Good morning. My name is Jackie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Constellation Brands First Quarter 2014 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Ms. Patty Yahn-Urlaub, Vice President of Investor Relations. Please go ahead.

Thank you, Jackie. Good morning, everyone, and welcome to Constellation's First Quarter Fiscal 2014 Conference Call. I'm here this morning with Rob Sands, our President and Chief Executive Officer; and Bob Ryder, our Chief Financial Officer. This call complements our news release, which has also been also been furnished to the SEC. During this call, we may discuss financial information on a GAAP comparable, organic and constant currency basis. However, discussions will generally focus on comparable financial results. Reconciliations between the most directly comparable GAAP measure and these and other non-GAAP financial measures are included in the news release or otherwise available on the company's website at www.cbrands.com. Please also be aware that we may make forward-looking statements during this call. While those statements represent our best estimates and expectations, actual results could differ materially from our estimates and expectations. For a detailed list of risk factors that may impact the company's estimates, please refer to the news release in Constellation's SEC filings. And now I'd like to turn the call over to Rob.

Thanks, Patty. Before we get started, I'd like to thank those of you who attended our recent New York City Investors Meeting. I hope one of your key takeaways from that meeting is that we are definitely a new Constellation. The powerful combination of our existing wine and spirits business with our newly consolidated beer business, including our New Mexican brewery and the other 50% of Crown, adds an entirely new dimension to our company, one that adds size and scale and provides new avenues for growth. Since the closing of the beer deal less than a month ago, we have experienced a smooth transition for our new brewery in Mexico. Our beer supply chain is operating efficiently as we continue to make and move beer. And we are fully engaged in working collaboratively with all brewery employees, including the operations team in Mexico. Overall, we're off to a good start for the year on all fronts, with results that were generally in line with all of our expectations. During the first quarter, our U.S. wine and spirits business continue to gain marketplace momentum, posting strong consumer takeaway growth of 9% versus category growth of 3% in IRI channels. In terms of consumer takeaway by market channel, Constellation's wine portfolio outperformed the category overall due to solid growth across every channel. Overall, we continue to benefit from continuing consumer trade-up trends, distribution gains at retail and contributions from our brand-building efforts, with our Focus Brands depletions growing at more than double the rate of our total portfolio during the quarter. Now I'd like to take a moment to highlight some of our key brand-building initiatives that were executed during the first quarter, including accolades received for some of our popular wines and spirits. The Dreaming Tree, which is one of…

Thanks, Rob. Good morning, everyone. Our comparable basis diluted EPS for Q1 came in at $0.38. At a high level, this result was generally in line with our expectations, and we are reiterating, or in the case of EPS, improving our full year guidance. We're pleased with our marketplace results as our wine, spirits and beer businesses continue to gain share in IRI for the quarter from our brand-building investments, innovation efforts and retail execution. For Q1, sales growth did not translate to higher EBIT due primarily to some timing items. In a few moments, I will highlight some additional timing and comparison impacts for Q2. As a result, we expect this year's profit growth to be generated in the back half of the year. Given those highlights, let's look at Q1 performance in more detail quarter, where my comments will generally focus on comparable basis financial results. As you can see from our news release, wine and spirits net sales on an organic constant currency basis increased 4%, primarily due to higher shipment volume. We saw shipments outpace depletions in the quarter as our U.S. domestic depletion volume growth was a little above 2%. In Q2, we expect this shipment benefit to reverse, and we expect depletion growth to be quite a bit higher than Q1. As a reminder, from time-to-time, we will see fluctuations in growth trends between shipments and depletions on a quarter-over-quarter basis due to various factors like timing of new product introductions and promotional activities. But from an overall standpoint, we continue to expect shipments and depletions to generally align on an annual basis. The acquisition of Mark West provided contribution to our total growth as total net sales for the quarter increased 6%. For the quarter, our consolidated gross margin was 38.3% versus 39.6%…

[Operator Instructions] Your first question comes from the line of Bill Chappell with SunTrust.

I was wondering if you could talk a little bit on the grape cost, both in the quarter and kind of looking forward. And when I'm looking at gross margin, was the decline year-over-year almost all because of the higher grape cost or was there a higher promotion? And then would you expect this type of impact throughout 2014 or should it ease as we get to the back end?

Yes, so I'll take that in pieces. So the grape cost flowing through the cost of goods sold this year are pretty much as expected, right, as we -- because the last 2 harvests in California, specifically the cost per ton had gone up, though that juice will be flowing through our cost of goods sold over the next year to 2. So the cost of goods sold is up. But to your point, for the quarter, promotion spending was up a bit, mostly due to some of the timing of the shipments versus depletions. For the full year, we don't expect promotion spending to be up except for the impact of positive mix. So do we do expect cost of goods sold to be up for the year, and that was part of our guidance. We do not expect promotion spending on a mix adjusted basis to be up for the full year, but we did have a reasonable amount of quarter-over-quarter volatility.

Okay, great. And then just on the beer side, was there any impact in terms of weather on the overall top line? And then have you seen any change as weather has improved in the summer?

Yes, so that's a great question. And we're very happy with our beer results. We outpaced the industry again for the 13th consecutive quarter. That being said, our results on the East Coast and in the Midwest were not very good because the weather for the spring has actually been very wet and very cold, and that's overlapping the previous year, where the weather was actually beyond ideal. So the whole beer industry had a very good first quarter last year. This year, we're all kind of suffering. We're not unique in that. But in general, we're doing better than most. And we're hoping for better weather as we come into the peak summer season, which is right now.

Your next question comes from the line of Vivien Azer with Citi.

I wanted to circle back on the commentary about the reversals in terms of the shipments and depletions. I guess, I was a little surprised to hear that you get a full reversal in the second quarter. Because it looks like in the wine business, your shipments have been running ahead of depletions for 4 or 5 quarters now. It wasn't just kind of a 1Q '14 event. So can you dig a little deeper into that?

Yes, Vivien, the quarter-over-quarter thing gets a little confusing and complicated to describe, especially when you're talking changes, right, because you have to take 2 years activities into account. But the way we look at it is there is volatility quarter-over-quarter, but it kind of clears up on an annual basis. So I think if you go back and look at last year, for the full fiscal year, shipments and depletions were pretty much in line, actually they have been for the last few years. But the quarter volatility does exist.

Fair enough. And then I wanted to follow up on Bill's question about promotional spending. As I look at -- and I don't have the IRI data that you guys note. I'm using Nielsen AOC. But it looks to me that after significant easing in category level promotional spending, that's really kind of eased off and actually picked up recently. So I'm curious whether you're seeing that on a category basis in IRI, if you're seeing a shift in promotional spending from your competitive set.

We feel we're spending in line with the industry. Again, a lot of our growth is coming out of the premium IRI segment, right, and we're making a concerted effort to get behind some of our brands there. And we're certainly spending more of our money on Focus Brands. But I think Q1 wouldn't be reflective of what we expect for the full year, especially when you look at some year-over-year indices.

Your next question comes from the line of Alice Longley with Buckingham Research.

I have a follow-up question on the difference between depletions and shipments in wine and spirits. I think you said in the second quarter, your depletions would improve significantly from up 2%, so I guess maybe up 4% or something like that. Could you, first of all, comment on why that improves? And then if there's a reversal, does that mean your shipments are up 2%?

Yes. And again, it can drive you a little bit crazy quarter-over-quarter. So the second quarter will kind of even out some of the anomalies in the first quarter because there'll be a reversal of the trends. So shipment growth, right, will be a lot less than depletion growth in the second quarter, which was the opposite in the first quarter. And again, for the full year, they should align. So our income statement is driven off shipment growth, which is why we said that the wine and spirits business will see profits in the second quarter below the second quarter of last year.

And why do depletions accelerate?

So again, they just happen in different cadences, right, so depletions will accelerate. Some of it will do what happen with last year's second quarter. But the other will be as we gear up going into October, November, December, right, we expect to have better depletion results in the second quarter.

And why does depletion get better? Is it just the timing of your marketing?

Yes, this is Rob. What really happens is that at the end of the fourth quarter, or I should say the fourth quarter, we had very, very, very strong depletions. That tends to mute depletion growth in the first quarter of this year as the inventory from -- at retail from the fourth quarter moves through. That moves through during the first quarter and, therefore, the second quarter we usually see bounce back to our normal depletion trends of -- at least around mid-single-digit depletion growth. So fourth quarter, we had very high depletion growth, almost double digit. First quarter, we have lower depletion growth, low-single digits. Next quarter, we return to sort of our normal run rate.

Okay. I mean, I suppose, in the second quarter, your depletions could be up 6% and your shipments still up 4%. Right?

In the second quarter, you're saying?

Yes.

Yes, we're not going to comment on the exact numbers, which, of course, we don't know at this moment.

But remember, from a shipment perspective, right, we said that shipment growth over prior year will drive negative EBIT in the second quarter. So I wouldn't expect shipment growth in the second quarter.

All right. No shipment growth at all?

Well, again, we're -- let's move on because we're kind of filling out economic models. We're just trying to do a favor giving some hints on second quarter. [indiscernible]

And can you comment on price mix in the wine business in the first quarter? I think your volume was up 5.4 and your price mix was a negative 1.4, and why would that be since...

Yes, that's a good question. So again, in the first quarter, we had some anomalies. I'd say price mix in the U.S. business, which usually really drives the bus, was slightly positive, okay? So that -- and if you look at the wine category, the trend continues, generally, the more expensive the wine, the faster it's growing. That was kind of consistent for us. But the anomaly in the first quarter was actually we had some negative price mix outside of the U.S., which it's normally not big enough to have an impact, but this quarter, because the first quarter's our smallest quarter and because it was a bit anomalous in -- mostly it was Canada and New Zealand, it kind of impacted the total business. Again, we don't expect that to be a full year phenomenon, which is a kind of anomalous first quarter event. So most of the negative price mix, actually all the negative price mix was outside of the United States.

And then my final question is on the beer category in the May quarter. Can you tell us what you think the growth was and when it was on premise as opposed to future consumption?

Yes. In the first quarter, the total beer category was down in volume terms about 1%, 1.5% versus our depletions, which, in the first quarter, were up 3%. In general, the trends in on-premise are worse than the trends in off-premise. It's hard to know exactly what the on-premise trends are because they're not tracked. So we don't know exactly what those numbers are, except that we expect that they're probably, as I said, worse in the on-premise than in the off-premise. Now as it relates to the beer business overall, the negative trends were largely driven by the domestic premium segment, which, of course, is dominated by the light premium beers of the 2 major brewers of domestic brands in the United States. The import category generally outperformed the domestic category. We represent about half of the import category, and as I said in my remarks, we gained about 1 point or 100 basis points of share of the import category, and we gained about around 20 basis points or so of the overall beer business in the United States. So generally, those are the trends.

Your next question comes from the line of Brett Cooper with Consumer Edge Research.

A couple of questions. On the wine business, you talked about the incremental, I guess, SG&A. I don't know if you're willing to give this, but I mean, how much are we talking that, that part of the wine business should be up in fiscal '14?

Yes, so the numbers that you see in SG&A are a combination of SG&A and marketing, right? And for the full year, we expect marketing to be up as we reinvest in the -- in mostly, the commercial activities, right, and mostly marketing spend. But SG&A would be up as well. The big drivers are normal raises, okay? They're kind of CPI inflation kind of numbers as we come off -- as we fully capitalize our ERP system, we have some increased depreciation around that. And then there's some overlaps from positives we incurred last year that aren't recurring this year that make SG&A looks like it's inflating, but it's really not. It's just overlapping anomalous positives in the previous year. They're the 3 big drivers for the SG&A increase.

And so would you -- I mean, I don't want to put numbers in your mouth, but would you say, I mean mid-single digits, would that be off base to make that sort of assumption for that part of the business?

No, I mean you can see it in the P&L, right? I think SG&A was up like 7%, 8%, something like that, I think, in the P&L.

I'm sorry, I was talking for the full year, not for the first quarter, how much it normalizes over the back end of the year?

I would say that the full year will be a little bit less, but pretty much right around where the first quarter was.

Okay. And then, I guess an unrelated topic, throughout the quarter, we've gotten an announcement on the wine in Brazil and SVEDKA, I think it was, whatever, it was yesterday or last week in South Korea. Can you just talk about sort of the strategy there? Are we likely to see more and more of this in the near future? Is this kind of a much longer build?

Well, when you say more of this, what we announced in both cases was the appointment of new distributors. So around the world, whenever we appoint a new distributor for our brand, and these were just changes, so we've distributed in our brands with another distributor prior to this, whenever we appoint a new one, we usually issue a release indicating who our new customer is. So you'll continue to see, as we make adjustments in our distributions matrix, you'll see announcements announcing who our distributors are around the world. So that's really the sole import of all this. Now, as a general proposition, yes, we continue to focus on building our business in regions and countries around the world. We basically distribute every place in the world, largely. And as our brands build momentum, we make adjustments in that distributorship network, and these announcements sort of are fairly reflective of that. Brazil is a fairly bouyant market for imports so, of course, we're relatively optimistic about that business on a small base. So is South Korea, but again, on a very small base.

Your next question comes from the line of Lauren Torres with HSBC.

My question goes back to the Beer business. We've heard a lot over the last couple of years of you gaining share and Modelo portfolio growing faster than the U.S. beer industry. But with that said, during that time period, you've not taken pricing or now, we're seeing some minimal pricing coming through. So just curious to get your thoughts on the ability to take more pricing, are you willing to give up some volume and take that pricing? Or you think the market's just not ready to accept that yet?

Well, first of all, Lauren, last year, we took about 2% of pricing, which is, on a percentage basis, lower than the industry, but on a dollar basis, pretty much consistent with what the rest of the industry did, right? Because you remember, our price for our product is substantially higher than the industry, in general. So on nominal terms, the same price increase results in a lower percentage for us versus the rest of the industry. So 2% was pretty healthy. That's point number one. Yes, prior to that, there was a period of time for a few years where we really didn't take much pricing because the focus of the business was largely against making sure that we maintained and, in fact, build market share following the recession of 2008, early 2009. As far as our plans going forward, we expect to continue to monitor what's going on in the industry in general, and we take a very strategic view towards pricing and really look at it on a market-by-market, brand-by-brand basis. And we're going to have to wait and see what happens with the rest of the industry as we move forward, but it looks like, up to now at least, pricing's been pretty healthy in the rest of the industry. So I suppose stay tuned for -- we'll see what happens.

Yes. And I guess as a follow-up, and I guess you did address this at your Analyst Day, but now that you're 100% owners of the Beer business, I know this is a very broad question, but any comments you'd like to make as far as things that may be done differently in beer that you may have not been able to do with a partner that you're excited about that could bring a great opportunity over the next couple of years?

Sure. Well, probably the biggest area that we're excited about is the opportunities for innovation and new product development. With the ownership of our own production, we can produce new packages and new types that previously we were entirely reliant upon the consent of Modelo to produce. And generally, they didn't really want to do much in the way of innovation, new products, new packages, new types. No less, new brands. So we're doing a lot of thinking about what our NPD and innovation pipeline will be in the future. We already are taking advantage of it. We've intro-ed or we're test marketing, Modelo Especial Lite. We are introducing Modelo Especial Chelada, which is a Bloody Mary style beer, which is actually a pretty large category in the United States. It's dominated entirely by one other supplier, so we see a lot of opportunity there. We are introducing new SKUs in drafts that we haven't previously had. So the primary area where we can really kind of do something different than what we have historically done is in the area of innovation and NPD.

Your next question comes from the line of Bryan Spillane with Bank of America.

Just a question about the wine business. If you look at, I guess, 5 or 6 quarters ago, you made the decision to ramp up or increase your marketing and promotional investment with the aim of holding or gaining market share, which you've been successful at. And I guess when you look at it, where you stand today, are you happy with the return on a net -- on that investment, first? And then now going forward, you feel like you have the right balance between spending on new product innovation, spending on advertising and marketing, and spending on promotion, or will there be any sort of tweaks to that mix going forward?

Yes, I think that certainly, right now, we feel like we have the right mix of those items. And yes, we have been successful in driving share. Our goal is not just to drive share. I'll say as a complete and total end goal, it's really about making sure that our brands are healthy so that we can take advantage of trends as they emerge. Now, as we move forward in the future, I am sure, in fact, we will tweak the mix between those things. And of course, in the end, our goal is to drive profitability and margins, but we really have to make sure, first and foremost, that the top line is healthy before we could turn our attention to that. So we'll definitely continue to tweak the mix between those things, and especially as we sort of monitor what's going on in the industry as we move into our next fiscal year and thereafter.

And if I could just follow up, if you look at the industry, the dynamic that's played out over the last year or so is that you've had -- the industry has been pricing at the value end of the category where you don't really participate. But I -- our impression is that helped maybe drive some mix benefit, drive consumers into the next price tiers. Just based on what you're seeing today, has anything changed in that dynamic? Is there still firm pricing at the value end of the category? And would you expect that to continue?

Not much has changed. The pricing is almost all at the low end, but that's not the surprising because the low end is the least fragmented part of the category, dominated largely by 2 suppliers. It has very much impacted the volume growth in the low end, so the pricing was not without some impact on volume, actually, fairly significant. It has driven some trade up. We are seeing more pricing, I suppose, at the top end sort of above $15, $20 as wine supplies, especially in the above $20 category, which is largely the North Coast Sonoma/Napa wine supplies have been very tight up there. So there has been some pricing there. The, I'll say, more commercial part of the business between $5 and $15 is much more fragmented, so we tend not to see pricing occur in that category or in that -- those segments as quickly as it occurs in the other 2 segments, but I would say, over time, we probably expect to see some pricing start hitting in those categories. And we have seen it in some specific brands. We've seen some pricing being taken, and some specific suppliers have taken some pricing in that category. But I would say not overall as a general proposition.

Your next question is coming from the line of John Faucher with JPMorgan. John A. Faucher - JP Morgan Chase & Co, Research Division: Just a quick question here. You talked about the on-premise being a little bit weaker for the Beer business, and one of the things you're focusing on with Corona Light is more of a draft presence than getting tap handles. So does this change and do we need to see the on-premise reaccelerate before we see the payoff on this? Or is this something where you think you've got enough momentum behind the brand that even if on-premise remains a little bit weak, you can still drive some decent growth off of that?

Yes, we are -- in our business, draft is a very, very, very small percentage of our business, about 2%, yes. Well, for us, it's even less -- I'm sorry, it's even less than 2%. But for the industry overall, it's a much higher percentage, so we under index grossly when it comes to draft. So regardless basically of what happens on the on-premise as an overall proposition, because we're so under indexed, it's a big opportunity for us. Now, that said, the strategy on draft is really all about providing the opportunity on, on premise for sampling of our products, and -- which translates directly into off premise volume and sales growth. So I don't think that the opportunity there has much to do with what's going on in the on-premise in general at all. It's all about we have traditionally just simply not participated in this segment. So the growth opportunity is quite substantial for us even without the on-premise generally growing.

Yes, John. The on-premise, as Rob said, is not growing. We feel we are growing in the on premise in our Beer business, right? As Rob said, the numbers aren't really like incredibly nuclear, but we feel we're growing pretty well in draft. Draft is helping it, and actually, we have some tests that said when draft is on the account and people can see the tap handle, they'll actually also buy the bottle brand as well, right? So it's kind of synergistic in that way. John A. Faucher - JP Morgan Chase & Co, Research Division: Okay. And then one sort of quick follow-up here. You talked about the wine EBIT being below last year. Shipments below depletions, is the margins -- should we expect the margins to be down sort of a similar amount in Q2 versus Q1 roughly similar from that standpoint?

Yes, so we would expect margin erosion again in the second quarter because remember, I said that our profit growth is back-end weighted, right? So I don't think we'll see the -- for the full year, our guidance is for margin erosion in the wine and spirits business because we have operating profit growth estimated below net sales growth. But I think you're seeing an anomalously negative margin in the front half, which will start to come back in the second half of the year. John A. Faucher - JP Morgan Chase & Co, Research Division: Okay. So -- but Q2 probably somewhat similar to Q1 though?

Probably.

Your next question comes from the line of Robert Ottenstein with ISI.

Guys, I was wondering if you could give us a little bit more color on what you think is driving incredibly strong beer performance. I mean last year, everything went right. I mean the weather was amazing, I mean you've -- the timing of the holidays was great. You had incredibly difficult comps. This year, the weather couldn't have been worse. I mean as you tread objectively, kind of look back in terms of what you're doing right in the marketplace on an execution side and marketing side, can you give us any sense of what you think is driving these incredibly impressive results on the beer side?

Yes, Robert. Thank you for that complement. I hope everybody heard that. I hope our Beer business guys heard that. But look, if you talk brands, right, the current juggernaut is Modelo Especial. And it continues -- it's above 40 million cases, which is a substantial brand, and it continues to grow on the 20% range. So I think that's the big buy brand section. I think the other thing that's happening is the import category's doing better than premiums or the sub-premiums, that's helping. And I think our marketing continues to resonate with the consumer, and the strong equity continues to resonate with the consumer. And very good sales execution. So I'd say not any one thing. One brand is clear, it is Modelo Especial. And then it's good execution around everything else.

Terrific. And Bob, as you continue to have more conversations with your leading retail customers about the new shape of your portfolio and kind of the increased importance of your portfolio at a lot of the retailers, can you give us any sense of how those discussions are going, whether you think you now have, obviously, a bigger seat at the table, you'll have more shelf space possibly going forward? Any color around that?

Yes, Robert. We definitely have a bigger seat at the table. As I've commented before, total beverage alcohol is probably the most important category at retail, especially in the chain and mass merchandisers environment. And as one of the largest multi-category players or the largest multi-category player and third largest category player overall, that puts us on a very important position. So our conversations with these retailers are good, and we hope to translate our position into a better position in these retailers. So that's something that we're always working on and yes, we're making progress. We have increased points of distribution in both wine, spirits and beer. So we think that we should be seeing continued favorable trends as a result of this.

Terrific. And then just one last question. Can you give us an update on where you see kind of currency potentially affecting results this year? And are you doing any hedging of any of your peso-based costs? How should we be thinking about that in the second half of the year?

Yes, so we do, do hedging. We hedge currencies and we hedge fuel prices, are currently what we're hedging. We do not yet hedge the peso because we don't have enough data from the new business to enter into those contracts. We are looking at it, and I would expect us to start hedging the peso as we go forward. The dollar's strengthened versus the peso, but it's been very volatile. And so we're keeping our eye on it. Right now, it looks better than it did a month ago, but again, it's very volatile. Of course, the euro and dollar is very volatile as well, that's our other big exposure. And we're also hedging fuel prices, which actually, for us, and it's all around freight, is a bigger number than our exposure to currencies, okay? So I think that's what we look at going forward.

Sure. And just, I mean, so I just want to make sure I get this right. So any decrease in the peso is going to lower your cost, so that would be a benefit. Am I right about that?

That's correct, yes. Because we...

And can you give us like, I don't know, for a 10% decrease roughly on an annualized basis, what that could mean?

No, it would -- I'm not going to give those numbers because, frankly, we're still investigating. But actually, we're not as exposed to the peso as you might think, mostly because if you go back through the myriad of contracts that we have, where the beer that we do not make, we're buying in dollars from InBev, right? So that's a big thing. Natural gas is generally priced in dollars. Natural gas fuels the plants. In addition, most of the global beer input costs, malt, barley, things like that, are also paid for in dollars. It's kind of like oil. So really, the big exposure we have in pesos is the cash cost at the facility, which is mostly labor costs, right? That's our exposure, which isn't as big as you would think it would be because remember how automated this facility is. So yes, we have peso exposure. It's not as big as you might think.

Okay. And then just as a follow-up on the question that we had at the Investor Day on the packaging side, and you had mentioned that there was a new packaging bottling plant that was being built in Piedras Negras, how far along is that plant in terms of -- is that plant actually in operation now? And if not, when do you think it will be operational? My understanding is, I guess, if ABI was to sell, that you have right of first refusal. Can give us any color around that situation?

We -- that's InBev's plant, so we don't have any insights to it. But we currently aren't sourcing any glass from that, and that's really not on our radar screen right now.

Okay. But it is in operation now?

No. To my knowledge, it is not in operation currently.

Your next question comes from the line of Tom Mullarkey with Morningstar.

I have a follow-up on John's question concerning draft beer. In your prepared remarks, you mentioned the rollouts in a few select markets. Are there currently supply-chain bottlenecks or strategic reasons why you don't want to do a more broad scale rollout of tap handles across America? And how do you foresee the mix of draft beer for you changing over the next 3 to 5 years? Will it be a steady creep-up or will it be a kind of a stair-step change once the bulk of the brewery expansion is done?

Yes, no, there's not -- there's really no, I would say, overall supply chain issues other than just getting the supply chain for draft beer on a large scale up and going, is a relatively complicated process because it involves producing a lot more or having a lot more kegs than you need. It involves having the infrastructure in place for delivering kegs and having kegs returned and so on and so forth. So there's no issue, and we will continue to build the business. I would say it's going to be, as opposed to like a gigantic step change, I think it will be a slower change as we continue to build the business from where we are currently, which is about 2 million cases out of 170 million. So I said 2% is actually closer to 1% to more of the industry average, which is around 10%. So it will be a slow build. Obviously, that's a lot of draft beer as we build towards those numbers. But our intention is to continue to build the business, and we are putting the infrastructure in place. And as we continue to -- as we build out the Piedras Negras brewery, we'll be doing so, making sure that we have that capacity in mind.

Yes, so just to follow up on Rob, our draft business is doubling, still small but doubling. This is logistically complex, but also, remember, we're trying to be very selective with the accounts that we go into. So we're at a higher end, mostly on our draft, right? So we might not get the full distribution that maybe a Bud Light or Coors Light will because we'll be a little bit more selective. But we're very happy with the progress so far, and I think it's a slow build, but I'll take a slow build if it's a doubling of the business every year.

Your next question comes from the line of Mark Swartzberg with Stifel. Jesse Reinherz - Stifel, Nicolaus & Co., Inc., Research Division: This is Jesse Reinherz in for Mark. So a question on the SG&A spend. Sounds like we're going to see more of an uptick in marketing in 2Q than we saw in Q1. And then that's going to kind of level out in 3 or 4Q, you're going to be a little bit less than we saw in Q2. Is that correct?

Yes, we're just trying to give you a hint towards Q2, so we're -- I'm not going to get into like quarterly guidance stuff on marketing spend. But marketing spend in Q1 was below prior year, and for the full year, it's going to be above prior year. Yes, so you'd expect balance of the year to be higher. Jesse Reinherz - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. And then just on the decision to kind of take up marketing in second quarter, and I guess, beyond. Is this more of a proactive move or is this a symptom of you guys seeing increasing competition in wine and kind of trying to get behind that?

No, it's nothing. I'd say in beer, it's maybe more conscious to move some marketing spend into the second quarter. It's probably a little bit of a bigger bet on baseball and probably driving some of our Hispanic marketing. And in wine, it's more just I don't think we're that anomalous from prior years, we're just increasing total marketing spending in wine. It just so happened that Q1 was a little bit lighter and that the balance of the year will be heavier than prior year.

And your final question comes from the line of Carla Casella with JPMorgan. Carla Casella - JP Morgan Chase & Co, Research Division: Just one quick finance question. You mentioned you put the revolver in place to fund the acquisition. Can you just say how much you drew on it in the second quarter?

No, I'm not going to give second quarter balance sheet stuff, right? So we did draw on it to fund the acquisition, which happened like 7 days into the quarter.

That was our final question. I'd now like to turn the floor back over to Rob Sands for any closing remarks.

Okay. Well, thanks for joining our call today. We are very excited about the final completion of the beer deal. We have great marketplace momentum across beer, wine and spirits, and we're on track to meet all our goals for the year. I hope you've had the opportunity to enjoy some of our fine products, especially the SVEDKA Stars and Stripes during the 4th of July holiday later this week. So thanks, again, for your participation.

Thank you. This concludes today's conference call. You may now disconnect.