Good afternoon. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2012 Earnings Call. [Operator Instructions] Thank you. Mr. Jim Koch, Founder and Chairman, you may begin your conference.

Thank you. Good afternoon and welcome. This is Jim Koch, Founder and Chairman, and I'm pleased to be here to kick off the 2012 first quarter earnings call for the Boston Beer Company. Joining the call from Boston Beer are Martin Roper, our CEO; and Bill Urich, our CFO. I'll begin my remarks this afternoon with a few introductory comments, including some highlights of our results, and then hand over the microphone to Martin, who will provide an overview of our business. Martin will then turn the call over to Bill, who will focus on the financial details for the first quarter, as well as the review of our outlook for 2012. Immediately following Bill's comments, we'll open the line for questions. I’m pleased that we continue to lead the craft industry in both innovation and variety. In the first quarter, we introduced our new spring seasonal Samuel Adams Alpine Spring, an unfiltered lager that showcases Tettnang noble hops. We’ve been brewing with Tettnang noble hops for more than 28 years and I’m particularly pleased with how well Alpine Spring was received by drinkers, retailers and wholesalers. Late in the first quarter, we had a smooth transition from Alpine Spring to our Summer Seasonal, Samuel Adams Summer Ale, now in its 17th year and still one of my favorites. We have also been introducing some exciting new small batch brews, most recently Samuel Adams Dark Depths and Samuel Adams Cinder Bock, which have quickly found their niche among craft aficionados. We are still seeing expanded distribution of domestic specialty brands and craft brands, but even so, we grew the Samuel Adams brand during the quarter. We are happy with the health of our brand portfolio and remain positive about the future of craft beer. I’ll now pass over to Martin for a more detailed overview of our business.

Thank you, Jim. Good afternoon, everyone. As we state in our earnings release, some of the information we discuss in the release and that may come up on this call reflect the company's or management's expectations or predictions of the future. Such predictions and the like are forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's most recent 10-K. You should also be advised that the company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. We are pleased with the start of the year and the growth of our business, and in particular the smooth transition from our Spring to our Summer Seasonal. This occurred in mid-March this year, which was earlier than our 2011 transition but consistent with prior year’s timing and it sets us up well for the second quarter. We continue to invest in our brands and in new opportunities, and we will likely increase investments in advertising, promotional and selling expenses commensurate with the opportunities and the increased competition that we see. Specifically, we are investing in systems and capital equipment to enable us to manage the increasing complexity effectively and expand the capacity and capabilities of our breweries. We are prepared to forsake some earnings in the short term as we make appropriate investments in brand-building activities and our brewing and packaging capabilities position as well for long-term growth. We remain confident about the long-term prospects for the craft category and our Samuel Adams brand. In the first quarter, our depletion growth benefited from the positive acceptance of…

Thank you, Jim and Martin. Good afternoon, everyone. We reported net income of $7.5 million or $0.56 per diluted share for the first quarter, representing an increase of $3.5 million or $0.28 per diluted share from the same period last year. This increase was primarily due to net revenue increases offset by increased investments in advertising, promotional and selling expenses. Core shipment volume for the first quarter was approximately 536,000 barrels, an 8% increase over the first quarter of 2011. The increase in shipment is due primarily to increases in Samuel Adams Seasonal, Angry Orchard and Twisted Tea, offset by declines in some other Samuel Adams styles. We believe that inventory levels at wholesalers at the end of the first quarter are similar to previous years, except for those wholesalers participating in the Freshest Beer Program whose inventories were lower. Inventory at wholesalers participating in the Freshest Beer Program was lower by an estimated 259,000 case equivalents, compared to the end of the first quarter in 2011. Our first quarter 2012 gross margin increased to 55% from 51% in the first quarter of 2011. Price increases, lower brewery processing costs and favorable package mix were partially offset by cost increases in barley and other ingredients. We are maintaining our full year gross margin target of between 53% and 55%, primarily due to the continued negative impact of barley and other ingredients costs. We intend to continue to focus on cost-saving initiatives at our breweries and are pleased with the improvements we have made to date. First quarter advertising, promotion and selling expenses were $2.9 million higher than those incurred in the prior year, primarily as a result of increased costs for additional sales personnel, investments in point of sale materials and freight to wholesalers due to higher volumes and the…

[Operator Instructions] Your first question comes from the line of Judy Hong with Goldman Sachs.

First, just in terms of your depletion growth, so you had a very strong first quarter. Your full year guidance still remains 6% to 9%. So I’m just wondering why you think there may be a bit of a slowdown in the back half? And then in Q1, do you think depletion growth benefited to some extent from the early timing of the Summer Seasonal this year?

Hey, Judy, it’s Martin. I think we are certainly happy with our first quarter trends, which were obviously an improvement over how we finished the year and last year’s trends and also slightly ahead of expectations. There are some structural issues related to the timing of the seasonal conversions and how effectively we did it, compared to the first quarter last year, where our timing was not as tight and we were not as effective. So, certainly, we believe that we benefited from that in the first quarter, exactly how much is very hard to estimate. As it relates to looking at full year, we are just looking that and there is so much unknown, how well will these brand trends continue into the second quarter, where we would also expect to get some slight structural benefit versus last year because of that timing of the Summer Ale rollout. What the full impact of Angry Orchard and Twisted Tea national rollouts will be, it’s still way too early to tell. And I think given all of those factors, the structural impacts in the first quarter was sort of anticipated and we are still sort of looking like we’re on plan and we just aren’t willing to change the current range yet.

Okay. And then Jim or Martin, maybe just update us on the competitive environment, the expanded distribution that you're seeing with domestic specialty and craft brands. Are you seeing any signs that things are starting to slow down? Any commentary that you're hearing either from wholesalers or retailers that gives you comfort that things are starting to sort of plateau?

Sure. Why don’t I take a stab at that and then Jim can comment on top of my comments. Based on, what I see and what I hear, the competition continues to intensify. At one end you have the big brewers sort of reinvesting more heavily in their own brands that compete with us, from craft domestic specialty to small niche import, and they appear to be showing more active interest in the high end. And then as it relates to craft and local craft, they are still opening, they are still innovating, they are still introducing new SKUs. Retailers are still providing distribution. Wholesalers are still saying, “Come on in, welcome.” So it’s still is continuing to remain quite challenging. And at this point in time, it doesn't appear to be slowing down. Now within that there is obviously only so much retail space available for everybody. And you are seeing some signs of some sort of churn of some of the, perhaps, styles or SKUs or brands that came in 2 years ago into a market maybe further away from home than usual or maybe sort of winding down, but there is someone to replace them. So, I would say, you are seeing some sign of some sort of brand turnover, sell turnover on the smaller SKU brands but in total it’s still very competitive for shelf space, tap handles and there’s probably more competing brands and competing SKUs today than there were last year. So from that perspective, it continues and I’ll let Jim perhaps comment.

Yes. I would concur with what Martin has said. There are now approximately 1,000 breweries in planning in the United States. It’s an extraordinary number. It's not quite a doubling of the number of shipping breweries, but it's close to it, if they all come to fruition. Retailers are continuing to open up space for craft beer, partly by cutting space for the mass domestic brands and even beginning to push out the beer section to accommodate craft specifically, even though the beer category isn’t showing very much growth. I mean, Southern California actually now -- and was a very sophisticated retailer this morning was cutting some of the wine space to accommodate more craft beer. So, right now, I don't see craft beer hitting a wall. I don't even see craft beer envisioning, hitting a wall. Obviously, it won't go on forever and probably, when it does hit the wall it will be a rude shock, but right now, it just doesn't seem to be happening. Craft beer is really the darling of the alcoholic beverage industry at this moment.

Okay. That’s helpful. So and then just finally on the -- Bill, on the gross margin and on the cost side. So Q1 seems like on, at least on a year-over-year basis, gross margins came in more favorably and cost per barrel was down actually year-over-year. So is there anything just in terms of timing wise where barley or other costs inflation actually hit the coming quarter much more than Q1? And then, is your commentary on some of the freight costs and the packaging costs and everything else, is the commentary on costs, are they a little bit worse than what you’ve sort of talked about in the last couple of calls?

Let me take it in a couple of pieces, Judy. First is the first quarter gross margin. The increase in gross margin percent this year is mainly driven by lower brewery operating costs than we had last year at this time, so that has helped our gross margin percent. In terms of packaged material and barley costs, there is some turnover from the beginning of the year from last year. So there is some barley that comes into this year and there is some packaged material that comes in before all the price increases are realized. So some of that does help in the first quarter and it's not fully realized in the first quarter.

Yes. And just building on what Bill said, I think, from a first quarter comparison basis. The first quarter of last year we had some operational events that I think we commented on it at the time that were not probably recurring and I'm delighted to say, they didn’t recur. We are very pleased with our brewery operational performance in the first quarter. And as we look forward, I’m not -- I don’t think the size of improvement that you might look at on a gross margin will flow through in the following quarters. It was more a specific quarter-to-quarter comparison.

Your next question comes from the line of Caroline Levy with CLSA.

My question relates to Twisted Tea because there is just been a lot of conversation about this. I'm wondering if you could share with us, how much national distribution it has, what percentage ACV, what the growth was in the quarter in Twisted Tea, and what percent of your volume it is, because there is some view that it's about 10% nationally and there’s some views it’s 20%, which is just a huge spread. So if you could help us with that. And then just finally, if you grow faster in Twisted than in your other brands, is that negative for net revenue per barrel in margin or positive or neutral?

Sure, Caroline. It’s Martin. Let’s see, Twisted Tea, as you know it’s been, for us a 10-, 11-year sort of learning experience, starting with our launch of BoDean's back in the early 2000s and frankly, failing. And since then it sort of evolved and has grown into a nice part of our business, generating nice gross margin contribution to allow us to grow our sales organization and to invest behind our Samuel Adams brand. This year, we will hopefully compete -- complete a full national distribution. There are still a number of states that we are rolling out, and certainly, in those states, our distribution penetration is still quite low and even in states that we rolled 2 years ago and 3 years ago, our penetration is quite low. We don't sort of disclose distribution penetration numbers. But if you were to sort of look at percentage ACV on the publicly available numbers, you’d see that Twisted Tea is at 40%, 45% of ACV relative to 77%, 80% on a total U.S. food basis. So that gives you an idea -- about 80% for other flavored malt beverages. So, we still have a lot of distribution upside on Twisted Tea. Obviously it varies enormously by market. And Twisted Tea sort of took hold in some markets that were perhaps more independent stores, so perhaps less developed in supermarkets type markets than we were before. To sort of answer your second question, pricing varies by market based on where we are in our sort of launch and growth phase. There is some initial pricing for trial. So the new volume and new markets is probably less than Sam Adams on a revenue per barrel basis, but the -- but ultimately it sort of becomes much closer. So it sort of depends on where the growth is coming from and I think, as we’ve commented, we are actually happy to still be growing in markets we’ve been in for 10 years. So, but still, some, still growth happening in markets that we’ve had a presence for a long time. And from a gross margin point of view, the gross margins of Twisted Tea are not as favorable as Sam Adams but they are close, so there is a little bit of effect there but not too much.

And how much was it up this quarter?

Caroline, I think as you know that is a question that we have chosen not to disclose, as we don't break out the business and I would just refer you to the publicly available information that is the best available information.

Sure. Okay. Just lastly, I wondered if you could talk about Twisted Tea. I sometimes get asked about whether it’s similar to some of the flavor alcoholic -- flavored alcoholic beverages and yet you are talking of the fact that it’s 11 years old. How do you address those questions from investors where they say, how do we know it’s not going to fall off the cliff in a year or 2? That it's just a fad.

Well, I think, if you look at that category, there was a couple of brands and I would put Mike’s in that and to some extent, Smirnoff Ice that has been around for 15 years and a very successfully and obviously from Mike’s perspective build a nice U.S. based business. So I would say that there our brands in that category that have built themselves in sensible ways over sensible periods of time and appear to have ongoing traction. And then like with any category, there are brands that come and go that have great couple of years and then disappear for many reasons. And so I would just point to Twisted Tea's longevity and the fact that in some of its core markets, we’ve had 10 years of successive growth on -- not unreasonable volumes and maybe small markets but we have shown we can do it and we’d like to show we can do it on a national basis.

And the fact that it’s got tea in it, does it stir up any more regulatory examination? Do you feel that, that’s any kind of risk?

Well, obviously, there are risks in a business wherein it relates to regulation and control of ingredients. Our tea is naturally occurring tea that we use in the Twisted Tea that we use in the brews. And I would compare that to some extent to someone brewing coffee stout where they are using coffee and stout or other sources of additions to beer. So I think we are exposed, like much of crafted, exposed to those sorts of things. Certainly, flavored malt beverages have attracted a fair amount of enquiry as it relates to high alcohol and large single serves and we -- that’s not what Twisted Tea is in any shape or form with 5% alcohol and in some ways, something completely different. So could we get caught up in that enquiry? Sure. But that’s just the business risk I think we all face.

I have one last housekeeping. And that is, was there a 2-point drag from the freshness program as expected or no?

When you say 2-point drag Caroline, what are you…

Shipment volume, you expected freshness date -- Freshness Program to reduce shipments versus demand by a certain amount. Is that what actually happened? Do you think that’s the disconnect between your depletions and your shipments?

Yes. As we disclosed the wholesalers participating in the freshest beer program were lower by about 260,000 cases. And so that, I’m just going to do the numbers in my head is what, 18,000 barrels. So that’s 3 percentage points.

Your next question comes from the line of Marc Riddick with Williams Capital.

Couple of questions. One of the things I noticed with the press release, you mentioned this smooth transition of the seasonal. And so marrying that with the rollout of Angry Orchard and Twisted Tea, I’m wondering if you could spend a little time talking about, maybe, the benefits that those who have been through the Freshest Beer program have seen in that transition versus maybe those who have not gone through that process as of yet. And then I have a follow-up after that.

Sure. Well, I think, our goal on seasonal transition is to align with our sales force and the wholesale, sort of, brand manages as the target transition date. It is appropriate for each market and it does vary by market but there are some sort of groups and pockets of consistency. And then to -- through inventory planning and order replenishment to try and get the inventory levels down to de minimis levels on that date to allow a clean cut over in market. Now, the clean cut over may involve, retailers running out their own retail stocks and then carrying over but from a wholesaler’s perspective to try and have the wholesaler’s down to de minimis and inventory on that per period so they can at least do a cut off on shipments if they so choose. But our observations, the Freshest Beer wholesalers appear to be having that conversion almost unilaterally where Boston Beer and the wholesalers have been working closely to get on inventory levels, on a plus or minus 1-week basis, which is much, much tighter than was happening previously where the wholesalers were solely responsible for planning and forecasting orders. And they’re running with 3 to 4 weeks’ worth of inventory. And obviously, with 3 to 4 weeks’ worth of inventory at the end of the season, there is some slowdown and it’s very hard to predict and you may be sitting there thinking I’m in good shape but the following week you go, oh, it’s going down so fast. Now, I got 6 weeks’ worth of inventories instead of 3. So I do think that the Freshest Beer wholesalers have seen an enormous benefit on that relative to our non-Freshest Beer wholesalers. Obviously, we’re actively encouraging wholesalers to join the program. There are some requirements that not everyone is ready for yet but we are trying to sell the program. I haven’t looked at the data recently but I believe that we saw on total seasonal sales, a benefit of a couple of points and that’s coming because one inclination of the wholesaler that’s doing its own ordering is to not order enough and therefore do early cutovers and then be out of sync and the other thing that happens is wholesalers order too much. And when it backs up, then you get a backup at retail. And you have some lost sales and that sort of happened to us last year with the Noble Pils to Summer Ale conversion which is one of the reasons for the timing benefits this year. So real benefit. Real benefit to total business, real benefit to inventory cost, real benefit to predictability, and I think most of our wholesalers are delighted to have that as a real benefit. And certainly as you look at what’s on shelf from some competing brewers, you still see some spring and even winter out there. So you know that we’re doing something right.

That’s excellent. One of the things that I was curious about is sort of comparing the strength of the craft beer market this time versus last time, and so that may be some of the behaviors that you’re seeing. Is it -- I don’t know how to put this perfectly but is it fair to say that you’re seeing maybe the locals staying a little closer to home this time either by the choice of their own brewing and brewing capacity or by the choice of those who are controlling the shelves?

And Marc, when you say this time, are you referring to back in the ‘90’s or what’s your comparison?

The strength of the craft beer market that you’re seeing now vis-à-vis the last time craft beer did very well. I mean, one of the things that I recall from the last time was that you had some local brands that may be reached outside of their area, if you will. And then struggled when they got outside of that area where they were well known. And so this time, it seems as though -- I’m asking if this is actually the case. But it seems as though they might be outside of just -- not just you guys but outside of you guys, there seems to possibly be a little more discipline on that type of thing and maybe that’s part of the turnover of those brands that Jim was speaking about earlier. And I’m trying to figure out if that may be the case.

Yes. I’m going to, maybe, ask Jim to comment because he lived through the first wave. Jim could you comment?

Sure. I think you’re basically right that locals are staying a little closer to home this time. And I think also wholesalers and retailers have so many choices this time that they are not mindlessly grabbing anything from anywhere and we can always -- can fill a lot of their shelves with local brands. And when they bring something in from outside of let say the region, it might not be the city or even the state but certainly the regions, then they are looking for a brand that has some consumer polls, some consumer awareness, some buzz. And they are not just grabbing anything from anywhere. So I do see this cycle of craft beer growth as being healthier, more prudent and it’s also not growing the way it did in the ‘90s. When it slowed down in 1996, it went from 30% growth to 0 in a matter of a month or 2. We’re not at 30% anymore. We’re at 10% to 15%.

Your next question comes from the line of Andrew Kieley with Deutsche Bank.

Martin, I wanted to just try to get a sense for how much of the depletions growth was due to the spring seasonal, the new spring seasonal. I know you won’t say exactly but if you could just give us a sense; and then number two, on the depletions. If the earlier shipment of Summer Ale was in those numbers or was it just in your shipments? I guess if some of that was widely available on the actual shelf during Q1.

Yes. Well, as you indicate, we don’t disclose sort of that sort of breakout but I think from our comments that we have said, one, we obviously had Alpine Spring out at wholesale ready to go in early January. And we talked a little bit about that at our call for last year because it provided some shipment boost in the quarter. And I think that transition went very smoothly. And then we were delighted with how the Alpine flowed through and if it hadn’t have flown through correctly, we would not have had an on-time Summer Ale transition. So you can draw your conclusions from that. It relates to the second question. The transition date we’re sort of targeting at least the wholesale or inventory level was mid March. So obviously we had the benefit of Summer Ale load into wholesale because they would have been ready to go around that timeframe depending whether they were Freshest Beer or not. And then depending on whether the wholesalers released Summer Ale to the retail trade or allowed Alpine Spring to run down a little bit, there would have been some potential benefit for Summer Ale in March from a depletions perspective.

And then I just -- just looking at Boston Lager, sometime -- we look at the grocery channel data, sort of, its proxy. I know it’s not perfect but you see some softness in the actual Boston Lager SKU and I was just wondering if you could talk about that. Is that a concern or do you just look at it and say, I’m getting growth, overall seasonal and other SKUs and some of that’s sort of offset.

Yes. But I certainly think there’s some effect in cross trading of drinkers between the 2 but we would obviously be happier if Lager was stronger so that does get a fair amount of management attention and thought as to what may be going on as it relates to any weakness and how to fix. And certainly our preference would be to have both growing. So, yes, it would be a concern. I think you relate to the publically available data on what’s going through the supermarket class of trade, obviously that’s down. We’ve obviously got some nice growth in convenience stores for our total business. And we look at that and we look at what’s going on and we try to work out ways to grow longer and our Seasonals. Well, our Seasonals are obviously experiencing some growth of a pre-launch base, and certainly some of that is cannibalizing it.

Okay. And then I just have one on tea, if you could talk maybe on if there is any measure of sort of same-store sales or repeats that you see in that product and then also how you think about competing products I guess, because we have seen a bunch of announcements about other products coming into the category.

Yes, so repeat, I would sort of, refer you back to my answer to Caroline, which is that we’ve been -- the brand has been available in some markets since 2002, 2003. It’s been a slow build. It seems to be a very unique sort of liquid offering. And it’s been hard to duplicate from a competitive point of view. And we just had nice slow steady growth and so where we are able to cede it, we’re able to get repeat. And it grows slowly and steadily. But it’s also quite small in the total scheme of beer things. So I think we attracted some competitive -- I don’t want to say copy the people who are positioning product in the same space. And they sort of come in waves and we have seen 2 waves and we may be about to see a third. And certainly the brand has survived. Was the growth affected by such efforts? Sure, but it’s still grown. And so we’re pretty positive, it’s still a small category but we’re happy that we have the #1 tea.

Okay. And then I just have one last one for, Bill. Just looking at the guidance for the gross margin pressure for the balance of the year. You mentioned some of the favorable comparables in the first quarter. Is it just for the rest of year that the barley inflation starts to kick in more? Can you get any help on packaging cost as the year goes on? Just trying to think about other items in the gross margin.

I think, I tried to answer this question for Judy. We have some package material and some raw materials that carry over from the prior year, 2010 barley, for example, so you don’t have that in the reminder of the year. So you have the full impact in the remainder of the year of any of those cost increases that we’ll see.

Your next question comes from the line of James Watson with HSBC.

I’m just going to follow up quickly on COGS. I noticed you had a much -- saw a decline I think in COGS per barrel. I was just curious, you mentioned operational kind of brewery efficiency, if you could give a sense, is that natural gas prices coming down? Is that efficiencies that just leverage on high volumes in the quarter?

Yes I think the big impact on the first quarter, we talked about this time last year, was we had some events at the breweries and related to sort of the Noble Pils, Summer Ale transition to some extent, where we took hits on our brewery operating costs that we’ll perhaps -- were hopefully non-recurring through better planning and operations. Okay. And so that’s a lot of the effect you see. Now, I would not want to disrespect the breweries because we are operating more efficiently and effectively than we were this time last year in terms of kilowatt hours per barrel, and firms per barrel and water per barrel, all the metrics that we would like to see. Obviously, the natural gas benefit to the breweries from what is going on with natural gas is part of it. But we are pleased with brewery performance on those sorts of metrics and we continue to be challenged from other metrics that we still think we have upside on.

Okay. And moving into pricing, I mean looks like you guys got 3% and then it stuck in the marketplace. I was just, if you could give a little more color as to when you took that, if you got any pushbacks from retailers and whether or not you saw other crafters or big domestic guys following that price increase.

Sure. We execute the pricing mostly -- around February 1, but some March 1 and some in the fourth quarter that looks like it will meet our sort of revenue goals of 3% for the year. And we are still -- we’re 2.5 months in. Some of the competitive set has reacted to similar cost pressures that we face. It’s particularly on the body side, you’re now starting to see, much more talk about it and has gone up. And some of the competitive set hasn’t. And it varies, like you might expect by market for the local, who doesn’t -- or if the big importers haven’t -- there are different competitive issues depending on our strength of brand and also how the retailer in that market likes to operate. So at this point in time, I’d say, we’re happy the way, we’ve executed. It’s unclear whether everything will stick but it looks like most will stick and the right time to ask us this question will be sort of on the next earnings call, which is what stuck through the summer. And obviously, it’s unclear whether all of this will stick through the summer.

We should ask you that in the next call then. I guess you mentioned favorable package mix as well. Was that some of the smaller brands or was that a switch to channel? I just wondered what drove that in the quarter.

Yes. We don’t typically get into sort of different costs by brand or package. But it was just driven by favorability of that mix and that’s probably likely to continue because there is underlying business reasons for that to continue.

[Operator Instructions] There are no further questions at this time. I am sorry. We have a follow-up question from Caroline Levy with CLSA.

I was just wondering with the Yuengling launch in Ohio. My understanding was -- there was some impact on Sam Adams, which in a way is surprising. Can you talk about the interaction between a brand like Yuengling and your core brand?

Sure, Caroline. I think again if you look at sort of the publicly available data for Ohio, you’ll see that Yuengling made -- had a terrific launch. There was a lot of interest, and sort of size of volume and share they had -- they had to be banking drinkers from everybody. And I think we experienced that, obviously the big guys experienced it. And it affected our growth rates in that marketplace. I think longer term, we would expect that sort of down a little bit and that our brands will return to grow. But when something like that happens and there’s pent-up demand and a well executed launch, then obviously you some impact. It’s such a big event that it affects all brand.

And without going into -- I mean are there other states where they would be as much buzz because they neighbor them, where they’re not there already? Are you…

Well, I think as they grow geographically, they’re going to keep hitting those states that are reasonably significant volume. And we might expect that to continue. I don’t know that we would deem to predict how far the brand can travel, nor would I deem to predict what their plans are. But they certainly have a nice business model and they’re executing it well.

And I am just -- somewhere I read something about a tax on non-local craft beer in the New York market. Am I right, in that are there situations where taxes are going up and then -- for beer, for your beer?

Well, I think there are situations where states are looking at that. And there certainly are some states who tax sort of small brewers different than the large brewers and local brewers different than non-local brewers. And I do believe and maybe I’ll look for Jim’s confirmation that New York may have something waiting for governor’s signature, but not yet approved as it relates to that.

So would you -- would you characterize this as normal course of business, or is something heating up here?

I would think it’s just the normal course of business, states look for revenue. What happened in New York is they had for many years a significantly lower tax rate for in-state New York brewers. And the New York state courts, I believe it was, threw that out, that tax break for local brewers as violation of the commerce clause. So, it did not affect our tax rate in New York state, because we are not brewing there. There were some craft brewers in New York that’s a significant increase in their taxes, but not us and that was a one off. It was a court that looked at what it had been in place for many years and said, wait a minute, this is a violation of the commerce clause of the constitution. You can’t discriminate against in-state and out of state breweries.

That’s helpful. Last thing is you mentioned, wine is maybe losing a bit of space, I don’t know if it was one region in California or more but do you see any other glimmers of hope that that may -- you may be able to gain space, floor space?

It is -- I would say it is a glimmer of a hope. I mean there was one retailer that I was calling on today and I was quite surprised because for a dozen years or more, it’s been going the other way. But clearly there is an excitement level at retail and consumer around craft beer. There is an explosion of a variety of things [ph]. They have to have space and they are probably squeezed domestics almost as much as they can. And they are looking for space for craft beer from non-alcoholics and even from wine. So I guess my point is it said something about the strength of the craft beer movement today.

[Operator Instructions] There are no further questions at this time.

Well, on behalf of Jim, Bill and myself, I would like to thank you all to joining us. And we look forward to joining you at the end of the second call and we are going to go grab a beer. Cheers.

This concludes today’s conference call. You may now disconnect.