 21.

Lastly, the plan to retain the cooks and Jerry Jay sparkling wine brands is also included in our pre Cobiz 19 target for fiscal 21.

Our pre Cobiz 19 expectation for Q1 wine and spirits results assumed a decline of 25% to 30% in sales and operating income due to the following factors.

David Brown: Our pre-COVID-19 expectation for Q1 wine and spirits results assumed a decline of 25% to 30% in sales and operating income due to the following factors: unfavorable Q1 FY21 comparison due to a very strong order last year for the brands to be divested; sales of the Black Velvet brands are not included in this year's Q1 result as a result of the divestiture late last year; and distributors have ample supply of brands targeted for the Gallo divestiture as they assumed a fiscal 2020 year-end close on the transaction. Our retained portfolio of power brands in the wine and spirits business, including Cook's and J. Roget, targeted net sales growth of 2% to 4% on a pre-COVID-19 basis for fiscal 2021.

Our pre-COVID-19 expectation for Q1 wine and spirits results assumed a decline of 25% to 30% in sales and operating income due to the following factors: unfavorable Q1 FY21 comparison due to a very strong order last year for the brands to be divested; sales of the Black Velvet brands are not included in this year's Q1 result as a result of the divestiture late last year; and distributors have ample supply of brands targeted for the Gallo divestiture as they assumed a fiscal 2020 year-end close on the transaction. Our retained portfolio of power brands in the wine and spirits business, including Cook's and J. Roget, targeted net sales growth of 2% to 4% on a pre-COVID-19 basis for fiscal 2021.

Unfavorable Q1 F. Why 21 comparison due to a very strong quarter last year for the brands to be divested.

Sales of the Black Velvet brands are not included in this years Q1 result, as result of the divestiture late last year.

And distributors have what have ample supply of brands targeted for the gallon divestiture as they seem to fiscal 20 year end close on the transaction.

Our retained portfolio power brands in the wine spirits business, including cooks and Jay Roueche, Jay targeted net sales growth of 2% to 4% on a pre cobot 19 basis for fiscal 2001.

David Brown: Other pre-COVID-19 target assumptions include interest expense in the range of $385 to 395 million, comparable tax rate excluding Canopy equity and earnings of approximately 18%, weighted average diluted shares outstanding targeted at approximately $195 million, and operating cash flow in the range of $2.3 to 2.5 billion. This is a good spot to discuss a few items around capital management and deployment. As you would expect, we are reviewing in detail all expenses and capital expenditure plans for refinement and flexibility to make sure we prioritize and optimize this spend given the current business conditions and economic environment. While our wine and spirits EBIT is moving down in fiscal 2021 due to the planned divestitures, we are maintaining our current quarterly dividend rate. In addition, we remain focused on our goal of returning significant capital to shareholders balanced between dividend payments and share repurchases.

Other pre-COVID-19 target assumptions include interest expense in the range of $385 to 395 million, comparable tax rate excluding Canopy equity and earnings of approximately 18%, weighted average diluted shares outstanding targeted at approximately $195 million, and operating cash flow in the range of $2.3 to 2.5 billion. This is a good spot to discuss a few items around capital management and deployment. As you would expect, we are reviewing in detail all expenses and capital expenditure plans for refinement and flexibility to make sure we prioritize and optimize this spend given the current business conditions and economic environment. While our wine and spirits EBIT is moving down in fiscal 2021 due to the planned divestitures, we are maintaining our current quarterly dividend rate. In addition, we remain focused on our goal of returning significant capital to shareholders balanced between dividend payments and share repurchases.

Other pre covert 19 target assumptions include interest expense in the range of 385 to 395 million.

Comparable tax rate, excluding cap it cannot be equity earnings of approximately 18%.

Weighted average diluted shares outstanding targeted at approximately 195 million.

Operating cash flow in the range of 2.3 to 2.5 billion.

This is a good spot to discuss a few items around capital management an appointment.

As you would expect we're viewing in detail all expenses in capital expenditure plans for us for refinement and flexibility to make sure we prioritized and optimize the spend given the current business conditions and economic environment.

Well, our wine spirits EBIT is moving doubted fiscal 21 due to planned divestitures, we are maintaining our current quarterly dividend rate.

In addition, we remain focused on our gold returning significant capital shareholders balance between dividend payments and share repurchases.

David Brown: However, in the short term, given the uncertainty around the COVID-19 impact on our business, we will be maximizing free cash flow and utilizing that free cash flow to reduce debt and leverage. We believe longer term we retain the full flexibility to fulfill our $4.5 billion commitment over time. In closing, I want to reiterate that Constellation Brands is a strong cash flow generator, has ample liquidity, and financial flexibility. We remain focused on prudently navigating through the challenging environment presented by COVID-19 and will look to provide updates, including full-year guidance, as more factors become known. With that, Bill and I are happy to take your questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please limit yourself to one question.

However, in the short term, given the uncertainty around the COVID-19 impact on our business, we will be maximizing free cash flow and utilizing that free cash flow to reduce debt and leverage. We believe longer term we retain the full flexibility to fulfill our $4.5 billion commitment over time. In closing, I want to reiterate that Constellation Brands is a strong cash flow generator, has ample liquidity, and financial flexibility. We remain focused on prudently navigating through the challenging environment presented by COVID-19 and will look to provide updates, including full-year guidance, as more factors become known. With that, Bill and I are happy to take your questions.

However, in the short term given the uncertainty around the cobot 19 impact on our business. We will you maximizing free cash flow and utilizing that free cash flow to reduce that and leverage.

We believe longer term, we retained a full flexibility to fulfill our 4.5 billion commitment overtime.

In closing I want to reiterate the constellation is a strong cash flow generator had ample liquidity and financial flexibility.

We remain focused on prudently navigating through the challenging environment presented by Kobin 19, and we'll look to provide updates including full year guidance as more factors become though [noise].

With that Bill and I are happy to take your questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please limit yourself to one question. Our first question comes from Bonnie Herzog with Goldman Sachs. You may proceed with your question.

[noise]. Thank you as a reminder, that's the question you need press Star one on your telephone to withdraw your question press the pound <unk>.

Please limit yourself to one question.

David Brown: Our first question comes from Bonnie Herzog with Goldman Sachs. You may proceed with your question. All right. Thank you. Hello, everyone. Welcome back, Bonnie. Hi. Oh, yeah. Thank you. Say, I wanted to get some clarification on the Mexican government's decision, which determined that alcohol is nonessential. And I just wanted to make sure I understand what you're sharing with us today, that if I heard you correctly, you are not suspending your production. But what I'm hearing is a lot of the other brewers are suspending. So I just wanted to make sure I heard you correctly. And then curious to hear how you see this situation evolving and maybe what your contingency plans are. You did share with us some of the, I think, finished inventory that you have on hand to meet the US demand.

First question comes from Bonnie Herzog with Goldman Sachs. You May proceed with your question.

Bonnie Herzog: All right. Thank you. Hello, everyone.

Alright, Thank you Hello, everyone.

Bill Newlands: Welcome back, Bonnie.

Well go back money.

Bonnie Herzog: Hi. Oh, yeah. Thank you. Say, I wanted to get some clarification on the Mexican government's decision, which determined that alcohol is nonessential. And I just wanted to make sure I understand what you're sharing with us today, that if I heard you correctly, you are not suspending your production. But what I'm hearing is a lot of the other brewers are suspending. So I just wanted to make sure I heard you correctly. And then curious to hear how you see this situation evolving and maybe what your contingency plans are. You did share with us some of the, I think, finished inventory that you have on hand to meet the US demand. But I just kind of wanted to understand where you're at with that specific situation. Thanks.

Yeah.

I wanted.

To get some clarification on you know that the Mexican government's decision, which determine that alcohol non essential and I just wanted to make sure I understand what you're you're sharing with us today that.

If I heard you correctly, you are not spending your production, but what I'm hearing is a lot of the other brewers are spending I just wanted to make sure I heard you correctly and then.

Great to hear how you see this situation evolving and maybe what your contingency plans are you did you know share with us some of them I think finish inventory that you have on hand to meet the U.S. demand.

David Brown: But I just kind of wanted to understand where you're at with that specific situation. Thanks. Sure. So as we stand today, we are currently operating. We also have, as I noted in my script, roughly 70 days through the system at either end, and that does not include at retail. That is purely that we have or our distributors have. So we are fairly confident that we will see no disruption at retail from our operations and will be able to meet consumer demand as it continues. Thank you. Our next question comes from Kaumil Gajrawala. With Credit Suisse, she may proceed with her question. Thank you. Good afternoon, everybody. Bill, I think you mentioned that you're working through a series of options on what's going to happen with Mexicali. Obviously, we don't know which of those options you'll take.

But I just kind of wanted to understand where are your out with that except situation. Thanks.

Bill Newlands: Sure. So as we stand today, we are currently operating. We also have, as I noted in my script, roughly 70 days through the system at either end, and that does not include at retail. That is purely that we have or our distributors have. So we are fairly confident that we will see no disruption at retail from our operations and will be able to meet consumer demand as it continues.

Sure.

So as we stand today, we're currently operating.

We also have as I noted in my script.

Roughly 70 days through the system at either and that does not included retail that is purely a that we have or our distributors have.

So we're fairly confident that we will see no disruption at retail from our operations and we'll be able to meet consumer demand as it continues.

Thank you. Our next question comes from Cold Mill cargo Olive from Credit Suisse. You May proceed with your question.

Operator: Thank you. Our next question comes from Kaumil Gajrawala. With Credit Suisse, she may proceed with her question.

Kaumil Gajrawala: Thank you. Good afternoon, everybody. Bill, I think you mentioned that you're working through a series of options on what's going to happen with Mexicali. Obviously, we don't know which of those options you'll take. But could you at least give some insight on what your options are from this stage?

Thank you good afternoon, everybody Bill I think you mentioned a that you're working through a series of options on what's going to happen it was mexicali.

Obviously, we don't know which of those options, you'll take but could you at least give some insight on what your options are from the stage.

David Brown: But could you at least give some insight on what your options are from this stage? We're not prepared to go through what the exact options are. What I would say is this: we had a very productive meeting with the president and his team. I think there is mutual agreement that we have been a strong player in Mexico for 30-plus years and that that strong relationship is going to continue and that we will have solutions for the long term to make sure that we are able to meet the strong consumer demand that we continue to have for our brands. So while I'm not prepared to talk about the specificity of that, we are very comfortable that our discussions will yield strong, medium, and long-term benefits for our business. Thank you. Our next question comes from Vivian Azer with Cowen and Company. You may proceed with your question.

We're not prepared to go through what the exact options are what I would say, that's we had a very productive meeting with the president and his team I think there is a mutual agreement that we have been a strong player in Mexico for 30, plus years and that that that strong really.

Bill Newlands: We're not prepared to go through what the exact options are. What I would say is this: we had a very productive meeting with the president and his team. I think there is mutual agreement that we have been a strong player in Mexico for 30-plus years and that that strong relationship is going to continue and that we will have solutions for the long term to make sure that we are able to meet the strong consumer demand that we continue to have for our brands. So while I'm not prepared to talk about the specificity of that, we are very comfortable that our discussions will yield strong, medium, and long-term benefits for our business.

They should ship is going to continue and that we will have solutions for the long term to make sure that we're able to meet the strong consumer demand that we continued to have for our brands. So while I'm not prepared to talk about the specificity of that we're very comfortable that our discussions will yield strong.

Medium and long term benefits for our business.

Operator: Thank you. Our next question comes from Vivian Azer with Cowen and Company. You may proceed with your question.

Thank you. Our next question comes from Vivien Azer with telling you May proceed with your question.

David Brown: Thank you. Good morning. I was just hoping to go to the on-premise, off-premise mix. Bill, very helpful in terms of contextualizing the revenue mix. But Garth, I was wondering whether you could offer any insights into the margin differential given the presence of kegs in the on-premise. And then as a follow-up to that, is it possible for you guys to move cans and bottles that are no longer being sold in the on-premise into the off-premise with your distributors? Thanks. Thanks for the question, Vivian. So to your first question, the margin differential, there's no margin differential for us between on and off-premise because that all goes through distributors. So same margin for us. As it relates to the question as can we move product out of the on-premise to the off-premise? Let me touch on that, Vivian.

Vivien Azer: Thank you. Good morning. I was just hoping to go to the on-premise, off-premise mix. Bill, very helpful in terms of contextualizing the revenue mix. But Garth, I was wondering whether you could offer any insights into the margin differential given the presence of kegs in the on-premise. And then as a follow-up to that, is it possible for you guys to move cans and bottles that are no longer being sold in the on-premise into the off-premise with your distributors? Thanks.

Thank you good morning, I was hoping on the Gill.

All right.

Well in terms of conceptualizing the revenue mix that Garth I was wondering whether you could offer any insight into the margin differential given.

Okay and in the on premise and then as a follow up that is it possible for you guys can move on cans and bottles that are no longer being sold and the on premise into the on premise many distributors. Thanks.

Garth Hankinson: Thanks for the question, Vivien. So to your first question, the margin differential, there's no margin differential for us between on and off-premise because that all goes through distributors. So same margin for us. As it relates to the question as can we move product out of the on-premise to the off-premise?

Hi, Thanks for question Vivian So to your first question the margin differential there's no margin differential for us between on and off premise because that goes through.

That all goes through distributors. So same same margin for us as it relates to the question is can we move product out of the on premise to the off premise. It let me let me touch on that Vivian in many instances distributors will picked up and redistribute supply.

Bill Newlands: Let me touch on that, Vivian. In many instances, distributors will pick up and redistribute supply where necessary or where a particular channel, like on-premise, has effectively closed in many markets. So yes, that, in fact, often does occur. Obviously, there's some format differences in terms of what people use in particular channels. But yes, it does occur. Just to reiterate the piece of your question as well, we are multiple points across both beer, wine, and spirits less reliant in on-premise than the industry overall. So our business has been skewed historically and still is to the off-premise channel, which in an instance like this is very valuable. But that's not to say, as you heard, that we haven't recognized the many challenges that our friends in the on-premise are having at the moment.

David Brown: In many instances, distributors will pick up and redistribute supply where necessary or where a particular channel, like on-premise, has effectively closed in many markets. So yes, that, in fact, often does occur. Obviously, there's some format differences in terms of what people use in particular channels. But yes, it does occur. Just to reiterate the piece of your question as well, we are multiple points across both beer, wine, and spirits less reliant in on-premise than the industry overall. So our business has been skewed historically and still is to the off-premise channel, which in an instance like this is very valuable. But that's not to say, as you heard, that we haven't recognized the many challenges that our friends in the on-premise are having at the moment.

Where necessary or where a particular channel like on premise.

Has has effectively closed in many markets. So yes that in fact, often does occur obviously, there's some format differences in terms of what people use in particular channels, but yes. It does occur just to reiterate it a piece of your question as well we are multiple points across.

Both beer wine and spirits less reliant and on premise than the industry. Overall, so our business has been skewed historically and still is a true the off premise channel, which on an instance, like this is very valuable, but that's not to say as you heard we haven't record.

Nice to many challenges that are that our friends.

In the on premise, you're having at the moment and we as a company.

David Brown: And we as a company and many of us as individuals have made significant contributions to help those who are in need at the moment and who have run into very challenging times for those who are in the on-premise. Thank you. Our next question comes from Brian Spillane with Bank of America. You may proceed with your question. Hey. Good morning, everyone. Garth, maybe just two quick modeling for you. One, in terms of the on- and off-premise split for wine and spirits and beer, could you give us a sense in the fiscal 2021 plan that was unaffected by COVID, what was the growth expectation in those two channels? So what were you expecting from home versus growth at home?

And we as a company and many of us as individuals have made significant contributions to help those who are in need at the moment and who have run into very challenging times for those who are in the on-premise.

Many of US as individuals have made significant contributions to help those who are in need at the moment and who I have a have run into a very challenging times for those who are in the on premise.

Operator: Thank you. Our next question comes from Bryan Spillane with Bank of America. You may proceed with your question.

Thank you. Our next question comes from Brian Spilling with Bank of America proceed with your question.

Bryan Spillane: Hey. Good morning, everyone. Garth, maybe just two quick modeling for you. One, in terms of the on- and off-premise split for wine and spirits and beer, could you give us a sense in the fiscal 2021 plan that was unaffected by COVID, what was the growth expectation in those two channels? So what were you expecting from home versus growth at home?

Hey, good morning, everyone.

Garner maybe just just two quick modeling is for you one in terms of the on off premise split for spirits and want one it's very your.

And in the fiscal 21 plan that was unaffected <unk> what was the growth expectation in those two channels. So we expect <unk>.

Oh versus growth at home and then second if you could give us a sense wouldn't in both segments of just fixed and variable costs. You know as we kind of want to run through sensitivity that you don't look it up a rough sense of of fixed and variable cost. Thank you.

David Brown: Then second, if you could give us a sense within both segments of just fixed and variable costs as we kind of want to run through sensitivities, it would be helpful to get a rough sense of fixed and variable costs. Thank you. Brian, would you mind repeating the first part of that question around the margins? I didn't quite catch that. The second part is just trying to get an understanding of what is fixed versus variable costs within both the beer and wine and spirits segments. Yep. Okay. The fixed versus variable cost for both businesses is they skew highly towards variable. Call it somewhere in the neighborhood of 2/3 variable, 1/3 fixed, maybe a little bit higher in some cases. On the beer side, the variable costs really are around freight and packaging. And in wine, it's grape costs and packaging.

Then second, if you could give us a sense within both segments of just fixed and variable costs as we kind of want to run through sensitivities, it would be helpful to get a rough sense of fixed and variable costs. Thank you.

Garth Hankinson: Brian, would you mind repeating the first part of that question around the margins? I didn't quite catch that.

[noise] [laughter] about right, which would you mind repeating the first part of that question around the margins I just I didn't quite catch that so so that part is just trying to get an understanding of what it is sick versus variable costs in both the the beer and wine and spirits segments.

Bryan Spillane: The second part is just trying to get an understanding of what is fixed versus variable costs within both the beer and wine and spirits segments.

Garth Hankinson: Yep. Okay. The fixed versus variable cost for both businesses is they skew highly towards variable. Call it somewhere in the neighborhood of 2/3 variable, 1/3 fixed, maybe a little bit higher in some cases. On the beer side, the variable costs really are around freight and packaging. And in wine, it's grape costs and packaging. Then I believe the first part of your question was around the on-premise versus off-premise growth rates. And for on-premise growth rates, we were modeling in flat. And for off-premise, it was mid-single digits.

Okay. So a fixed versus variable cost is for both businesses is based skew highly towards variable you know colleagues somewhere in the neighborhood of two thirds variable I want their fixed maybe a little bit higher in some cases on the beer side yeah.

The variable cost really around free and packaging and in why it's a it's great costs and packaging.

David Brown: Then I believe the first part of your question was around the on-premise versus off-premise growth rates. And for on-premise growth rates, we were modeling in flat. And for off-premise, it was mid-single digits. Thank you. Our next question comes from Nik Modi with RBC Capital Markets. You may proceed with your question. Yeah. Thanks. Good morning, everyone. Bill, just a question on retail. I mean, we are hearing that resets are being pushed back. Spring resets are being pushed back. And I just wanted to get an understanding of impacting you guys because obviously, there's a lot of new products coming into the marketplace. Corona Seltzer has gotten into the market but not in full distribution. So if you could just give us some of the puts and takes in terms of how that's going.

Then I believe you're at the first part of your question was around the on premise versus off premise growth rates and for our on premise growth rates. We were we're modeling in flat as for off premise.

As a mid single digits.

Operator: Thank you. Our next question comes from Nik Modi with RBC Capital Markets. You may proceed with your question.

Thank you. Our next question comes from Nik Modi with RBC capital markets. You May proceed with your question.

Yeah. Thanks, good morning, everyone.

Nik Modi: Yeah. Thanks. Good morning, everyone. Bill, just a question on retail. I mean, we are hearing that resets are being pushed back. Spring resets are being pushed back. And I just wanted to get an understanding of impacting you guys because obviously, there's a lot of new products coming into the marketplace. Corona Seltzer has gotten into the market but not in full distribution. So if you could just give us some of the puts and takes in terms of how that's going. Are you getting just more space of your A-level SKUs in place of some of the new products that were going to come out in the market? Any thoughts around that would be helpful.

Well, it's a question on when we tell me more hearing Bob you know, we sets of being pushed back.

Yes, that's a being pushed back and I just wanted to get an understanding of.

Being you guys, because obviously, there's a lot of new products coming in the marketplace.

On a seltzer you know had gotten into the market, but not at full distribution. So you could give us some of the puts and takes in terms of how that's going are you getting just must pay Cynthia hey level skews. The place. That's some of the new products that we're going to come out in the market any thoughts on that would be helpful.

David Brown: Are you getting just more space of your A-level SKUs in place of some of the new products that were going to come out in the market? Any thoughts around that would be helpful. Sure. You bet. First of all, obviously, there was. And particularly in March, there was a lot of heavy-up pantry loading, people buying, particularly those brands where they had a lot of comfort. And of course, many, many of our brands across beer, wine, and spirits all fit into that. So that was obviously very helpful. Keeping in mind, Nick, the seltzer, much like Refresca did, goes into different space. And seltzer's obviously been a very hot category. You see a lot of that product on the floor with us and with competitors as well.

Bill Newlands: Sure. You bet. First of all, obviously, there was. And particularly in March, there was a lot of heavy-up pantry loading, people buying, particularly those brands where they had a lot of comfort. And of course, many, many of our brands across beer, wine, and spirits all fit into that. So that was obviously very helpful. Keeping in mind, Nick, the seltzer, much like Refresca did, goes into different space. And seltzer's obviously been a very hot category. You see a lot of that product on the floor with us and with competitors as well.

Sure you bet, we're seeing a.

For a first of all obviously there was particularly in March there was a lot of a heavy up pantry loading people buying a particularly those those brands, where they had a lot of comfort and of course, many many of our brands across beer wine and spirits all fit into that so that was obviously very helpful.

Keeping in mind, Nick the seltzer at much like for Fresca. Good goes into different space and shelters has obviously been a very hot category you see a lot of that product on the floor with lots of with what competitors as well so and we've already in just the first month our team.

David Brown: And we've already, in just the first month, our team and our distributors have done an outstanding job of getting the product out in the market. We've almost achieved 50% ACV in the first month, which is, again, record speed. So we think as time goes forward, you're going to continue to see core SKUs, critical SKUs being very important. And in fact, we have made some adjustments in our production footprint to make sure that those core SKUs are fully available throughout the supply chain because that's something that we think will occur in the near term until consumers spend more time in stores. We've also seen a very rapid uptick in things like three-tier e-commerce, click and collect. Our company had its single biggest.

And we've already, in just the first month, our team and our distributors have done an outstanding job of getting the product out in the market. We've almost achieved 50% ACV in the first month, which is, again, record speed. So we think as time goes forward, you're going to continue to see core SKUs, critical SKUs being very important. And in fact, we have made some adjustments in our production footprint to make sure that those core SKUs are fully available throughout the supply chain because that's something that we think will occur in the near term until consumers spend more time in stores. We've also seen a very rapid uptick in things like three-tier e-commerce, click and collect. Our company had its single biggest.

And our our distributors have done an outstanding job of getting the product out the market, we've almost cheap 50% ACB in the first month, which is again record speed. So.

We think as time goes forward, you're going to continue to see a core skews critical skews being very important and in fact, we have made some adjustments in our production footprint to make sure that those core skews are are fully available throughout the supply chain up because that's something.

We think will occur in the near term until consumer spend more time in stores. We've also seen a very rapid uptick and quick things like treat your E commerce click and collect a our company habits single biggest and wine had our single biggest direct to consumer we've ever had last week as consumers again.

David Brown: And wine had our single biggest direct-to-consumer week we've ever had last week as consumers, again, found alternate ways to continue to buy our products. So I think just to summarize that, you're going to continue to see critical SKUs be in stronger distribution positions. But we've been very pleased with our distributors' ability to continue to get critical new products. Remember, most of the new things that we're doing this year are master brand extensions. So they are consistent and part of strong brand families. That, particularly at a time like this, I think, is important because the consumer often, during recession or recessionary-type behavior, seeks out those core brands that they have a lot of personal comfort with. And again, our brands, fortunately, are part of that set. Thank you. Our next question comes from Dara Mohsenian with Morgan Stanley. You may proceed with your question. Hi, guys.

And wine had our single biggest direct-to-consumer week we've ever had last week as consumers, again, found alternate ways to continue to buy our products. So I think just to summarize that, you're going to continue to see critical SKUs be in stronger distribution positions. But we've been very pleased with our distributors' ability to continue to get critical new products. Remember, most of the new things that we're doing this year are master brand extensions. So they are consistent and part of strong brand families. That, particularly at a time like this, I think, is important because the consumer often, during recession or recessionary-type behavior, seeks out those core brands that they have a lot of personal comfort with. And again, our brands, fortunately, are part of that set.

Found alternate ways you continued to buy our products. So I think you're just to summarize that you're going to continue to see is critical skews.

Being stronger distribution positions.

But we've been very pleased with our distributors ability to continue to get critical new products remember most of the new things that we're doing this year, our master brand extensions show, they're consistent and and part of strong brand families.

Dot, particularly as it at a time like this I think it's important because the consumer often.

During recession or recessionary type behavior seeks out those core brands that they have a lot of personal comfort with and again our brands. Fortunately are part of that SAP.

Operator: Thank you. Our next question comes from Dara Mohsenian with Morgan Stanley. You may proceed with your question.

Thank you. Our next question comes from Darren Hussain with Morgan Stanley. Please proceed with your question.

Hi, guys.

Dara Mohsenian: Hi, guys. So I wanted to ask more of a longer-term question. In past cycles, we've seen some trade-down occur in the beer category in a recessionary environment, including back in 2008, 2009. Can you just spend some time discussing how your product portfolio might be more or less at risk from a macro slowdown versus past cycles on a theoretical basis, sort of ex the COVID situation? You're at a much higher share level today. Your brand mix has changed over time. So just was curious for your perspective on the degree of trade-down risk or macro sensitivity maybe versus what we've seen in past cycles.

So I wonder as more of a longer term question in past cycles, we've seen some trade down occur in the beer category into recessionary environment, including back in 2008 2009 can you just spend some time discussing how your product portfolio might be more or less at risk from a macro slowdown versus.

David Brown: So I wanted to ask more of a longer-term question. In past cycles, we've seen some trade-down occur in the beer category in a recessionary environment, including back in 2008, 2009. Can you just spend some time discussing how your product portfolio might be more or less at risk from a macro slowdown versus past cycles on a theoretical basis, sort of ex the COVID situation? You're at a much higher share level today. Your brand mix has changed over time. So just was curious for your perspective on the degree of trade-down risk or macro sensitivity maybe versus what we've seen in past cycles. Yeah. And I joked with Garth earlier today. I guess if you're old enough, you've been through a couple of these cycles. So I have.

Cycles on a theoretical basis sort of X. The co bid situation here to much higher share level today your brand mix change over time. So just was curious for your perspective on the degree of trade down risk or macro sensitivity maybe versus what we've seen the past cycles.

Bill Newlands: Yeah. And I joked with Garth earlier today. I guess if you're old enough, you've been through a couple of these cycles. So I have.

Yeah.

And I joke with Garth earlier today, I guess, if your old enough you've been through a couple of these cycle. So I have what what what we expect to see is this brands are even more important at a time like this because many people are seeing the opportunity a NR category is one of those.

David Brown: What we expect to see is this: brands are even more important at a time like this because many people are seeing the opportunity, and our category is one of those for simple pleasures in life. Let's face it, the more people are sheltering in place, the more that they look for those small pleasures in life. And our category is one of those that addresses that. But you often see even stronger brand behavior that occurs during this time. So let's take our Woodbridge wine brand example. We have seen significant pickup in the month of March for that brand because, as I said in my script, it's a tried-and-true brand. People know it. They appreciate the quality for the price-value relationship that exists there. And we've seen quite a bit of an uptick against that brand.

What we expect to see is this: brands are even more important at a time like this because many people are seeing the opportunity, and our category is one of those for simple pleasures in life. Let's face it, the more people are sheltering in place, the more that they look for those small pleasures in life. And our category is one of those that addresses that. But you often see even stronger brand behavior that occurs during this time. So let's take our Woodbridge wine brand example. We have seen significant pickup in the month of March for that brand because, as I said in my script, it's a tried-and-true brand. People know it. They appreciate the quality for the price-value relationship that exists there. And we've seen quite a bit of an uptick against that brand.

For simple pleasures in light, let's face it the more people are sheltering in place the more that they look for those small pleasures in light and our categories. One of those their dresses that but but you often see even stronger brand behavior that occurs during this time, so let's take let's take our.

Woodbridge wine brands example.

We have seen significant picked up in the month of March or for that brand because as I said in my script. It say tried and true brand people know what they appreciate the quality for the price value relationship that exists there and we've seen quite a bit of an uptick a against that brand. We've seen the same thing with Kim Crawford.

David Brown: We've seen the same thing with Kim Crawford and Meiomi and The Prisoner, brands that the consumer appreciates and likes. Similarly, in beer, when you have a brand like Modelo that's the number 4 brand now in the entire US beer business, you've got a brand that has a great deal of trust. And you're seeing the trends that support that. Fortunately, Modelo and Corona are two of the most trusted brands in the consumer's mind. And therefore, we feel very comfortable that we will actually get a disproportionate amount of benefit that occurs when people go to the more tried-and-true brands. That's what we saw in 2008. That's what we saw in the previous recession before that, that those tried-and-true brands end up winning. And we think our brands are well-positioned across beer, wine, and spirits to take advantage of that.

We've seen the same thing with Kim Crawford and Meiomi and The Prisoner, brands that the consumer appreciates and likes. Similarly, in beer, when you have a brand like Modelo that's the number 4 brand now in the entire US beer business, you've got a brand that has a great deal of trust. And you're seeing the trends that support that. Fortunately, Modelo and Corona are two of the most trusted brands in the consumer's mind. And therefore, we feel very comfortable that we will actually get a disproportionate amount of benefit that occurs when people go to the more tried-and-true brands. That's what we saw in 2008. That's what we saw in the previous recession before that, that those tried-and-true brands end up winning. And we think our brands are well-positioned across beer, wine, and spirits to take advantage of that.

And they all me in the prisoner.

Brands brands that the consumer appreciates and likes a similarly in beer.

When you when you have a brand like deleverage the number for brand now in the entire U.S. beer business, you've got a brand that has a great deal of trust and you're seeing that the trends that support that Fortunately modelo and Corona are two of the most trusted brands and the consumers mine and therefore, we feel very comfortable.

So that we will actually get a disproportionate amount a benefit that occurs when people go to the more tried and true brands. That's what we saw in 2008, that's what we saw in the previous a recession before that that there was tried and true brands ended up winning a and we think our brands are well position.

Into process beer wine and spirits.

Take advantage of that.

David Brown: There's a little less experimentation during a recession environment. That's why those core brands like ours will do very well. Thank you. Our next question comes from Lauren Lieberman with Barclays. You may proceed with your question. Great. Thank you. My question was just continuing on, going back to the conversation about Mexico production. If we do, in fact, get to the place where you need to curtail production, even though you expect no disruption to retail and to sell through, how should we think about the impact on margins, right? So if we shut down the plant for a month, I would think you get a good amount of pressure on margins. But does that even out when you ramp back up as you come out of this?

There's a little less experimentation during a recession environment. That's why those core brands like ours will do very well.

Just a little less experimentation during a recession environment and that's why those core brands like ours will do very well.

Operator: Thank you. Our next question comes from Lauren Lieberman with Barclays. You may proceed with your question.

Your next question comes from Lauren Lieberman with Barclays. You May proceed with your question.

Lauren Lieberman: Great. Thank you. My question was just continuing on, going back to the conversation about Mexico production. If we do, in fact, get to the place where you need to curtail production, even though you expect no disruption to retail and to sell through, how should we think about the impact on margins, right? So if we shut down the plant for a month, I would think you get a good amount of pressure on margins. But does that even out when you ramp back up as you come out of this? So just kind of thinking about very, very short-term question, but just trying to understand how we should think about that impact on profitability? Thanks.

Great. Thank you. My question was just continuing on that going back to the conversation about Mexico production. If we do in second place, where you curtailed production, even though there.

No that's been you on the retail unto itself.

How should we think about the and margin right. So you shut down the plan.

None I.

Thank you got it did a minute freshmen margin, but does that even out ramp that you can you just kind of thinking about very very short term question, but just trying to understand how we should think about that that impact than possibility.

David Brown: So just kind of thinking about very, very short-term question, but just trying to understand how we should think about that impact on profitability? Thanks. Well, again, I'm going to repeat myself, but I hope you'll bear with me on it. We continue to operate in Mexico. And as long as that is a consistent statement, and we expect that it will be, we wouldn't expect that there would be any significant issues around our margin structure. Obviously, a lot of things factor into that, not the least of which is the peso and various other things that occur during times like this. But I think the best way to think about it is we have 70+ days in the pipeline for our beer business. And we expect to have no disruption in our ability to produce product and deliver it to retail. Thank you.

Bill Newlands: Well, again, I'm going to repeat myself, but I hope you'll bear with me on it. We continue to operate in Mexico. And as long as that is a consistent statement, and we expect that it will be, we wouldn't expect that there would be any significant issues around our margin structure. Obviously, a lot of things factor into that, not the least of which is the peso and various other things that occur during times like this. But I think the best way to think about it is we have 70+ days in the pipeline for our beer business. And we expect to have no disruption in our ability to produce product and deliver it to retail.

Operator: Thank you. Our next question comes from Kevin Grundy with Jefferies. You may proceed with your question.

Well again, I'm going to repeat myself, but I hope you'll bear with me on it.

We continue to operate a in Mexico and as long as that is a consistent statement and we expect that it will be.

We wouldn't expect that there would be any significant issues around our margin structure, obviously lot of things that factor into that not at least a which is the peso and various other things that occurred during during times like this but I think the best way to think about it is.

We have.

70, plus days in the pipeline for our beer business and we expect to have no disruption in our ability to produce a product and deliberate to retail.

Thank you. Our next question comes from Kevin Grundy with Jefferies. You May proceed with your question.

David Brown: Our next question comes from Kevin Grundy with Jefferies. You may proceed with your question. Thanks. Good morning, everyone. Morning. Good morning. Bill, I wanted to pick up on the on-premise, off-premise dynamic. I know this is a difficult question to answer. I can appreciate that you don't want to give guidance. Maybe even qualitatively, I think what a lot of investors are kind of wrestling with is how much of the unprecedented weakness in the on-premise channel is potentially going to be captured in the off-premise. We've seen big pantry loading at this point, but really hard to make conclusions on what's going on in terms of how quickly consumers are going to will destock their pantries. Any comments you have potentially on how much of the on-premise weakness will potentially be offset by the off-premise? Thank you. Sure. You bet.

Kevin Grundy: Thanks. Good morning, everyone.

Thanks, Good morning, everyone.

Bill Newlands: Morning.

Kevin Grundy: Good morning. Bill, I wanted to pick up on the on-premise, off-premise dynamic. I know this is a difficult question to answer. I can appreciate that you don't want to give guidance. Maybe even qualitatively, I think what a lot of investors are kind of wrestling with is how much of the unprecedented weakness in the on-premise channel is potentially going to be captured in the off-premise. We've seen big pantry loading at this point, but really hard to make conclusions on what's going on in terms of how quickly consumers are going to will destock their pantries. Any comments you have potentially on how much of the on-premise weakness will potentially be offset by the off-premise? Thank you.

Morning.

Bill I wanted to pick up on the on premise off premise dynamic I know this is a difficult question to answer and I can appreciate that you don't want give guidance, but maybe even qualitatively I think what a lot of investors are kinda wrestling with is how much of the unprecedented weakness and the on premise channel is potentially going to be captured in the off premise and we've seen.

Big Pantry loading at this point really hard to make conclusions on what's going on a in terms of how quickly consumers are going to well can will destock, there, they're pantries, though it and any comments you have potentially on.

How much of the.

On premise weakness will potentially be offset by all the off premise. Thank you.

Bill Newlands: Sure. You bet. Now, admittedly, this is somewhat unprecedented. So I think we need to all be careful with specificity of answers because in other recessionary periods, while you saw decreases in the on-premise, you didn't have shutdown in the on-premise. So it is a little different. With that said, channel shift is not unusual during recessionary times. And you're obviously seeing that now, in part because the on-premise, in many markets, is largely closed. Again, if you are in the 85% to 90% range for us, in the off-premise to start with, the need to see some increase in channel shift is less significant than it is for someone who is more weighted to the on-premise. Let's take March as an example. And admittedly, there was some pantry loading that occurred during that month.

Sure you bet now admittedly this is somewhat unprecedented so I think we need to all be careful with specificity of answers because in other recessionary periods. While you saw decreases in the on premise you didnt have shutdown in the on premise. So what is a little different way.

David Brown: Now, admittedly, this is somewhat unprecedented. So I think we need to all be careful with specificity of answers because in other recessionary periods, while you saw decreases in the on-premise, you didn't have shutdown in the on-premise. So it is a little different. With that said, channel shift is not unusual during recessionary times. And you're obviously seeing that now, in part because the on-premise, in many markets, is largely closed. Again, if you are in the 85% to 90% range for us, in the off-premise to start with, the need to see some increase in channel shift is less significant than it is for someone who is more weighted to the on-premise. Let's take March as an example. And admittedly, there was some pantry loading that occurred during that month.

That said channel shift is not unusual during recessionary times and you're obviously seeing that now part because the on premise is in many markets largely closed.

What what again, if you are in the 80, 590% range of them for us and you off premise to start with the of the need to see some increase in channel shift is less significant than it is for someone who is more weighted to the on premise.

Let's take March as an example, and admittedly there was some pantry loading that that occurred during that month it more than made up the off premise more than made up for the on premise loss that occurred during that timeframe. It was an excellent month, but we're always trying to send to be two project.

David Brown: It more than made up the off-premise more than made up for the on-premise loss that occurred during that time frame. It was an excellent month. But we're always reticent to project that forward because you don't know what the consumption profile will be. I'll repeat what I said a minute ago because I think it's a very true comment. People look for small pleasures in their life when you are in situations of recession. Multiply that by the fact that most of us are now sheltering at home. Those small pleasures, our business is one of those small pleasures. And I think that will be advantageous for our business going forward. As long as we're on the on- and off-premise question, let me just go back to clarify Brian's question around the growth rates related to on versus off-premise. Brian, I gave you a bit of an incomplete answer.

It more than made up the off-premise more than made up for the on-premise loss that occurred during that time frame. It was an excellent month. But we're always reticent to project that forward because you don't know what the consumption profile will be. I'll repeat what I said a minute ago because I think it's a very true comment. People look for small pleasures in their life when you are in situations of recession. Multiply that by the fact that most of us are now sheltering at home. Those small pleasures, our business is one of those small pleasures. And I think that will be advantageous for our business going forward.

Forward, because you don't know what the consumption profile will be I'll repeat what I said a minute ago, because I think it's a very true common people looked for small pleasures in their life. When you were in situations of recession multiply that by the fact that most of US are now sheltering at home.

Oh small pleasures ER, our business is one of those small pleasures and I think that would be advantageous for our business going forward.

As long as Ron the the Oh the on it off premise question. Let me just go back to clarify a brian's question around the growth rates related on versus off premise, Brian I gave you a bit of any answer so what I gave you is zero.

Garth Hankinson: As long as we're on the on- and off-premise question, let me just go back to clarify Brian's question around the growth rates related to on versus off-premise. Brian, I gave you a bit of an incomplete answer. So what I gave you is zero On-premise growth and mid-single digits. That was really for wine and spirits, as you think about their total sales being in that 2 to 4 range. On beer, total sales were targeting to be 8% to 10% on an organic basis. So the On-premise will be in the sort of low to mid-single digits. And Off-premise will be the remainder.

David Brown: So what I gave you is zero On-premise growth and mid-single digits. That was really for wine and spirits, as you think about their total sales being in that 2 to 4 range. On beer, total sales were targeting to be 8% to 10% on an organic basis. So the On-premise will be in the sort of low to mid-single digits. And Off-premise will be the remainder. Thank you. Our next question comes from Rob Ottenstein with Evercore. You may proceed with your question. Great. Thank you very much. I was just wondering if you could talk a little bit about how you may be adjusting your marketing spend and what sort of flexibility you have on your contracts. Obviously, you do a lot with ESPN, a lot of sports, UFC, and a lot of these events just aren't going to happen.

Zero on premise growth and mid single digits that was really for wine and spirits. As you think about their total sales being in that two to four range on beard total sales were targeting to be 8% to 10% on a court on an organic basis. So the on premise would be in the sort of low to mid single digits and offer.

Operator: Thank you. Our next question comes from Rob Ottenstein with Evercore. You may proceed with your question.

This would be the remainder.

Thank you. Our next question comes from Rob Ottenstein with Evercore you May proceed with your question.

Robert Ottenstein: Great. Thank you very much. I was just wondering if you could talk a little bit about how you may be adjusting your marketing spend and what sort of flexibility you have on your contracts. Obviously, you do a lot with ESPN, a lot of sports, UFC, and a lot of these events just aren't going to happen. So is there maybe some kind of breakout that you can give us in terms of what is fixed for this year or, let's say, the calendar year, next 12 months, and what areas you can possibly save or redirect? Thank you.

Great. Thank you very much.

I was just wondering if you could talk a little bit about how you may be adjusting your marketing spend and what's sort of flexibility you have on your contracts. Obviously, you do a lot would be S.P. and a lot of sports a U.S.C. and a lot of these events just aren't going to happen. So it is they're all.

David Brown: So is there maybe some kind of breakout that you can give us in terms of what is fixed for this year or, let's say, the calendar year, next 12 months, and what areas you can possibly save or redirect? Thank you. Sure. This is also, as you would expect, a bit of a moving answer. Some things you've seen have been postponed. Therefore, while we may not spend it in the first quarter, we might well spend it when the events do occur, assuming they do. What we have done is that we have adjusted Jim Sabia and his team, in both wine and spirits and in beer, have done a fair amount to move to more digital and social media efforts, which is actually good. That's very consistent with where the consumer is going anyway. So we do have quite a bit of flexibility to move things around.

You know maybe at some kind of breakout that you can give us.

In terms of what is fixed.

For this year or let's say the calendar year next 12 months.

And what you know what areas you can possibly sabre redirect thank you.

Bill Newlands: Sure. This is also, as you would expect, a bit of a moving answer. Some things you've seen have been postponed. Therefore, while we may not spend it in the first quarter, we might well spend it when the events do occur, assuming they do. What we have done is that we have adjusted Jim Sabia and his team, in both wine and spirits and in beer, have done a fair amount to move to more digital and social media efforts, which is actually good. That's very consistent with where the consumer is going anyway. So we do have quite a bit of flexibility to move things around.

Sure.

It's this is also as you would expect a bit of moving answer.

Some things you've seen have been postponed therefore, we are not well we may not spend it in the first quarter, we might well spend that when the events do occur assuming they do.

What we have done is that we have adjusted Jim's, Dave and his team and both wine and spirits and beer.

I have done a fair amount to move to more digital and social media efforts.

Which is actually good that's that's very consistent with our the consumers going anyway. So we do have quite a bit of flexibility to move things around.

David Brown: When you have cancellations, let's take the NCAAs. That is a cancellation. So choices are then made as to whether or not we reproportion that type of spend that we have into other formats or we don't. Those decisions are ongoing. It would be difficult to give you a definitive answer at this point in time around that. We will try to do that going forward as we more thoroughly understand what is canceled versus what is delayed. Until we have a better handle on that, it'd be very difficult. But suffice it to say, one of the traits that we've seen with our marketing group is to be very nimble. And they are being very nimble, adjusting on the fly to more digital and social environments from things where we can't do live sports, as you note. Thank you. Our next question comes from Andrea Teixeira with J.P. Morgan.

When you have cancellations, let's take the NCAAs. That is a cancellation. So choices are then made as to whether or not we reproportion that type of spend that we have into other formats or we don't. Those decisions are ongoing. It would be difficult to give you a definitive answer at this point in time around that. We will try to do that going forward as we more thoroughly understand what is canceled versus what is delayed. Until we have a better handle on that, it'd be very difficult. But suffice it to say, one of the traits that we've seen with our marketing group is to be very nimble. And they are being very nimble, adjusting on the fly to more digital and social environments from things where we can't do live sports, as you note.

Around when you have cancellations, let's take the M.C.A. that as a cancellation. So choices are then made as to whether or not we reproportioned note that type of spend that we have into other formats or we don't those decisions are ongoing it'd be difficult to give you a definitive answer at this point in time around that.

We will try to do that going forward as as we more more thoroughly understand what is canceled versus what is delayed.

Until we have a better handle on that'd be very difficult, but suffice it to say one of the one of the the trades that are that we've seen with our marketing group is Jimmy very nimble and they are being very nimble adjusting or on the fly to more digital and social environments from from.

Things, where we can't do live sports as you know.

Thank you. Our next question comes from Andrea to share with JP. Morgan You May proceed with your question.

Operator: Thank you. Our next question comes from Andrea Teixeira with JPMorgan. You may proceed with your question.

David Brown: You may proceed with your question. Thank you. And good afternoon. As a follow-up on the comments about the production in Mexico, in your discussions, Bill, with the Mexican government, in order to stay open, could you prove that your production facilities are safe enough to remain operational through the end of April? And then, as a follow-up to the margin commentary, how much of your Mexican peso-denominated costs are hedged at this point in light of the devaluation of the Mexican peso? Thank you. So Garth, I'll take the first half of that. Let me just tell you some of the things we've done. And we've done this in wine and spirits as well as beer. And I think it's important. As I said, our employees are our number one priority. We are testing for temperature as people enter our facilities.

Andrea Teixeira: Thank you. And good afternoon. As a follow-up on the comments about the production in Mexico, in your discussions, Bill, with the Mexican government, in order to stay open, could you prove that your production facilities are safe enough to remain operational through the end of April? And then, as a follow-up to the margin commentary, how much of your Mexican peso-denominated costs are hedged at this point in light of the devaluation of the Mexican peso? Thank you.

Thank you and good afternoon, its a follow up on the comments about the production in Mexico.

Our discussions deal with the Mexican government.

Just stay open could you prove that your production facilities are safe enough to be may operational through the end of the cool and then as a follow up to the margin commentary how much of your Mexico peso denominated costs I has that this points in light of the devaluation of the next.

Bill Newlands: So Garth, I'll take the first half of that. Let me just tell you some of the things we've done. And we've done this in wine and spirits as well as beer. And I think it's important. As I said, our employees are our number one priority. We are testing for temperature as people enter our facilities.

So going if I'll take the first half of that let me just let me just tell you some of the things we've done that we've done this and wine and spirits as well as beard and I think it's important as I said, our employees or a number one priority.

We are testing for temperature as people enter our facilities, we are keeping social distant saying in our facilities to make sure that people are safe we have changed how we run shifts in our plan to make sure they're not overlap of ships shifts in case, there or any issues.

David Brown: We are keeping social distancing in our facilities to make sure that people are safe. We have changed how we run shifts in our plant to make sure there is no overlap of shifts in case there are any issues that occur with people's health. So we are doing everything humanly possible to make sure that we continue to operate in a safe and effective manner within all of our operating facilities. The same is true of that in New Zealand and Italy as well. So first and foremost, we are taking great care to make sure we are operating correctly. I think that will likely be respected by the government of Mexico. They have obvious concerns for their entire economy, as our country has great concerns for our economy, to make sure that people are being protected.

We are keeping social distancing in our facilities to make sure that people are safe. We have changed how we run shifts in our plant to make sure there is no overlap of shifts in case there are any issues that occur with people's health. So we are doing everything humanly possible to make sure that we continue to operate in a safe and effective manner within all of our operating facilities. The same is true of that in New Zealand and Italy as well. So first and foremost, we are taking great care to make sure we are operating correctly. I think that will likely be respected by the government of Mexico. They have obvious concerns for their entire economy, as our country has great concerns for our economy, to make sure that people are being protected.

That occur with People's Health. So we are doing everything humanly possible to make sure that well we continue to operate in a safe and effective manner within all of our operating facilities. The same is true of that New Zealand, and and Italy as well so first and foremost we're taking great care.

To make sure we're operating correctly.

I think that that will likely be respected.

By the government Mexico, they have obvious concerns for their entire economy as our country has great concerns for our economy to make sure that people are being protected and I think the kind of steps that we are taking to make sure.

David Brown: I think the kind of steps that we are taking to make sure that we are protecting our people, we believe, is best in class. We are keeping track of everything possible to ensure the safety of our employees. And that effort will continue. Garth, you want to touch on the second piece? Sure. On the hedging piece. So as it relates to both commodities and on-currency, for the current fiscal year, fiscal 2021, we are hedged on both fronts in excess of 80%. We are using this period of time, though, as we see some movements on commodities and in currency to layer in additional hedges for the next couple of years. So we could see some further benefits in coming fiscal years. Thank you. Our next question comes from Laurent Grandet with Guggenheim. You may proceed with your question. Yes. Good morning. Thanks for the opportunity.

I think the kind of steps that we are taking to make sure that we are protecting our people, we believe, is best in class. We are keeping track of everything possible to ensure the safety of our employees. And that effort will continue. Garth, you want to touch on the second piece?

We're protecting our people Oh, we believe is best in class, we're keeping track of everything possible to ensure the safety of of our employees and that effort will continue to want to touch on the second piece sure on the on that on the hedging piece so as it relates to both commodities.

Garth Hankinson: Sure. On the hedging piece. So as it relates to both commodities and on-currency, for the current fiscal year, fiscal 2021, we are hedged on both fronts in excess of 80%. We are using this period of time, though, as we see some movements on commodities and in currency to layer in additional hedges for the next couple of years. So we could see some further benefits in coming fiscal years.

And on currency were current for the current fiscal year physical 21, we are hedged on both fronts well in excess of 80%.

We are using this period of time, though as we see some movements on commodities and in currency to layer in additional hedges for the next couple of years. So we could see some some further benefits in incoming fiscal years.

Operator: Thank you. Our next question comes from Laurent Grandet with Guggenheim. You may proceed with your question.

Thank you. Our next question comes from Laurent Grandet Guggenheim You May proceed to your question.

Laurent Grandet: Yes. Good morning. Thanks for the opportunity. So two follow-up questions, actually. One, you said you will focus on the core brands going forward. I mean, and that makes sense. I'd like to understand if Corona Hard Seltzer is considered as a core brand and will be one of your focus points for the next two months. That's one question. And the second follow-up, I'm sorry to come back on this manufacturing in Mexico. But this morning, again, I mean, one of your competitors said that on Sunday, 5 April, Grupo Modelo will suspend beer production and distribution operations. So as you've got 70 days of inventory, and obviously, you want to build kind of a goodwill with the Mexican government, I mean, on the Mexicali brewery subject.

Yes. Good morning. Thanks, what are your funding so to put up question looks pretty.

David Brown: So two follow-up questions, actually. One, you said you will focus on the core brands going forward. I mean, and that makes sense. I'd like to understand if Corona Hard Seltzer is considered as a core brand and will be one of your focus points for the next two months. That's one question. And the second follow-up, I'm sorry to come back on this manufacturing in Mexico. But this morning, again, I mean, one of your competitors said that on Sunday, 5 April, Grupo Modelo will suspend beer production and distribution operations. So as you've got 70 days of inventory, and obviously, you want to build kind of a goodwill with the Mexican government, I mean, on the Mexicali brewery subject. So why, there is something I don't understand. Why have you decided to go against, I mean, the government decision in that specific subject? Thank you.

Well.

You said you realize.

We focus on the call brands going for water.

That makes sense like.

Like sort of studies of corn that center is concerned rosy called Brian.

Yeah, we'd be focal one of your focus points for the for the next two modes. That's one question I just don't put up I'm, sorry to come back on B cell manufacturing make he killed outside this morning again and one of your competitor set up on Sunday April thieves, Grupo Modelo, which says spend.

Your production and distribution operations.

So I guess, you've got 70 70 days of inventory.

I see you won't see two beaten up a good when there was a Mexican government.

On the make he can be in Ah Ah worry some shape. So why I'm done something I don't understand why are you if you decided to.

So why, there is something I don't understand. Why have you decided to go against, I mean, the government decision in that specific subject? Thank you.

To go again some of the government decision that's on that side since you can simply thank you.

David Brown: So let's tackle your first question, which is seltzer. Certainly, our Corona brand family, since we approached 150 million cases of product in fiscal 2020, is one of the critical things and critical brands that we have within our portfolio. The seltzer, as you know, is one of the fastest-growing subsegments within the alcohol beverage business as well. Therefore, the combination of the great Corona branding plus the hot category of seltzer is a wonderful combination. And we're expecting that that's going to be an important part of our success story for fiscal 2021. I do need to be very, very clear with you. We are not doing anything against what the government of Mexico is suggesting. Our company is known for being respectful of the laws and approaches of any company in any country in which we operate. And that certainly will continue.

Bill Newlands: So let's tackle your first question, which is seltzer. Certainly, our Corona brand family, since we approached 150 million cases of product in fiscal 2020, is one of the critical things and critical brands that we have within our portfolio. The seltzer, as you know, is one of the fastest-growing subsegments within the alcohol beverage business as well. Therefore, the combination of the great Corona branding plus the hot category of seltzer is a wonderful combination. And we're expecting that that's going to be an important part of our success story for fiscal 2021. I do need to be very, very clear with you. We are not doing anything against what the government of Mexico is suggesting. Our company is known for being respectful of the laws and approaches of any company in any country in which we operate. And that certainly will continue.

So, let's let's tackle your first question, which is seltzer certainly arc run a brand family.

Since we approached 150 million cases of product in fiscal 20 is one of the critical things and critical brands. The we have within our portfolio.

The Seltzer as you know is one of the fastest growing sub segments.

Within the alcohol beverage business as well therefore [noise].

The combination of the break Rona branding plus the hot category of Seltzer, It's a wonderful combination and we're expecting that that's going to be important part of our success story fiscal 21.

I do need to be very very clear with you or we're not doing anything against what the government of Mexico.

Is suggesting a we certainly our company is known for respect being respectful of the wasn't approaches of any company any country in which we operate and that's certainly will continue I have no no comment regarding a competitor what they're choosing to do or not choosing to do I personally would suggest you asked.

David Brown: I have no comment regarding a competitor and what they are choosing to do or not choosing to do. I personally would suggest you ask them. What I would say is, today, currently, we are operating. And we will continue to do what's appropriate under the restrictions that apply or don't apply in any company in any country in which we operate. Thank you. Our next question comes from Bill Kirk with MKM Partners. You may proceed with your question. Thank you, everyone. So on the 70 days of inventory in the system, how much of that is in Mexico? I guess it'll show up in the 10-K. But how much of it is in Mexico? And how much of that is actually allowed to leave Mexico and into the United States? Is that allowed to come over the border right now?

I have no comment regarding a competitor and what they are choosing to do or not choosing to do. I personally would suggest you ask them. What I would say is, today, currently, we are operating. And we will continue to do what's appropriate under the restrictions that apply or don't apply in any company in any country in which we operate.

What I would say is today currently we are operating and we will continue to do what's appropriate under that restrictions that apply or don't apply a in any company would in any country in which we operate.

Operator: Thank you. Our next question comes from Bill Kirk with MKM Partners. You may proceed with your question.

Thank you. Our next question comes from broker with MKM Partners. You May proceed with your question.

Bill Kirk: Thank you, everyone. So on the 70 days of inventory in the system, how much of that is in Mexico? I guess it'll show up in the 10-K. But how much of it is in Mexico? And how much of that is actually allowed to leave Mexico and into the United States? Is that allowed to come over the border right now?

Thank you everyone. So on the 70 days of inventory in the system how much of that is in Mexico, I guess I was hoping the 10-K, but how much of it at the Mexico and how much of that is actually allowed to leave Mexico and ended the United States is that allowed to come over the border right now.

David Brown: So to answer your question, the vast majority of that answer is in the United States between either inventory at our distributors or in our DCs. So the vast majority of it, I would say, in excess of 80% of that's already in the United States. Thank you. Our next question comes from Bill Chappell with SunTrust. You may proceed with your question. Hey, thanks. Just want to go back to Mexicali. I understand you can't talk about where it goes from here. But could maybe give us an update on how much money has been put into it and then any kind of color on how you've got this far down the path and we got to this stage? Yeah. So I'll take the first part of that. To date, we have spent approximately $700 million in CapEx in Mexicali.

Bill Newlands: So to answer your question, the vast majority of that answer is in the United States between either inventory at our distributors or in our DCs. So the vast majority of it, I would say, in excess of 80% of that's already in the United States.

So to answer your question the vast majority of that answers in the United States between either either inventory at our distributors or in our Dcs. So the vast majority of it.

I would say or in excess of 80% of that's already in the United States.

Operator: Thank you. Our next question comes from Bill Chappell with SunTrust. You may proceed with your question.

Thank you. Our next question comes from Bill Chappelle with Suntrust. You May proceed with your question.

Bill Chappell: Hey, thanks. Just want to go back to Mexicali. I understand you can't talk about where it goes from here. But could maybe give us an update on how much money has been put into it and then any kind of color on how you've got this far down the path and we got to this stage?

Hey, thanks.

It's one of the I'd go back to Mexicali, and I understand you can't talk about where it goes from here, but could maybe give us an update on how much money has been put into it and then no any kind of color on how.

You got this far down the path for me we got to this this.

Stage.

Yes, I'll take the first part of that to date, we have spent approximately a $700 million in capex in Mexicali.

Garth Hankinson: Yeah. So I'll take the first part of that. To date, we have spent approximately $700 million in CapEx in Mexicali.

So what I would say is.

David Brown: So what I would say is that there are a lot of decisions that have been made as time has gone on. As you know, there have been changes in government during the time that this facility has been started. What I would say is this: We've been operating in Mexico for 30 years. It has been a tremendous partnership with the people of Mexico, with the government of Mexico, and with the local states within Mexico. We remain extremely confident in our long-term ability to meet the consumer needs in the United States for the critical brands of Modelo, Corona, Pacifico, and other related brands. So I don't feel that it does anyone any good to micromanage the approach to the situation. What I would say is we're going to have a very solid solution for our long-term prospects.

Bill Newlands: So what I would say is that there are a lot of decisions that have been made as time has gone on. As you know, there have been changes in government during the time that this facility has been started. What I would say is this: We've been operating in Mexico for 30 years. It has been a tremendous partnership with the people of Mexico, with the government of Mexico, and with the local states within Mexico. We remain extremely confident in our long-term ability to meet the consumer needs in the United States for the critical brands of Modelo, Corona, Pacifico, and other related brands. So I don't feel that it does anyone any good to micromanage the approach to the situation. What I would say is we're going to have a very solid solution for our long-term prospects.

That there are lot of decisions that have been made as time has gone on a as you know there have been changes in government. During the time that this that this facility has been started what I would say this we've been operating in Mexico for 30 years. It has been a tremendous.

Partnership a with the people of Mexico, and with the government in Mexico, and with the local states within Mexico.

We are dart, we remain extremely confident in our long term ability to meet the consumer needs in the United States for the critical brands Delo Corona specific go and other related brands. So I don't feel that it does anyone any good micromanage Uh huh.

The approach to the situation what I would say is we're going to have a very solid solution for our long term prospects and we certainly appreciate the government's engagement with us on that topic.

David Brown: And we certainly appreciate the government's engagement with us on that topic. Thank you. Our next question comes from Sean King with UBS. You may proceed with your question. Hi. Thanks for the question. I got a wine sale question. Is it safe to say that the escalating COVID-related work stoppages and disruptions could have an impact on the, I guess, achievability of the new timing? Or was that already baked into your new outlook? So thank you for the question. No, we think that the COVID situation is baked into the current timeline. That being said, I don't know how much more disruption COVID-19 could have in terms of the government's ability to work. But I can tell you right now that the FTC continues to be actively engaged in our conversations and in the review of this process.

And we certainly appreciate the government's engagement with us on that topic.

Operator: Thank you. Our next question comes from Sean King with UBS. You may proceed with your question.

Thank you. Our next question comes from Simon King will you be US you May proceed with your question.

Operator: Hi. Thanks for the question. I got a wine sale question. Is it safe to say that the escalating COVID-related work stoppages and disruptions could have an impact on the, I guess, achievability of the new timing? Or was that already baked into your new outlook?

Hi, Thanks, a question they got a a wine sell question its safe to say that the escalating coded related work stoppages and disruptions that I could have an impact on the idea of achieve ability of the new timing or is that already baked into your baked into your new outlook.

Oh. So thank you for a question are we think that the Kobe situation is baked into the current timeline that being said a you know I don't know how much are you know how much more disruption covert 19 could have far in terms of Ah.

Garth Hankinson: So thank you for the question. No, we think that the COVID situation is baked into the current timeline. That being said, I don't know how much more disruption COVID-19 could have in terms of the government's ability to work. But I can tell you right now that the FTC continues to be actively engaged in our conversations and in the review of this process. And we've factored all of that into the timeline that we provided.

The government's ability to work but.

I can tell you right now that the FTC continues to be actively engaged in our conversations.

In the review this process and and we factored all that into the timeline it provided.

David Brown: And we've factored all of that into the timeline that we provided. Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Newlands for any further remarks. I'd just like to thank everyone for joining our call today, particularly in these challenging times. I believe we've done an excellent job of building vital momentum in fiscal 2020 as we head into what admittedly will be a volatile start to our new fiscal year. Through our strategic initiatives and priorities, we are positioning Constellation for sustained long-term success and will continue to quickly adapt to the rapidly changing market dynamics as we navigate through fiscal 2021.

Operator: Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Newlands for any further remarks.

Thank you I'm not showing any further questions at this time I would knowledge current turn the call back over to build new ones for any further remarks.

Bill Newlands: I'd just like to thank everyone for joining our call today, particularly in these challenging times. I believe we've done an excellent job of building vital momentum in fiscal 2020 as we head into what admittedly will be a volatile start to our new fiscal year. Through our strategic initiatives and priorities, we are positioning Constellation for sustained long-term success and will continue to quickly adapt to the rapidly changing market dynamics as we navigate through fiscal 2021.

[noise] I'd just like to thank everyone for joining our call today, particularly in these challenging times I.

I believe we've done an excellent job a building vital momentum in fiscal 20, as we head into what admittedly will be a volatile started to our new fiscal year.

Through our strategic initiatives and priorities, we're positioning constellation for sustained long term success and we'll continue to quickly adapt to the rapidly changing market dynamics as we navigate through fiscal 21.

David Brown: As the environment evolves and more factors become known over the next few months, we hope to be able to provide much more clarity on the prospects for our business for the year in which we are in. I'd like to thank you all again for joining the call. I hope you and your loved ones remain healthy and safe during this unprecedented time. Thank you. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.

As the environment evolves and more factors become known over the next few months, we hope to be able to provide much more clarity on the prospects for our business for the year in which we are in. I'd like to thank you all again for joining the call. I hope you and your loved ones remain healthy and safe during this unprecedented time. Thank you.

The environment evolves and more factors become known over the next few months, we hope to be able to provide much more clarity on the prospects for our business for the year in which we already.

I'd like to thank you all again for joining the call I Hope you and your loved ones remain healthy and say during this unprecedented time. Thank you.

Operator: Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

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