CONSTELLATION BRANDS, INC.

Constellation Brands, Inc. is an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy. The company operates in the highly competitive beverage alcohol industry, competing on the basis of quality, price, brand recognition, and distribution strength. In the U.S., Constellation is one of the top dollar share gainers among beverage alcohol suppliers, the second-largest beer company, and holds the #1 beer brand, Modelo Especial, in dollar sales. The beer segment focuses on the high-end imported beer category, while the wine and spirits segment has been repositioned to exclusively higher-end brands aligned with consumer-led premiumization trends.

Constellation Brands' primary competitors in beer include Anheuser-Busch InBev, The Boston Beer Company, Heineken, Mark Anthony, and Molson Coors. In wine, competitors include Deutsch Family Wine & Spirits, Duckhorn Portfolio, GALLO, Treasury Wine Estates, The Wine Group, and Wagner Family of Wine. In spirits, competitors include Bacardi USA, Brown-Forman, Diageo, GALLO, Heaven Hill, Pernod Ricard, Proximo, Sazerac Company, and Suntory Global Spirits. The company's competitive advantages include its leadership position in the U.S. beer market, having 6 of the top 15 share gaining brands across the total beer category, and its exclusive sub-license to use trademarks related to its beer brands in the U.S., which is perpetual.

Constellation Brands generates revenue through the production, importation, marketing, and sale of beer, wine, and spirits. The company's products are primarily distributed in the U.S. through wholesale distributors under a 3-tier distribution channel, with separate distribution networks for beer and for wine and spirits. In control states, state governments perform the role of wholesaler and retailer. The company also sells through direct-to-consumer channels including digital commerce and hospitality locations. Revenue is transactional in nature, driven by consumer demand and seasonal patterns, with beer sales historically highest in the first and second fiscal quarters and wine and spirits sales highest in the third fiscal quarter.

The Beer segment generated net sales of $8,315.2 million ¹ in fiscal 2026, compared to $8,539.8 million ² in fiscal 2025. Key brands include Modelo Especial, Corona Extra, Pacifico, and Victoria. Modelo Especial was the best-selling beer overall in the U.S., Corona Extra was the second largest imported beer and fifth best-selling beer overall, and Pacifico and Victoria were the top two fastest growing major imported beer brands. The segment operates two breweries in Nava and Obregón, Mexico, with a third brewery under construction in Veracruz. During fiscal 2026, the company spent more than $700 million ³ on modular capacity addition activities at its breweries. The package format mix of beer volume sold in the U.S. for fiscal 2026 was primarily glass bottles, with the Glass Plant joint venture with Owens-Illinois supplying approximately 60% ⁴ of the total annual glass bottle supply for beer brands.

The Wine and Spirits segment generated total net sales of $823.8 million ⁵ in fiscal 2026, compared to $1,668.9 million ⁶ in fiscal 2025. Wine net sales were $700.4 million ⁷ and spirits net sales were $123.4 million ⁸ in fiscal 2026. The segment's portfolio includes higher-end wine brands such as Kim Crawford, Ruffino, The Prisoner Wine Company, Robert Mondavi Winery, and Sea Smoke, and spirits brands including High West, Casa Noble, and Mi CAMPO. In the U.S., the company had 5 of the 100 top-selling higher-end wine brands, with Kim Crawford achieving the 8th spot. The company operates nine wineries in the U.S., two wineries in New Zealand, six wineries in Italy, and three distilleries in the U.S. The broader wine category continued to experience deceleration in fiscal 2026.

During fiscal 2026, the company completed the 2025 Wine Divestitures in June 2025, selling and in certain instances exclusively licensing the trademarks of a portion of its wine and spirits business primarily centered around mainstream wine brands and associated inventory, wineries, vineyards, offices, and facilities. The company also completed the SVEDKA Divestiture on January 6, 2025, selling the SVEDKA brand and related assets. In fiscal 2026, the company launched new beer products including the national launch of Corona Sunbrew, two additional pack sizes of Corona Non-Alcoholic, the national launch of Modelo Chelada Limón y Sal non-alcoholic, and Modelo Noche Especial, a seasonal amber lager. In fiscal 2027, the company launched Modelo Chelada Suprema, an 8% ABV single-serve. The company's Board of Directors approved the 2025 Authorization in April 2025 to repurchase up to $4.0 billion ⁹ of publicly traded common stock. The company also entered into the 2025 Credit Agreement providing for a $2.25 billion ¹⁰ aggregate revolving credit facility and the 2025 Term Credit Agreement providing for a $500.0 million ¹¹ unsecured delayed draw term loan facility, now terminated. The company repurchased shares under the 2021 Authorization, which was fully utilized during fiscal 2025, and the 2023 Authorization, which was replaced by the 2025 Authorization.

Consolidated net sales for fiscal 2026 were $9,139.0 million ¹², compared to $10,208.7 million ¹³ in fiscal 2025. The decline was primarily driven by the Wine and Spirits Divestitures and broader category deceleration in wine. The Beer segment net sales decreased from $8,539.8 million ¹⁴ to $8,315.2 million ¹⁵, while the Wine and Spirits segment net sales decreased from $1,668.9 million ¹⁶ to $823.8 million ¹⁷. The company's operating results were impacted by the 2025 Restructuring Initiative, an enterprise-wide cost savings and restructuring initiative designed to optimize performance, with the majority of work executed within fiscal 2026 and net annualized cost savings expected to be fully realized by fiscal 2028. The company maintained a focus on capital allocation, spending more than $700 million ¹⁸ on beer modular capacity additions and expecting to spend approximately $800 million ¹⁹ in fiscal 2027 for capital expenditures almost entirely focused on these activities.

The company states that in fiscal 2027 it intends to continue to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization, and invest in the next phase of modular capacity additions necessary to support anticipated future growth.

A primary growth vector is the continued expansion of the beer business through modular capacity additions at the Nava Brewery, Obregón Brewery, and Veracruz Brewery. During fiscal 2026, the company spent more than $700 million ²⁰ on these activities, and in fiscal 2027 expects to spend approximately $800 million ²¹ for capital expenditures almost entirely focused on these activities. The company believes these investments allow the opportunity to further expand its leadership position in the high-end segment of the U.S. beer market. The company is also building on its innovation platform, with plans for another limited time offering of Modelo Noche Especial during the fall season of fiscal 2027 and the launch of Modelo Chelada Suprema, an 8% ABV single-serve.

A second growth vector is the repositioned wine and spirits portfolio, which the company believes is positioned for long-term growth. The company intends to expand its brands across U.S. wholesale, international markets, and DTC channels (including hospitality) to maximize total addressable market opportunity by leveraging global, omni-channel capabilities. The company has been implementing actions including portfolio repositioning, operational efficiency initiatives, and tactical measures designed to support improved business performance. While the timing and impact of these efforts remains subject to various risks and uncertainties, the company believes these actions can better position the wine and spirits business for potential longer-term improvements in net sales and operational performance.

The 2025 Restructuring Initiative is an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of the business, including through enhanced organizational efficiency and optimized expenditures across the organization. The majority of the work was executed within fiscal 2026, and net annualized cost savings are expected to be fully realized by fiscal 2028. The company remains committed to improving margins in the wine and spirits business through operational efficiencies and tactical measures.

The company's operational outlook includes continued investment in modular capacity additions at its breweries to support expected future business needs. The company operates two breweries in Nava and Obregón with a third under construction in Veracruz. The Glass Plant joint venture with Owens-Illinois supplies approximately 60% ²² of the total annual glass bottle supply for beer brands. The company has long-term glass supply agreements with other glass producers. The breweries each receive water originating from separate and distinct aquifers, and the company believes it has adequate access to water to support ongoing and future requirements. The company had approximately 9,400 ²³ employees as of February 28, 2026, including approximately 1,100 ²⁴ employees through the Owens-Illinois joint venture.

Capital allocation priorities include continued investment in beer modular capacity additions, with fiscal 2027 capital expenditures expected to be approximately $800 million ²⁵ almost entirely focused on these activities. The company's Board of Directors approved the 2025 Authorization in April 2025 to repurchase up to $4.0 billion ²⁶ of publicly traded common stock, replacing the 2023 Authorization. The 2021 Authorization was fully utilized during fiscal 2025. The company also has a dividend policy, though specific dividend amounts are not quantified in the filing beyond references to target dividend payout ratios. The company spent over $15 million ²⁷ in development and training costs during fiscal 2026.

Structural headwinds flagged by management include the broader wine category continuing to experience deceleration, which has impacted the Wine and Spirits segment. The company also faces potential impacts from changes to trade and tariff policies and regulations, alterations of the global trade environment, and geopolitical events including the conflict in the Middle East. The dynamic and evolving consumer environment includes subdued spend, depressed sentiment, value-seeking behaviors, and reductions in discretionary income, elevated unemployment, changing prices, inflation, and other unfavorable global and regional economic conditions.

Execution risks management explicitly flagged include potential declines in the consumption of products sold and dependence on sales of beer brands, impacts of the President and Chief Executive Officer transition, impacts of acquisition, divestiture, investment, and NPD strategies and activities, dependence upon trademarks and proprietary rights, competition in the industry and for talent, economic and other uncertainties associated with international operations including tariffs, supply chain disruptions, reliance on complex information systems and risks associated with cybersecurity and AI, dependence on limited facilities for production of beer brands and impacts from Brewery Projects, operational disruptions or catastrophic loss to breweries, wineries, or other facilities, severe weather, natural and man-made disasters, climate change, and the success of cost savings, restructuring, and efficiency initiatives.

The company faces material risks from its dependence on sales of beer brands, which represent the majority of consolidated net sales at $8,315.2 million ²⁸ in fiscal 2026, and any decline in consumer demand for these brands could materially adversely affect results. The company's international operations, particularly its breweries in Mexico, expose it to risks from changes in trade and tariff policies, with the filing specifically noting Section 232 tariffs on aluminum and aluminum derivative product imports and potential alterations of the global trade environment. The company relies on a limited number of suppliers for critical packaging materials, with one producer supplying most of its glass container requirements for U.S. operations and the Glass Plant joint venture supplying approximately 60% ²⁹ of total annual glass bottle supply for beer brands, creating concentration risk. The company's significant indebtedness, including $500.0 million ³⁰ of 4.80% May 2025 Senior Notes and $500.0 million ³¹ of 4.95% October 2025 Senior Notes issued in fiscal 2026, exposes it to interest rate fluctuations and credit market disruptions. The company also faces risk of potential impairments of intangible assets such as goodwill and trademarks, particularly in the Wine and Spirits segment which has experienced category deceleration and portfolio repositioning.

Management's message emphasizes the company's strategic vision to consistently deliver industry-leading total stockholder returns over the long-term through key pillars: building strong brands that people love with advantaged routes to market, building a consumer-obsessed culture with robust innovation capabilities, deploying capital in line with disciplined and balanced priorities, empowering the whole enterprise to achieve best-in-class operational efficiency, and delivering on impactful ESG initiatives. The tone is forward-looking and focused on maintaining leadership in the U.S. beer market, with specific emphasis on the beer modular capacity addition activities. Management states that in fiscal 2027, the company intends to continue to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization, and invest in the next phase of modular capacity additions. The company also emphasizes its focus on consumer-led innovation, with new product launches including Corona Sunbrew, Corona Non-Alcoholic pack sizes, Modelo Chelada Limón y Sal non-alcoholic, Modelo Noche Especial, and Modelo Chelada Suprema. The filing notes the appointment of Nicholas I. Fink as President and Chief Executive Officer in April 2026, succeeding the prior CEO.