Andrew Peller Limited

David Mills - Investor Relations John Peller - Chief Executive Officer Steve Attridge - Chief Financial Officer Randy Powell - President

Brian Pow - Acumen John Chu - Laurentian Bank

Thanks, Melanie and good morning everyone. Before we begin, let me remind you that during this conference call, we may make statements containing forward-looking information.

This forward-looking information is based on a number of assumptions and is subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those disclosed or implied. We direct you to our earnings release, MD&A and other securities filings for additional information about these assumptions, risks and uncertainties.

I will now turn things to over to Mr. John Peller, Chief Executive Officer.

Good morning, everyone. Nice to be with you.

We are here in Randy’s office in Grimsby on a cool fall day. It’s clear winter is on its way and in fact, we are just finishing our harvest both here and in the Okanagan.

We have had good harvest in both areas. We are pleased with everything.

We definitely have the quality we need to maintain the momentum and strength in our premium programs. We had a hot summer that had a lot of humidity that was a bit of a challenge in our harvest this year.

But we were able to manage things. And out west, they have had a bit of a cooler fall.

So, it’s quite unusual that we actually still have red grapes hanging in the vineyards in Okanagan, but they will be coming off shortly. So, with me is Randy and Steve Attridge, who is our new CFO.

Steve comes to us via Mastronardi and Maple Leaf. He has had a distinguished career in both companies and we are thrilled to have him as our CFO.

You will hear from him very shortly. We have had a very good quarter and first half of the year.

Our sales are up 10% and our adjusted earnings or EBITDA is up 16%. And most importantly is our gross margins are up to 42%, as a result of a lot of capital investment, a lot of investment in people and the strengthening of our HR profile, a lot of investment in our brands and what we have articulated as kind of Canadian premium craft strategy for our company that is not just in line, but also in craft spirits and craft refreshment.

So let me start with just a few comments on things that have changed in our industry in the last year. Most noticeably has been the legalization of cannabis.

Easily, one of the most significant, kind of, disruptive events in the business landscape of Canada for, as long as I can remember. And it’s off to a very big start financially, certainly in the markets, I am sure you are familiar with the story of the market cap of cannabis is quite phenomenal.

And as well, the fact that, while there is federal oversight, there is a great deal of provincial responsibility for distribution and even municipal policies. So it has been a lot of work and effort to try to sort things out.

I think, based on the experience that we witnessed in the US over the last 5 years, it’s reasonable to expect that going forward, cannabis will impact beverage alcohol, they are substitute products at some point in time. And we would factor in a maybe a 5% to 10% impact on.

We already think wine will continue to grow, maybe, just at a less rate as a result of cannabis going forward. But we also feel staying focused in premium segments keeps us away from we think the beverage alcohol segment that will be grit the most is beer, because younger consumers who are the heaviest consumers of cannabis are also the heaviest consumers of beer.

I think one of the things that is of most interest to us is the fact that governments do not have their head around treating beverage alcohol and cannabis equitably. And coming out of the gate the taxation scheme around cannabis is marginal compared to the tax levels on line.

I think, it’s in and around 15% level of wine is what they’re proposing to tax cannabis, so that they are ending up with an anomaly where wine drinkers are subsidizing pot smokers, and we don’t think that that’s reasonable or fair, or sustainable going forward. So that we will be ensuring as we make representations to government that they deal with some of these anomalies going forward.

And the other issue is, obviously, the retail profile for cannabis and imposing rules and regulations on the two substances that are different, so that it creates a different business foundation and success factors. And I’ll go to that.

And next is the overall political landscape in Ontario. The forward government has made commitments to increase retail access to beverage alcohol and they’re now in the process of reviewing what their options are in terms of delivering on that commitment.

I think, it’s fair to say that when they made the, kind of, alcohol at a fairly big commitment to increase retail access, they were not highly informed on the complexity and the challenges that are involved in changing the rules. And in particular, the current system was designed by government for government.

In other words, the system is designed heavily in favor of ensuring that government controls and financially benefits from the system, so that as they start to dismantle it, they are going to end up allocating – end up with significantly less control, but even more relevant. From their financial position, they’re going to have to give up some of their financial benefits.

And as they look at that, now it’s a significant concern, because they really don’t have a lot of financial wiggle room these days. So they are involved at looking at alternatives, and we are heavily engaged with government and all ministries in an organized industry approach, working with the growers all the wineries, small, medium and large and we have definitely made them aware that the wine industry is a critical contributor to the economic well being of Ontario.

It has a great future. And that they need to be mindful as they go forward that they are not implementing policies that will weaken what it is we currently deliver to the province.

And they are aware of that, the premier has been down, he’s visited the wine region, and he is aware of our employment profile. And they have assured us that their goal is to strengthen their support to our industry, not weaken it.

But this is definitely a very complex issue. They put the minimum wage back a bit from $15 to $14.

You will see in our statements, the current increase in the minimum wage has, I think been amount of roughly $2 million hit to our P&L. But I think the fact that they have brought back a lot of the employment legislation that the liberal government had put in place was a good thing for the business community.

It was getting a little too aggressive and becoming constraining for employers. And I think the fact they repealed that legislation was a positive thing for the province.

On the NAFTA, U.S. and CA, whatever there, I am seeing the YMCA, so I’m going with the title.

I think the bottom line is that despite all this fury and vitriol, not much has changed with NAFTA in the end. The change is even in auto and IP.

It might have been 1% or 2%, but it certainly wasn’t more even the amount of berry impact is really marginal. So that we were carefully monitoring and involved in the negotiations, because we were severely injured at the last time NAFTA was negotiated and we are relatively pleased that there will be very little impact on the new agreement going forward.

And on the Inter-Provincial trade, which we have talked to you about, there has been no progress. We have let them know that we think it’s shameful that it’s – that we’re not allowed to sell our products across the country, like every other country in the world can do.

And while they have promised to address it, they have made the same promise for 25 years and then nothing. So I don’t think it’s reasonable to expect a lot of that is going to change in the short term.

So faced with all those challenges and changes in our landscape, we’ve stayed focused on what we do best, which is making great products and looking at the future and ways that we can invest in it to improve our business. So with that, I will turn things over to Steve and he will give you our financial update.

Thanks, John. Good morning, everyone.

It’s great to speak with you all for my first time today. Turning to our results, following another record year for the company in fiscal 2018, the second quarter and the first 6 months of fiscal 2019 continue to build on the strong momentum.

Sales were up just over 10% for the 6 months ended September 30, 2018 with second quarter sales rising even higher, 12.5%. Our growth this year has been driven by contribution from the 3 VQA wineries we acquired in October of 2017 as well as strong performance across the majority of our product lines and trade channels.

In particular, we saw very solid growth in our Ontario retail outlets all are our state wineries in Ontario and BC, and our two wine importing and marketing agencies. With this growth in revenue, our focus on higher-margin products and cost efficiencies, gross margin has been strengthened in fiscal ‘19 rising to 43% through the first 6 months of the year from 41.2% last year.

You will note that our gross margin includes a charge of $4.2 million through the first 6 months of fiscal ‘19, related to the write-down of inventories acquired with the purchase of the 3 wineries last year. We believe these acquired goods will be sold in the fiscal year and expect the remaining balance of the fair value adjustment of $3.3 million will be charged to income through the balance of the year.

The last few years have seen the company build and enhance our team with experienced new people, as well as investing in new and successful sales and marketing programs to drive our growth. As a result, sales and admin expenses have increased through the first 6 months of fiscal ‘19, as well as due to the addition of three new wineries acquired last October.

The increase in minimum wage in Ontario has impacted our costs, increasing expenses by approximately $1 million so far this year. Looking ahead, we expect investments in our people and our sales and marketing programs will continue to grow as we drive innovation and build on our strong brand equity, factors critical to maintaining our track record of delivering value to our shareholders.

EBITDA was $32 million for the first 6 months of fiscal 2019, up from $30.7 million last year, the result of our increased sales and improved gross margin, partially offset by the increase in sales and admin expenses, and the inventory fair value adjustment being taken this year. Our adjusted EBITDA, which excludes the one-time acquisition-related charges, rose to $36.1 million for the 6 months ended September 30th, from $31.3 million last year.

Interest expense has increased due to the long-term debt incurred to complete the acquisitions in October of 2017. Amortization expense was also higher due to the addition of the three new wineries and to the completion of the Wayne Gretzky Estate Winery and Craft Distillery in June of 2017.

The net unrealized non-cash gains in both years continue to reflect mark-to-market adjustments to our interest rate swaps and foreign currency contracts. We believe these programs help to mitigate the impact of potential future interest rate changes and changes in foreign currency exchange rates.

Net earnings for the first half of fiscal 2019 were $16.4 million or $0.38 per Class A share. Adjusted net earnings, again removing one-time costs related to last year’s acquisitions, rose to $20.2 million or $0.47 per Class A share, up from $17.8 million or $0.43 per share through the first 6 months of last year.

Turning to the balance sheet, overall debt reduced to just under $160 million at September 30, 2019 down from $172 million at the March 2018 year end. The reduction is due to our strong earnings so far this year, positive working capital management and our regular debt payments.

Cash from operating activities through the first 6 months of fiscal 2019 rose to $29.3 million from $22.8 million last year. Working capital was stable at $149 million consistent with year end.

Shareholders’ equity rose to $233.4 million or $5.28 per common share, up from $4.99 per common share at March 31, 2018. At September 30, we had capacity on our operating credit facility of approximately $51.4 million with another $98 million on our investment facility providing us with ample liquidity and flexibility to fund our growth programs going forward.

Board of Directors was also very proud to announce an almost 14% increase in the company’s common share dividends in late June, the fifth increase over the last 5 years. Importantly, the company has consistently paid a common share dividend since 1979.

In summary, the first half of 2019 was another very strong period for the company with solid increases in sales and improved gross margins. We look forward to these trends to continue going forward.

Thank you for your time and attention this morning. I will now turn things over to Randy to discuss how we will build on this positive momentum.

Thank you, Steve. Good morning, everybody.

As both John and Steve mentioned, we have had a good first half, which was built on a pretty strong last fiscal year as well, both of those are driven by the strategy that we implemented about 18 months ago. So just to maybe a touch on some of the key highlights of that strategy.

It’s really about driving efficiencies and building significant growth versus prior years. From an efficiency point of view, our operations have gleaned over $20 million worth of cost savings really being derived from the capital spending that we have been putting in for the last number of years.

And we will continue to invest in capital where we can drive long-term efficiencies and benefit. We have also gotten into the portfolio as we have mentioned in the past and continue to go into that portfolio and make sure that we are rationalizing any other products that are that aren’t delivering at as high level as our best performers.

That really leaves us the opportunity to take that time, money and attention and put it on those big brands that you see starting to really solidify in their growth. We have taken approximately 20% – call it 20% out of that portfolio in the last 18 months.

From a growth perspective and really building on growth, as John had mentioned, we are very much focused on our brands, but it’s one thing to say that, it’s another thing when you measure the actions. And when you measure our actions, we have seen us double our investment in each of the last 2 years in our equity building activities and we are starting to see that really payback in our brand shares as we start to move forward.

Another platform for growth is obviously innovation. I mentioned a few at the last at our AGM, with regards to last year and the first quarter.

But as you, kind of, look through, kind of, the Top 5 or 6 innovations that we have put forth in the last 6 to 12 months, they have been – they are quite inspiring. We have high double-digit growth in our Gretzky spirit business.

We have doubled our No Boats business on the back of the new launch of our Cranberry product. We have relaunched really our Rose platform, where we are seeing 30% to 40% growth depending by brand with 2 or 3 new skews that we added to our XOXO business, it’s up 35%.

And we most recently launched our whiskey Oak Aged Gretzky Wine, red wine both Gretzky and Black Cellar, which are doing just superb. A comment made earlier about our three acquisitions.

They are obviously part of our growth strategy. The good news is that we have seen solid top line and bottom line growth, which isn’t always the case when you first make an acquisition.

Often when you are on-boarding the new team members and bringing the brands in the portfolio, it’s not uncommon to see a little slippage on both the top and bottom line. I am proud to say, mostly because of the terrific people we have in this company and the terrific people in the companies that we acquired, we have been able to show growth, sustained growth on both the top and the bottom line.

Just a side comment, coming out of our last Analyst Call, there was questions regarding how our core business was doing versus the acquisition business. I am happy to say that our core business is kind of back on trend with market growth.

When it comes to our core business and of course we have seen some substantial gains to our growth year-on-year, because of the acquisitions over and above that. So I think overall the message that I wanted to convey was just underpinning with both John and Steve said, which is we have got a terrific strategy we believe is serving us well.

It’s the early days into that strategy, but we will continue to execute against that and believe we will continue to get strong results going forward. At this point, I will hand it over to all of you for any questions you may have.

Good morning, gents and welcome to the team, Steven. Randy, appreciate your comments there on the core business versus the acquisitions and how they have evolved.

I am not sure if you guys are willing to share that, but how much growth – I guess, it’s been a year since these acquisitions, have you had for the three wineries specifically?

Yes, we don’t breakout any brand. So we wouldn’t break them up for that, but all three have seen growth as I said in the top and bottom.

Understood. On the organic side or the core business like the last few quarters, we have seen volumes a little I guess lower, but then like your pricing was very healthy.

And I am just wondering how that’s evolved during the current – the reported quarter?

Yes. Your observation is absolutely right.

So, the reductions that we saw in the quarter were planned. You can never exactly nail how much they will go up or down, but there is a couple of things that we did.

Remember, we rationalized about 20% of our SKUs, so that although that’s volume on the top line, but it wasn’t necessarily profit or very high profit on the bottom line. So, that’s out of there.

You are right we took some pricing that the brands deserved and clearly could carry, but as a result of that, it might suppress a bit more of the revenue. So, we are lapping that.

As we go forward, we will start lapping that this coming quarter, the third quarter.

Great. Thanks.

Then maybe just on the general and admin expenses, I know we saw it’s like uptick a couple of quarters ago, then last quarter was a downtick and now we are back to an uptick. I understand part of it is the minimum wage, the other part that you guys mentioned that the investments in marketing and sales supports.

And there, I am just trying to get a sense of what specifically you guys are doing, is it like specific like marketing programs? Then what should we expect going forward?

I think that we have always been a strong believer in brands with the consolidation if you will of the brands and the focus that we are putting on them. We have started to increase our brand building, our equity building activity.

And I think you can expect us to continue to do that. I would also say that there is a couple other things in there though that, one that John mentioned, which is as we have a healthy objective going forward, we have increased some talent elsewhere in the organization.

We are building systems and processes that will take us to the next level and that’s going to cost us a little bit of money, but all of these are well-placed medium and long-term investments.

Understood. And is the currents like general and admin expense a good run-rate to use going forward?

We don’t comment on those, but I would say that specifically – but I would say that, we will continue to invest where we think we can get strong returns.

Understood. Maybe one last one, I guess to the extent that you can, can you comment on how the M&A landscape evolved since your acquisitions, both in terms of pricing and the pipeline of opportunities you are looking at?

We continue to look at as M&As, the M&A opportunity landscape. It is – it’s funny, because we were just at our Board meeting yesterday and as we are updating the Board, I would say that there is certainly no less, maybe more but certainly no less of the many opportunities that cross our desk.

So we are active there as we have always been. But as we demonstrated last year, three of them hit.

Now will any hit this year, we don’t know, but we continue to look for opportunities that strategically fit into our portfolio for sure.

Understood. The pricing is still out of whack, like what sellers are expecting?

Well, there is a bunch of criteria. Price is clearly one of the criteria, but first and foremost, we are looking for brands that fit well into our strategy and our long-term portfolio.

Once we check that box, then it’s a matter of negotiation, but certainly there are expectations that have been set in our industry across the board for fairly healthy prices, but if they fit well into your portfolio, sometimes that’s not such an issue. I will tell you that the three that we bought last year as we reflect back on it now look like they were of great value to both the seller, but also to us as the buyer.

So again, it all comes down to the brand and quality of the assets we can bring into the company.

Great. Thank you very much.

I will pass the line.

Good morning gentlemen.

Good morning Brian.

Couple of questions, we saw a change of government in Quebec, any thoughts in terms of how that might change your strategy on getting into that market?

Yes. I mean I think that the issue in Quebec is they have – in addition to a government change, they had some rule changes in their grocery part of their wine business and then now there have been some subsequent changes in the policies of the SAQ.

So that the theme is quite consistent across the country, that in addition to cannabis, there have been initiatives with the liquor boards as well so that it contributes to an unstable footing in distribution policy, to be frank. So I am not sure what the new government is planning to do there, but – and we have been trying to watch the Quebec market to see signs of whether they will open up their market more to inter-provincial shipping, whether they will change their strategy with the SAQ and grocery.

And there are certainly some evidences, some cracks, but I – it’s not unlike the situation in Ontario. They rely heavily on the contribution of that system to their finances.

I pointed out to people, the anomaly that it’s always kind of interesting to me that the governments do hundreds, make that a thousands of the different things that lose the money and are very inefficient. The one thing they do that is constructive to their finances is their engagement in beverage alcohol and everybody wants them to get out of it.

And of course, it’s because of its profile more than anything. But we definitely have looked at the Quebec market and we are monitoring it.

And if we see opportunities there, we will look to invest going forward, but I think like in all the markets right now, the amount of change everywhere, Saskatchewan is changing, New Brunswick. And the impact of all the cannabis policy and how they will end up having to maybe adjust beverage alcohol as a result of that, has people kind of waiting to see a little bit how the dust settles, if you will over the next 6 months to 12 months before its clear where you might go and why.

Okay. Thanks.

Randy, this question is for you, in terms of the rationalization, you spoke to so you sort of said about 20%, where are you in that process, I mean was that sort of the easy part of it and now it just becomes more sort of a supply and demand thing or how should we think of your rationalization strategy?

Well, I think that a healthy portfolio is always being kind of reviewed. I would think that we have probably at that first cut through would have taken what we believe that the time to be the majority of the opportunity.

I just want to be careful to make it sound like it’s done, because any good portfolio is always rationalizing. It’s kind of a rule of thumb that you are always looking at your bottom 10% to 15% to see is it productive.

Sometimes that can be productive and so of course you don’t take it out for the sake of taking it out, but in an environment like ours where there are so many brands in the marketplace, you have got to be making sure that you are focusing on your big brands and really investing in them and that usually does create opportunities in the bottom to rationalize. But Brian, I would say that first cut through was a pretty good cut.

Okay. Thanks.

And then on the pricing side, obviously your goal is the premium end, but when you look at your pricing strategy, would you say that you have made a pretty good gain on that side of it and it will be much more selective going forward?

I think that the numbers show that the gains were well earned for those brands and I think we are in a good place in the market today with our pricing.

Okay. Just back to John’s comments at the front, just regarding harvest in that, depending on wineries, I have sort of heard mixed reviews, would it be fair to say that maybe the quality is good, but the volume won’t be as high this year, how should we think of it?

Yes. I mean we have lost a little of the volume in Ontario, but the key is, as long as we can predict the volume we need for our premium programs we can easily balance in our value segments how we blend to offset that.

And we – our biggest concern was smoking out in the Okanagan, it’s turned out to be less of a factor than even what we were concerned about. So that was positive and like I said, it was a cool – late summer cool fall, but they feel good about the quality that they have and the yields were pretty much where we wanted out West.

And I think around the world just to comment on that, because you know we are a large bulk wine buyer, volumes have come up around the world to very healthy levels, so that our pricing in that regard is positive and protected. So all-in-all, we have come out of the year very well.

Okay. And then Randy, you have made a comment just about system investments and things like that, how long will that sort of take or how should we think of your investments into the backbone of your business?

Well, I mean it’s an ongoing investment, but as you know Brian, these things tend to go in cycles. So I think that the system we have today is more than adequate for the business we have today, but with the aspirations we have moving forward, we will continue to invest and we will have to probably increase our investment for whatever that shoulder period is when you start to build out your system.

So I think for the – I think as we look forward we will start to put our plan together that will dimensionalize what the next phase of investment will look like in systems and process.

Okay. Thanks so much.

Thanks Brian.

Hi, good morning.

Good morning John.

The first question I had is just on the organic growth rate and I know you touched on earlier saying that it’s on trend with market growth, so is that in that 3% to 4% range, can you quantify that a bit for us?

I know you want this for your modeling John, I appreciate that. So just keep in mind that we are in English Canada, so kind of 2 to 3 is where English Canada growth is to the market and we are in that range.

Okay, perfect. And any comment on how the grocery store sales are going, I think John, you mentioned last time that your net-net in deferred with having your own stores, retail stores versus moving it into the grocery stores, so I am just kind of curious if there has been any change to that view?

Yes. I would think that we are still learning our way through grocery, John.

There was a pretty significant change that was made a couple of years ago with the Wynne government and Ed Clark. And we are still kind of getting the learnings.

Believe it or not, there is still – a few of those are still going in. So until we kind of have more information, it will be difficult to really see the full impact.

I will tell you that we are very pleased with our stores. They continue to do well and we do well across all our major channels.

But grocery is right now looks like it’s in line with the same movement that we have seen elsewhere.

Okay, great. And just wanted to get some clarity on – I think with John’s comments on the global grape volumes, it sounds like they are up, but I think last year, they were down and the talk was one of the lowest global volumes of grapes in 50 years or so, so it sounds correct I am assuming and no impact in terms of pricing and sourcing of juice, is that fair?

I think the pricing is more favorable, because there is significant surplus around the world generally. And then what happens is there is bad weather events, whether they are in Chile, Argentina or in Europe had 4 year, last year and then people who have been sourcing certain varieties from certain areas have to make adjustments and there is kind of a short-term pricing blip that put pressures upward last year, but there still were a few challenges around the globe this year.

I know France in particular had an unusual amount of storms and hail, but it wasn’t enough to offset which were many, many much stronger harvests around, so that supplies generally went up. They are up significantly in California after a very, very good harvest this year and pricing became more favorable immediately, so.

Okay, great. And I was curious in terms of some of the investing you are doing on the sales and marketing side, how quickly can you see some of that benefit come through in terms of building that brand equity and then seeing higher sales, is it fairly quickly where you do a marketing campaign and you can actually see the sales within a quarter or so is there a bit more of a longer game here to see those benefits?

John, you are starting to sound like every CFO I have ever worked with. Look, by and – every campaign is different.

Like look at the campaign that we did with Gretzky this past Father’s Day, right. It was phenomenal, the impact, that was both kind of an equity building campaign and some promotional activities.

But I would say that’s more of an outlier, typically when you are building brand equity it takes – it rarely pays back in the quarter and even the year that you invested. It tends to be a longer term investment, but when it starts to pay back John, that’s when I mean that’s where the I guess the word equity comes into play here.

And so it’s a longer term investment without doubt. There are exceptions like I said and I think our sales and marketing team have done some terrific work to get these – to get these one-time pops, but by and large, it tends to be a longer term, we would think of it as a longer term investment.

Candidly even sometimes with capital, sometimes capital takes a little – by the time you buy, you put it in, you get the first round of efficiency out of the equipment and the team takes a while to kind of – to drive full efficiency out of it. So again the investments we are making John and we have said this many times, we are very, very confident in.

But some of them, not all of them, but some of them do tend to have more of a medium-term and long-term sustainable impact.

Okay. And the discussions that the company is having with government officials on Ontario’s potential new retail model, any sense on the timing of when we might see alcohol, wine and everything sold in convenience stores and corner stores, can we see it in 2019 or is it something that’s going to take longer?

I mean it’s a $64 question. And I think the bottom line is what we are trying to do is encourage government to do proper financial due diligence, because naturally, the people who want the change, they want it to happen without that.

They want to just let the horse out of the barn and we are encouraging them to better be aware when you sign up for change, what’s the impact on your finance is going to be. And I think if they do the due diligence it will sober them up quickly.

Because as I have said the system was designed by them, for them and there – the debt levels in Ontario are huge and they have gotten worse, not better. So their wiggle room is less, not more.

I still think there are options for them to increase access to consumers and I think they should pursue them. And – but if they choose to go I will call it nuclear, in other words knock the whole system down to create a new system, there is going to be significant dislocation.

And if I were them and I would – I will strongly encourage them to realize, look this is a $40 billion, $50 billion economic ecosystem and to try to make those kind of changes to gain political for the next election to gain some political capital, you could end up being in a worse position. All the gas plants ended up impacting the liberal government.

Big decisions made by people who didn’t look at any numbers or do any due diligence. And this system is slanted in their favor already.

They can make adjustments and improvements. But they are going to put themselves at significant risk, if they make wholesale change in a very short period of time.

Okay, great. And one last question, in the MD&A, in terms of talking about growing the company in the wine and spirit markets and whatnot, there is a line that talked about continued growth in new wine related markets, can you just elaborate on that?

Well, I think just a good example is kind of craft refreshment. There is a lot of crossover now when you look at craft breweries adding wine aspects, wine ingredient and wine process.

And similarly the craft cider business, which has been historically – the cider you used to buy at the country fair in a jug, it’s now becoming a much more refined product and they are adding wine to cider. And similarly the spirit products are looking at lighter alcohol, call them what we used to look at is cherry import products.

There are interesting opportunities in kind of wine cocktails and wine spirit products, so that – and then throw in some cannabis, you get yourself full scale party going on here. We just saw how Francis Ford Coppola in California has launched its own cannabis product and its pre-rolled joints and bud product.

But he packaged it in an aluminum wine bottle to provide labeling and product presentation, so that you twist the aluminum wine bottle, it opens up and the product is inside, but what’s interesting is how he has used all the cues of premium wine marketing to profile a quality image for his cannabis so that – there is lots of opportunities, just in the way that we have now age some red wine and whiskey barrels and there are lots of innovation opportunities in the seams between the different categories.

Okay, that’s great. Thank you.

Thank you.

Thank you. So our next board meeting and results come in the third quarter in early February and we don’t have a conference call till our year end results come back out in late April.

So, if you in the interim have any questions or comments that we can be off help, please don’t hesitate to call us and we look forward to staying in touch and seeing everybody soon. Thanks.

Thanks very much.