A：During the Constellation Brands Q1 fiscal year 2026 earnings conference call, the key topics discussed included the presentation of financial results, CEO and CFO commentary, quarterly slides, and recent updates on the company's annual brand appendix slides. The CEO, CFO, and a new vice president of investor relations, Blair Beema, were in attendance. The company also reviewed reconciliations between GAAP and non-GAAP financial measures and highlighted the importance of understanding risk factors affecting forward-looking statements made during the call.

A：The speaker indicates that the company's expectations for revenue growth and margins remain confident despite observing industry weakness in May and June. The company anticipated a normal quarter with sequential improvement required to achieve guidance, which was not predicated on significant changes in consumer behavior but on easier sequential comps moving forward.

A：The speaker suggests that the impact of reduced selling days in the quarter was minimal, as the company had anticipated a 'normal' quarter despite the reduction in days. The sequential improvement expected to meet guidance was not dependent on extraordinary consumer changes but on the ease of comparables in the summer months.

A：The company views the impact of macroeconomic factors and potential tariffs as a source of uncertainty. There have been reductions in GDP growth expectations and softening in inflation, unemployment, and interest rates. The potential impacts of tariffs and government-related layoffs are also contributing to this uncertainty. Despite these challenges, the company feels confident in its ability to deliver margins in line with what was laid out in April, taking into account the incremental tariffs that have come into effect.

A：The company's position is that it is confident in its ability to deliver margins in line with the guidance laid out in April, even with the incremental tariffs that started in June. The impact of these tariffs is expected to be around $20 million, which will result in a 20 basis point hit to margins due to the first quarter's highest volume sales. However, the company still believes it can deliver margins in line with expectations outlined in April.

A：The speaker acknowledges the challenges faced by the Hispanic community due to raids and their effect on normal places of shopping, suggesting that it is difficult to predict the consumer reaction going forward. There is a consensus that the situation is very challenging to call. However, the speaker expresses uncertainty about the duration of the issue and the potential for a calming of the raids, which is critical for the business's perspective.

A：The brand loyalty is very strong and increasing in the general market. The company is investing to support consumers and maintain strong brand health measures. Even though there's concern about inflation and cost structure, the percentage of alcohol in the basket has remained constant. The focus has been on controllable factors, resulting in high single-digit share gains in the she, buy rates, and an increase in spend per visit.

A：The company's marketing cadence is dynamic, adjusting for seasonality and focusing on high-impact live and action-oriented events that are beer occasions. The competitive landscape has intensified with Nick Ultra and Medeola increasing their activity. The company continues to invest in its brands like Corona and Dr. Pepper for long-term success, aiming to maintain or improve brand health metrics and be ready for a return to normal consumer behavior.

A：Since the last Investor Day, several new initiatives have been undertaken, such as being the number two share gainer in a growth category (non-alcoholic), introducing Sunbreak, and focusing on new product innovation that can contribute up to 40% of annual growth. The company is also adjusting pricing for a high-end light beer and continuing to attract new, younger consumers. Strategies include focusing on winning more consumers on more occasions and leveraging the growth potential outside of California for Pacifico.

A：Pacifico is performing very strongly, especially in L.A. where it's a top brand. Growth for Pacifico is now coming from outside California, indicating significant national expansion. The company expects to accelerate growth for Pacifico, taking advantage of its different demographic profile which is seen as an important driver for future growth and share gains.

A：The question raised is whether consumer behavior post-COVID will return to pre-COVID norms or if there will be a lasting change, potentially akin to a 'Covid moment.' While it's acknowledged that consumer behavior has changed due to COVID-19, especially in how they approach various products including beer, it's unclear what the long-term effects will be. The company's strategies would likely adapt based on the evolution of consumer behavior.

A：The company's beer sales have not decreased in interest among consumers due to concerns in the socioeconomic area mentioned. However, the occasions for consuming beer have decreased, leading to fewer social occasions both out and at home. As the macroeconomic scenario improves, the company expects sales to revert to a more normal scenario.

A：The upside in gross margins was attributed to operational improvements and a tailwind of about a $1 million from the peso. The exact impact of the peso's strengthening and its favorability is not quantified in the provided transcript. However, the company has a robust hedging policy and had been hedged against currency risks starting several years in advance.

A：The company employs a robust hedging policy that starts several years in advance of any given fiscal year, which helps in managing the impact and smoothing the impact of currency and commodity risks from year to year.

A：The company entered the year hedged at about the low 70% range for the peso, which is higher than the normal start of the fiscal year. As the year progressed and saw favorability with the peso, the company layered in incremental hedges to take advantage of the conditions, resulting in being over 80% hedged for the peso for the remainder of the year.

A：Distribution is a critical part of the company's strategy, and as the number one share gainer in the category, it plans to continue gaining distribution and shelf positions. This strategy is expected to contribute to growth, particularly for products like Pacifico and Sun, which have strong growth profiles and demand more shelf space due to their market performance.

A：The company is focusing on controlling its loyalty by continuing to improve it among the Hispanic consumer and the general market. Additionally, the company is concentrating on price pack architecture, ensuring it has products available at various price points to cater to consumers' spending能力和 inflationary trends.

A：The company has recently adjusted its own pricing, particularly in the high-end light beer sector, to address the pricing landscape and build additional share. There has been some additional price promotion in the market, but the company's strong brand and consumer loyalty are expected to ensure long-term success.

A：The California wildfires are expected to initially cause a short-term hit but could provide a long-term upside due to job creation during the rebuilding process. This potential tailwind is built into the company's guidance expectations, though the exact impact remains uncertain and depends on factors such as permits and construction capability.

A：California has faced consumer challenges related to macroeconomic factors such as unemployment, particularly affecting the Hispanic population, and a year-over-year decline in construction plans. Despite potential benefits from rebuilding post-wildfires, the state still experiences short-term macro headwinds that could affect sales.