It’s down. And we’ve noted that continuously. So I think the important part as you think about the overall beer sector is to look at it bifurcated. The low end has not been successful and has been challenged on a volumetric basis, but the high end continues to perform well and we’re fortunate that we are leading at the high end. As it relates to the Wine & Spirits, what I’d like to do on that particular point, given I’m about to do a major deep dive into that business, is we’ll come back to you with more details on where we see our progress going to occur in that particular business when we do our next earnings call at the beginning of the new fiscal year. What I would say is this. We’re going to be focused — very, very focused, on execution and working closely with our distribution partners to make sure that we are outperforming the categories in which we play through our distributor network.
That’s going to be an important part of our ongoing success going forward, and it will be a critical part of where I’m spending my time.
Operator: Thank you. Our next question comes from the line of Chris Carey with Wells Fargo. Please proceed with your question.
Chris Carey: Hi, good morning.
Bill Newlands: Good morning.
Garth Hankinson: Hi, Chris.
Chris Carey: Garth, the beer savings number that you called out, which I believe was $55 million, is a big number, certainly in the context of the savings targets through fiscal ‘28 that you laid out at Investor Day. And so I guess, are you pulling forward savings into fiscal ‘24 from other years, or are you perhaps just getting better at the ability to drive savings in the near term and perhaps we should be thinking about over-delivery or maybe just building more confidence in your ability to hit those targets over time? So again, I’m just trying to get some context for your self-help capacity in the beer gross margin, which was quite strong this quarter.
Garth Hankinson: Chris, thanks for the question. And I guess the short answer to our question is no, we’re not pulling anything forward from future years in FY ‘24. I do think that what you’re seeing this year is a continuation of a couple things. One which we detailed at Investor Day, which is the shift from us from being builders of breweries to operators of breweries. And so we’re getting more efficient, we’re doing a better job from an end-to-end supply chain, and that’s what gave us the confidence not just in this year, but in the cost savings targets that we laid out at Investor Day. Another thing that we’re seeing benefits from is out of our digital business acceleration activities, which have been coupled with the discipline that we’re creating on an end-to-end supply chain and it’s driven significant savings in a whole host of areas as it relates to procurement.
So again, it is somewhat new muscle that we’re building, really more an extension of existing muscle as we, again, migrate from being builders to operators.
Operator: Thank you. Our next question comes from the line of Dara Mohsenian with Morgan Stanley. Please proceed with your question.
Dara Mohsenian: Hey, guys. Just two follow-ups probably on Nik’s question. Just first on beer, just to understand the strength and depletions at the end of the quarter. Is that more underlying strength? Was there anything timing related there? Is it continued in December? Should we look at sort of the 8% result in the quarter as sort of a true underlying gauge of the business, at least short-term, understanding that’s not the guidance, but how should we think about that? And I know it’s tough to talk about the gap versus scanner data. Obviously, it bounces around. But just any specific thoughts on what that could be going forward? And then I also have a wine question, if I can follow up on that.
Bill Newlands: Dara, why don’t you do that right away? Because usually once you ask a question, you don’t have further access. What’s your wine question?
Dara Mohsenian: Okay. I mean, just look, the comments on the revision were helpful in the longer-term portfolio transformation, but at the risk of being blunt, it’s been sort of years of disappointment on that business. It’s a pretty large negative revision after Analyst Day in a short period of time. So I just wanted to hear a little more about the response, Bill, and how you might manage that business differently from a strategic lens longer term, perhaps a greater focus on productivity or whatever the changes are. But how do you think about managing the business differently and maybe how it fits in the portfolio just juxtaposition versus what’s a very attractive beer business as we saw again this morning from a growth and margin standpoint.
Bill Newlands: Sure. So let’s cover the first one initially about the depletions coming out of the quarter. Obviously, there’s always a little bit of benefit when you have an early Thanksgiving because you give retailers a chance to restock after Thanksgiving. But let’s make no mistake, the takeout that we had around the Thanksgiving holiday was exceptional, which you wouldn’t get the great restocking if you didn’t have an exceptional takeout period. And obviously we’re very pleased to see, without going into specifics, that the strong November is playing into December as we expected it would because the underlying trends for our business remain very strong. And as I stated at an earlier question, our actual share gains have accelerated during the course of the year, which I think is very positive as well relative to our continuing success in that business.
As it relates to wine, as I said before, the thing that we were most concerned about coming out of this particular quarter is that we end our year in an appropriate inventory position and that we are preparing ourselves to work closely with our wholesale distributor partners to accelerate that business going forward so that we are winning in the categories and channels in which we participate. We’ve got a lot of work to do there, but we continue to believe the strategy work that’s been done over the past few years to reposition our portfolio much more to the higher end is going to pay dividends. And again, as I said, I think, to Nadine a moment ago, I’ll come back with some more specific thinking. We’re going to do, as you can understand, a fairly deep dive into that business.
And I’ll have some more thoughts on that as we get to our next call.
