Beer Depletion Growth
Q: How strong were beer depletions, and what's driving it?
A: Beer depletions grew by 8.2% in Q3, showing strong momentum driven by robust takeout around Thanksgiving and accelerated share gains, particularly in the high-end segment where they gained nearly 3 share points - ,. -

Wine and Spirits Guidance Cut
Q: Why was the wine and spirits guidance revised down, and how will you address it?
A: The guidance was revised down due to broader category deceleration and gaps in U.S. wholesale expectations. The company is focusing on enhancing operational effectiveness and marketplace execution to improve performance, maintaining targets for net sales and operating margin over the medium term. -

Beer Margins and Outlook
Q: Why are Q4 beer margins projected to be low, and what's the outlook?
A: Q4 margins are seasonally lower due to reduced shipments (about 20%-21% of annual volume in Q4) and increased depreciation costs. Margins are progressing as expected, with improvement over last year, and there is confidence in achieving the 39%-40% target operating margins over the medium term. -

Management Transition in Wine and Spirits
Q: What are you looking for in new wine and spirits leadership, and what's controllable?
A: Seeking a leader who can enhance operational efficiencies and marketplace execution, focusing on improving U.S. wholesale performance and leveraging the higher-end portfolio. Many performance factors are within control, such as execution and working closely with distributor partners. -

Pricing Strategy in Beer
Q: How does your pricing strategy compare to competitors, and what's planned?
A: The company maintains a judicious pricing approach with 1%-2% annual increases to keep consumers loyal, contrasting with competitors who may take larger increases. They are not pulling back on pricing and believe this strategy supports long-term growth. -

Cost Savings Initiatives
Q: Are you pulling forward cost savings, or improving efficiencies?
A: Not pulling forward savings but benefiting from shifting focus from building breweries to operating them, resulting in improved efficiencies and significant savings in procurement through digital business acceleration. -

Cash Flow Improvement
Q: What's driving the improved cash flow outlook?
A: Key drivers include increased beer operating income, favorable tax impacts, and disciplined cash management, reflecting consistent execution against balanced capital allocation priorities. -

Competitive Environment and Shelf Gains
Q: What are expectations for shelf space gains and competitive dynamics?
A: Expecting significant shelf space gains greater than the growth profile in upcoming spring resets, supported by strong velocities and brand loyalty. The promotional environment is expected to remain consistent, and the company continues to drive share gains - ,. -

Innovation Launches
Q: Can you share details on upcoming innovations like Corona Sunbrew?
A: Corona Sunbrew is set to launch with more details to be shared at the official introduction in March. The company is excited about this new product, which follows successful launches like Modelo Oro and Aguas Frescas. -

On-Premise Opportunities
Q: How do you view opportunities in the on-premise channel?
A: There is significant opportunity to grow in the on-premise, particularly in draft beer. Despite temporary keg issues earlier, brands like Modelo Especial and Pacifico were the top share gainers in draft and are expected to maintain this momentum. -

Inflation and Cost Outlook
Q: Is low inflation in packaging costs expected to continue?
A: Easing inflation benefits are being realized, with expectations of low single-digit inflation net of cost savings going forward. Logistics costs were also favorable in Q3. -

Measured vs. Non-Measured Channels
Q: Has there been pricing moderation in non-measured channels?
A: No significant variation between channels; trends are expected to be aligned. The moderation in pricing reflects lapping of prior year's higher pricing. -

Shipments and Depletions Alignment
Q: Will beer shipments and depletions be aligned for the year?
A: Yes, shipments and depletions are expected to be largely in line, both accounting for about 20%-21% of the full year in Q4, consistent with normal operations. -

Industry Outlook and Consumer Health
Q: Thoughts on U.S. beer industry trends and consumer health for 2024?
A: The industry shows a bifurcation between declining low-end and growing high-end segments. The company leads in the high-end, which continues to perform well, with strong brand loyalty among Hispanic consumers supporting growth. -

Impact of Comps on Beer Acceleration
Q: Did favorable comps contribute to recent beer acceleration?
A: While factors like weather and early Thanksgiving played a role, the strong takeout around Thanksgiving and accelerated share gains reflect the underlying strength of the brands, despite natural variations over the year. -

Wine and Spirits Medium-Term Targets
Q: How will you achieve medium-term targets after guidance cut?
A: The focus is on execution and working closely with distribution partners to outperform in categories and channels. More specific plans will be shared after a deep dive into the business during the next earnings call - ,. -