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What changed in Constellation Brands's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Constellation Brands's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+847 added−505 removedSource: 10-K (2025-04-23) vs 10-K (2024-04-23)

Top changes in Constellation Brands's 2025 10-K

847 paragraphs added · 505 removed · 313 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

83 edited+59 added−89 removed29 unchanged
Biggest changeFrom October 2019 to February 2021 she performed the role of Executive Vice President, Chief Growth and Strategy Officer and from October 2018 to September 2019, she performed the role of Senior Vice President, Chief Growth Officer.
Biggest changePrior to that she served as the Company’s Executive Vice President, Chief Growth and Digital Officer and Managing Director, Beer Brands from December 2023 to October 2024; Executive Vice President, Chief Growth, Strategy, and Digital Officer from March 2021 to November 2023; Executive Vice President, Chief Growth and Strategy Officer from October 2019 to February 2021; and Senior Vice President, Chief Growth Officer from October 2018 to September 2019.
By the end of Fiscal 2028, we expect to increase our capacity in Mexico to approximately 65 million hectoliters to support the growth of our high-end beer brands through continued expansion, optimization, and/or construction activities at our Mexican breweries. For further information on these expansion, optimization, and/or construction activities, refer to (i) MD&A and (ii) Note 5.
By the end of Fiscal 2028, we expect to increase our capacity in Mexico to approximately 55 million hectoliters to support the growth of our high-end beer brands through continued expansion, optimization, and/or construction activities at our Mexican breweries. For further information on these expansion, optimization, and/or construction activities, refer to (i) MD&A and (ii) Note 5.
Professional development Building diverse talent pipelines, delivering best-in-class people development, and championing professional advancement are key components of our human capital strategy which is designed to position our business for long-term growth. We are committed to offering programs, resources, and experiences that empower employees to grow their careers.
Professional development Building strong talent pipelines, delivering best-in-class people development, and championing professional advancement are key components of our human capital strategy which is designed to position our business for long-term growth. We are committed to offering programs, resources, and experiences that empower employees to grow their careers.
After grape purchases, glass bottles are the largest component of our cost of product sold, comprising more than 95% of our package format mix of our wine and spirits portfolio volume sold for Fiscal 2024. In the U.S., the glass bottle industry is highly concentrated with only a small number of producers.
After grape purchases, glass bottles are the largest component of our cost of product sold, comprising more than 95% of our package format mix of our wine and spirits portfolio volume sold for Fiscal 2025. In the U.S., the glass bottle industry is highly concentrated with only a small number of producers.
For Fiscal 2024, the package format mix of our Mexican beer volume sold in the U.S. was as follows: As part of our long-term beer glass sourcing strategy, we are a partner in an equally-owned joint venture with Owens-Illinois, one of the leading manufacturers of glass containers in the world.
For Fiscal 2025, the package format mix of our Mexican beer volume sold in the U.S. was as follows: As part of our long-term beer glass sourcing strategy, we are a partner in an equally-owned joint venture with Owens-Illinois, one of the leading manufacturers of glass containers in the world.
Prior to joining Anheuser Busch InBev, she served in roles of increasing responsibility with Beam Suntory Inc., including as Associate Brand Manager - Jim Beam from July 2007 to June 2009, Brand Manager - Cognac from July 2009 to December 2011, and Senior Brand Manager - Vodka, from January 2012 to June 2014.
Prior to joining Anheuser Busch InBev, she served in roles of increasing responsibility with Beam Suntory Inc., including as Associate Brand Manager – Jim Beam from July 2007 to June 2009, Brand Manager – Cognac from July 2009 to December 2011, and Senior Brand Manager – Vodka from January 2012 to June 2014. Constellation Brands, Inc.
We compete with numerous multinational producers and distributors of beverage alcohol products, some of which have greater resources than we do. Our principal competitors include: Beer Anheuser-Busch InBev, The Boston Beer Company, Heineken, Mark Anthony, Molson Coors Wine Deutsch Family Wine & Spirits, Duckhorn Portfolio, E. & J. Gallo Winery, Ste.
We compete with numerous multinational producers and distributors of beverage alcohol products, some of which have greater resources than we do. Our principal competitors include: Beer Anheuser-Busch InBev, The Boston Beer Company, Heineken, Mark Anthony, Molson Coors Wine Deutsch Family Wine & Spirits, Duckhorn Portfolio, GALLO, Ste.
She joined Constellation in October 2016 as Vice President, Beer Innovation and was given additional responsibilities as Chief of Staff to the Company’s Executive Management Committee in July 2018. Prior to joining Constellation, from July 2014 to September 2016, Ms. Monteiro was a Senior Marketing Director at Anheuser Busch InBev.
She joined Constellation in October 2016 as Vice President, Beer Innovation and was given additional responsibilities as Chief of Staff to the Company’s Executive Management Committee in July 2018. Before joining the Company, from July 2014 to September 2016, Ms. Monteiro was a Senior Marketing Director at Anheuser Busch InBev.
The main components of compensation are: (i) base pay, (ii) long-term incentives dependent on a number of factors such as geographic location and management level which can include restricted stock units, stock options, and performance share units, (iii) short-term incentives, and (iv) recognition awards.
The main components of compensation are: (i) base pay, (ii) long-term incentives dependent on a number of factors such as geographic location, market prevalence, and level which can include restricted stock units, stock options, and performance share units, (iii) short-term incentives, and (iv) recognition awards.
In our beer business, we focus on upholding our leadership position in the U.S. beer market, including the high-end segment, and continuing to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth.
ITEM 1. BUSINESS Table of Contents In our beer business, we focus on upholding our leadership position in the U.S. beer market, including the high-end segment, and continuing to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth.
Glaetzer served in roles of increasing responsibility with Treasury Wine Estates and its predecessors from 1996 until 2014. Garth Hankinson Age 56 Executive Vice President and Chief Financial Officer Mr. Hankinson is the Executive Vice President and Chief Financial Officer of the Company, having served in the role since January 2020.
Before joining the Company, Mr. Glaetzer served in roles of increasing responsibility with Treasury Wine Estates and its predecessors from 1996 until 2014. Garth Hankinson Age 57 Executive Vice President and Chief Financial Officer Mr. Hankinson is the Executive Vice President and Chief Financial Officer of the Company, having served in the role since January 2020.
Base and incentive compensation is reviewed on an annual basis ensuring it is competitive in the market and gives employees opportunities to earn more for exceeding expectations. Our total rewards program also offers valuable benefits, tools, and resources designed to help employees stay healthy and well, while achieving security, growth, satisfaction, and success.
Base and incentive compensation is reviewed on an annual basis, seeking to ensure it is competitive in the market and giving employees opportunities to earn more for exceeding expectations. Our total rewards program also offers valuable benefits, tools, and resources designed to help employees stay healthy and well, while achieving security, growth, satisfaction, and success.
The content of our websites is not deemed to be incorporated by reference in this Form 10-K or filed with the SEC. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 16 PART I ITEM 1A. RISK FACTORS Table of Contents Item 1A.
The content of our websites is not deemed to be incorporated by reference in this Form 10-K or filed with the SEC. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 12 PART I ITEM 1A. RISK FACTORS Table of Contents Item 1A.
Corporate Operations and Other segment The Corporate Operations and Other segment includes traditional corporate-related items including costs of corporate development, corporate finance, corporate strategy, executive management, growth, human resources, internal audit, investor relations, IT, legal, and public relations, as well as our Canopy investment and investments made through our corporate venture capital function.
BUSINESS Table of Contents Corporate Operations and Other segment The Corporate Operations and Other segment includes traditional corporate-related items including costs of corporate communications, corporate development, corporate finance, corporate strategy and growth, executive management, human resources, internal audit, investor relations, IT, legal, and public affairs, as well as our Canopy investment and investments made through our corporate venture capital function.
Competition The beverage alcohol industry is highly competitive. We compete on the basis of quality, price, brand recognition and reputation, and distribution strength. Our beverage alcohol products compete with other alcoholic and non-alcoholic beverages for consumer purchases, as well as shelf space in retail stores, restaurant presence, and wholesaler attention.
We compete on the basis of quality, price, brand recognition and reputation, and distribution strength. Our beverage alcohol products compete with other alcoholic and non-alcoholic beverages for consumer purchases, as well as shelf space in retail stores, restaurant presence, and wholesaler attention.
BUSINESS Table of Contents For further information about our significant Fiscal 2024, Fiscal 2023, and Fiscal 2022 transactions, refer to (i) “Overview” within MD&A and (ii) Note 2. Business segments We report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other.
For further information about our significant Fiscal 2025, Fiscal 2024, and Fiscal 2023 transactions, refer to (i) “Overview” within MD&A and (ii) Note 2. Business segments We report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other.
As a result, in response to wholesaler and retailer demand which precedes consumer purchases, our beer sales are typically highest during the first and second quarters of our fiscal year, which correspond to the Spring and Summer periods in the U.S.
As a result, in response to wholesaler and retailer demand which precedes consumer purchases, our beer sales have historically been highest during the first and second quarters of our fiscal year, which correspond to the Spring and Summer periods in the U.S.
Prior to joining Constellation Brands, he held a number of roles with increasing responsibility at Grainger, then a $9 billion global provider of industrial supplies and equipment. While at Grainger, from 2011 to 2013 Mr. McGrew served as Director, U.S. Business Communications, from January 2013 to October 2013 he served as Senior Director, U.S.
Before joining the Company, he held a number of roles with increasing responsibility at Grainger, then a $9 billion global provider of industrial supplies and equipment. While at Grainger, from 2011 to 2013 Mr. McGrew served as Director, U.S. Business Communications; from January 2013 to October 2013 he served as Senior Director, U.S.
Grapes are normally harvested and crushed in August through November in the U.S. and Italy, and in February through May in New Zealand and stored as wine until packaged for sale under our brand names or sold in bulk.
We also operate two wineries in New Zealand and five wineries in Italy. Grapes are normally harvested and crushed in August through November in the U.S. and Italy, and in February through May in New Zealand and stored as wine until packaged for sale under our brand names or sold in bulk.
We continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs. In our wine and spirits business, we continue to focus on higher-end brands, improving margins, and creating operating efficiencies.
We remain focused on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs. In our wine and spirits business, we continue to focus on delivering growth and improving margins beyond Fiscal 2026 by driving our higher-end brands and operating efficiencies.
Michelle Wine Estates, Treasury Wine Estates, Trinchero Family Estates, The Wine Group Spirits Bacardi USA, Beam Suntory, Brown-Forman, Diageo, E. & J. Gallo Winery, Fifth Generation, Pernod Ricard, Sazerac Company Production As of February 29, 2024, our production capacity at our Mexican breweries was approximately 48 million hectoliters.
Michelle Wine Estates, Treasury Wine Estates, Trinchero Family Estates, The Wine Group Spirits Bacardi USA, Brown-Forman, Diageo, Fifth Generation, GALLO, Pernod Ricard, Sazerac Company, Suntory Global Spirits Production As of February 28, 2025, our production capacity at our Mexican breweries was approximately 48 million hectoliters.
We have the exclusive right to import, market, and sell our Mexican beer brands in all 50 states of the U.S., of which include the following: Corona Brand Family Modelo Brand Family Victoria Brand Family Other Import Brand Corona Extra Corona Non-Alcoholic Modelo Especial Victoria Pacifico Corona Familiar Corona Premier Modelo Chelada Vicky Chamoy Corona Hard Seltzer Corona Refresca Modelo Negra Corona Light Modelo Oro Notable achievements in the U.S. include the following: (i) we have 7 of the top 15 share gaining brands across the total beer category, (ii) Modelo Especial is the best-selling beer overall, (iii) Corona Extra is the second largest imported beer and fifth best-selling beer overall, and (iv) Pacifico and Corona Familiar are tied for the fastest growing major imported beer brand.
We have the exclusive right to import, market, and sell our Mexican beer brands in all 50 states of the U.S., which include the following: Modelo Brand Family Corona Brand Family Pacifico Brand Victoria Brand Family Modelo Especial Modelo Oro Corona Extra Corona Non-Alcoholic Pacifico Victoria Modelo Chelada Modelo Spiked Aguas Frescas Corona Familiar Corona Premier Vicky Chamoy Modelo Negra Corona Light Corona Sunbrew Notable achievements in the U.S. include the following: (i) we had 5 of the top 15 share gaining brands across the total beer category, (ii) Modelo Especial was the best-selling beer overall, (iii) Corona Extra was the second largest imported beer and fifth best-selling beer overall, and (iv) Pacifico and Victoria were the top two fastest growing major imported beer brands.
We report net sales in two reportable segments, as follows: For the Years Ended February 29, 2024 February 28, 2023 (in millions) Beer $ 8,162.6 $ 7,465.0 Wine and Spirits: Wine 1,552.1 1,722.7 Spirits 247.1 264.9 Total Wine and Spirits 1,799.2 1,987.6 Consolidated Net Sales $ 9,961.8 $ 9,452.6 Beer segment We are the #1 brewer and seller of imported beer in the U.S. market.
We report net sales in two reportable segments, as follows: For the Years Ended February 28, 2025 February 29, 2024 (in millions) Beer $ 8,539.8 $ 8,162.6 Wine and Spirits: Wine 1,450.1 1,552.1 Spirits 218.8 247.1 Total Wine and Spirits 1,668.9 1,799.2 Consolidated Net Sales $ 10,208.7 $ 9,961.8 Beer segment We are the #1 brewer and seller of imported beer in the U.S. market.
Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 3 PART I ITEM 1.
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 4 PART I ITEM 1.
BUSINESS Table of Contents Samuel Glaetzer Age 49 Executive Vice President and President, Wine and Spirits Division Mr. Glaetzer is the Executive Vice President and President, Wine and Spirits Division of the Company, having served in the role since March 2024.
Glaetzer is the Executive Vice President and President, Wine and Spirits Division of the Company, having served in the role since March 2024.
Prior to that, he served as the Company’s Senior Vice President and General Counsel, Corporate Development, having performed that role from September 2014 until December 2017. Before joining the Company in September 2014, Mr.
Bourdeau is the Executive Vice President and Chief Legal Officer of the Company, having served in the role since December 2017 and as the Company’s Secretary since April 2017. Prior to that he served as the Company’s Senior Vice President and General Counsel, Corporate Development from September 2014 until December 2017. Before joining the Company, Mr.
We utilize glass and polyethylene terephthalate bottles and other materials such as caps, corks, capsules, labels, and cardboard cartons in the bottling and packaging of our wine and spirits products.
We believe that adequate supplies of the aforementioned products are available at the present time. We utilize glass and polyethylene terephthalate bottles and other materials such as caps, corks, capsules, labels, and cardboard cartons in the bottling and packaging of our wine and spirits products.
The Code of Business Conduct and Ethics, together with our Global Code of Responsible Practices for Beverage Alcohol Advertising and Marketing, is available on our website under “Our Policies.” Copies of these materials are available in print to any stockholder who requests them. Stockholders Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 15 PART I ITEM 1.
The Code of Business Conduct and Ethics, together with our Global Code of Responsible Practices for Beverage Alcohol Advertising and Marketing, is available on our website under “Our Policies.” Copies of these materials are available in print to any stockholder who requests them.
We continue to believe that over the medium-term our wine and spirits business will return to net sales growth supported by the transformation undertaken over the last few years to better align our portfolio with broader consumer-led premiumization trends, expand our omni-channel capabilities, and extend into select international markets.
We continue to believe that beyond Fiscal 2026 our wine and spirits business will return to net sales growth supported by our continued efforts to better align our portfolio with our focus on broader consumer-led premiumization trends, expand our omni-channel capabilities, and extend into select international markets.
For further information about our Mexico Beer Projects, refer to (i) “Production” below, (ii) MD&A, and (iii) Note 5. We are also building on the success of our leading import brand families through our innovation strategy. For example, our Modelo Chelada brands have become an important growth contributor to our portfolio as the leading chelada in the U.S. beer market.
We are also building on the success of our leading import brand families through our innovation strategy. For example, our Modelo Chelada brands have become an important contributor to our portfolio as the leading chelada in the U.S. beer market.
Where we produce products, we are subject to environmental laws and regulations, and may be required to obtain environmental and alcohol beverage permits and licenses to operate our facilities.
Where we produce products, we are subject to environmental laws and regulations, and may be required to obtain environmental and alcohol beverage permits and licenses to operate our facilities. Where we market and sell products, we may be subject to laws and regulations on brand registration, packaging, labeling, and recycling, Constellation Brands, Inc.
Prior to October 2011, Beam Global Spirits & Wine, Inc. was the spirits operating segment of Fortune Brands, Inc., which was a leading consumer products company that made and sold branded consumer products worldwide in the distilled spirits, home and security, and golf markets. BRG sponsorship - ECP supporting our early career professionals James O.
Prior to October 2011, Beam Global Spirits & Wine, Inc. was the spirits operating segment of Fortune Brands, Inc., which was a leading consumer products company that made and sold branded consumer products worldwide in the distilled spirits, home and security, and golf markets. James O. Bourdeau Age 60 Executive Vice President and Chief Legal Officer Mr.
Empowering our employees to give back Giving back to our communities is a value instilled by our founder, Marvin Sands, and remains core to our Company’s DNA. We empower our employees to engage in the communities where they live and work in a variety of ways, including volunteering time and through a charitable matching program available to all U.S. employees.
We empower our employees to engage in the communities where they live and work in a variety of ways, including volunteering time and through a charitable matching program available to all U.S. employees.
Sabia was with Molson Coors Brewing Company for 17 years. BRG sponsorship - ¡SALUD! supporting Hispanic and Latinx employees and communities Company Information Our website is https://www.cbrands.com, and our investor relations website is https://ir.cbrands.com.
Before joining the Company, Mr. Sabia was with Molson Coors Brewing Company for 17 years. Company Information Our website is https://www.cbrands.com, and our investor relations website is https://ir.cbrands.com.
In Fiscal 2024, we activated 40 wine and spirits sustainable packaging projects across more than 190 SKUs to optimize material consumption, decrease packaging weights, and enable reductions in consumer waste. Government regulations We are subject to a range of laws and regulations in the countries in which we operate.
To enhance our use of sustainable packaging, we have activated multiple projects designed to optimize material consumption, decrease packaging weights, and enable reductions in consumer waste. Government regulations We are subject to a range of laws and regulations in the countries in which we operate.
In Fiscal 2024, we (i) spent approximately $17 million in development and training costs, including the delivery of one executive development program, one leadership development program, two women’s focused development programs, and a newly-launched leadership coaching workshop for our people leaders and (ii) produced nearly 375 matched relationships under our formal career development mentoring program.
In Fiscal 2025, we (i) spent over $17 million in development and training costs, including the delivery of six executive, leadership, and other development programs as well as leadership coaching workshops for nearly 350 of our people leaders and (ii) produced approximately 400 matched relationships under our formal career development mentoring program.
Prior to that, he served as the Company’s Senior Vice President, Global Operations and International Sales for the Wine and Spirits Division, having performed that role from March 2021 until March 2024.
Prior to that he served as the Company’s Senior Vice President, Global Operations and International Sales for the Wine and Spirits Division from March 2021 until March 2024; Senior Vice President, Global Operations, Wine and Spirits from September 2018 until March 2021; Senior Vice President, Production, Wine and Spirits from May 2016 until September 2018; and President and Managing Director, New Zealand and Australia from March 2014 until May 2016.
All of our owned and leased vineyards in California routinely adhere to documented water management plans as required by Sustainable Grape Growing Certifications including the California Sustainable Winegrowing Alliance and Fish Friendly Farming.
Following the anticipated completion of the 2025 Wine Divestitures Transaction, we expect to own or lease approximately 11,400 acres of land and vineyards. All of our owned and leased vineyards in California routinely adhere to documented water management plans as required by Sustainable Grape Growing Certifications including the California Sustainable Winegrowing Alliance and Fish Friendly Farming.
In the U.S., we operate 12 wineries using many varieties of grapes grown principally in the Napa, Sonoma, Monterey, and San Joaquin regions of California as well as the Willamette Valley region of Oregon. We also operate two wineries in New Zealand and five wineries in Italy.
In the U.S., we currently operate 12 wineries using many varieties of grapes grown principally in the Napa, Sonoma, Monterey, and San Joaquin regions of California as well as the Willamette Valley region of Oregon. Following the anticipated completion of the 2025 Wine Divestitures Transaction, we expect to operate nine U.S. wineries.
Bureau of Labor Statistics data for wineries, breweries, and distilleries based on our portfolio mix in February 2024, February 2023, and February 2022 for the years ended February 29, 2024, February 28, 2023, and February 28, 2022, respectively.
Bureau of Labor Statistics data for wineries, breweries, and distilleries based on our portfolio mix in February 2025, February 2024, and February 2023 for the years ended February 28, 2025, February 29, 2024, and February 28, 2023, respectively. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 9 PART I ITEM 1.
Economic and other uncertainties associated with our international operations We have production facilities in the U.S., Mexico, New Zealand, and Italy and employees in various countries, and our products are sold in numerous countries.
We may be unable to increase our prices to pass along any increased costs we incur to our customers. Operational Risks Economic and other uncertainties associated with our international operations, including tariffs We have production facilities in the U.S., Mexico, New Zealand, and Italy and employees in various countries, and our products are sold in numerous countries.
From January 2016 to January 2017 he performed the role of President, Wine and Spirits Division and from January 2015 through January 2016 he performed the role of Chief Growth Officer. Mr. Newlands joined the Company in January 2015.
He served as Chief Operating Officer from January 2017 through February 2019 and as Executive Vice President from January 2015 until February 2018. From January 2016 to January 2017 he performed the role of President, Wine and Spirits Division and from January 2015 through January 2016 he performed the role of Chief Growth Officer. Mr.
The joint venture owns a state-of-the-art Glass Plant adjacent to our Nava Brewery in Mexico. The Glass Plant supplies nearly 60% of the total annual glass bottle supply for our Mexican beer brands. We also have long-term glass supply agreements with other glass producers. The current Mexican breweries each receive water originating from separate and distinct aquifers.
The joint venture owns a state-of-the-art Glass Plant adjacent to our Nava Brewery in Mexico. The Glass Plant supplies nearly 60% of the total annual glass bottle supply for our Mexican beer brands. We also have long-term glass supply agreements with other glass producers. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 6 PART I ITEM 1.
The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.
The business segments reflect how our operations are managed, how resources are Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 2 PART I ITEM 1. BUSINESS Table of Contents allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.
Bourdeau was an attorney with the law firm of Nixon Peabody LLP from July 2000 through September 2014, and a partner from February 2005 through September 2014. Mr. Bourdeau was associated with another law firm from 1995 to 2000. BRG sponsorship - WISE supporting our female employees and communities K.
Bourdeau was an attorney with the law firm of Nixon Peabody LLP from July 2000 through September 2014, and a partner from February 2005 through September 2014. Mr. Bourdeau was associated with another law firm from 1995 to 2000. Paula K. Erickson Age 56 Executive Vice President and Chief Human Resources Officer Ms.
In Fiscal 2024, we continued to build on our successful innovation platform with the launch of new products aligned with consumer-led premiumization, betterment, and flavor trends, including: (i) Modelo Oro, a light and lower-calorie Mexican beer, (ii) Modelo Chelada Sandía Picante, a watermelon and chile pepper michelada-style beer, (iii) Modelo Chelada Variety Pack, a 12 ounce, 12-pack format offering of certain of our chelada flavors, and (iv) Corona Non-Alcoholic.
In Fiscal 2025, we continued to build on our successful innovation platform with the launch of new products aligned with our focus on consumer-led premiumization, betterment, and flavor trends, including: (i) two additional pack sizes of Modelo Oro, a light and lower-calorie Mexican beer, to build on its launch in Fiscal 2024, (ii) Modelo Chelada Fresa Picante, a strawberry and chile pepper michelada-style beer, (iii) Modelo Chelada Negra con Chile, our first Modelo Negra chelada flavor launched in select markets, and (iv) Corona Sunbrew, a beer brewed with real citrus peels and a splash of real citrus juice, also launched in select markets.
We receive grapes from approximately 430 independent growers located in the U.S. and 40 independent growers in New Zealand and Italy. We enter into purchase agreements with a majority of these growers with pricing that generally varies year-to-year and is largely based on then-current market prices.
We enter into purchase agreements with a majority of these growers with pricing that generally varies year-to-year and is largely based on then-current market prices. As of February 28, 2025, we owned or leased approximately 18,000 acres of land and vineyards, either fully bearing or under development, in the U.S., New Zealand, and Italy.
BUSINESS Table of Contents should direct such requests in writing to Investor Relations Department, Constellation Brands, Inc., 207 High Point Drive, Building 100, Victor, New York 14564, or by telephoning our Investor Center at 1-888-922-2150.
Stockholders should direct such requests in writing to Investor Relations Department, Constellation Brands, Inc., 50 East Broad Street, Rochester, New York 14614, or by telephoning our Investor Center at 1-888-922-2150.
FY 2024 Form 10-K #WORTHREACHINGFOR I 9 PART I ITEM 1. BUSINESS Table of Contents As part of our brewery expansion efforts and commitment to making a positive impact on the communities where we operate, we plan to continue working with local authorities and community-based organizations on sustainability initiatives that benefit local residents.
As part of our brewery expansion efforts and commitment to making a positive impact on the communities where we operate, we plan to continue working with local authorities and community-based organizations on sustainability initiatives that benefit local residents. Critical local projects are identified through community collaboration and input and guidance from third-party water restoration organizations.
He has been an Executive Vice President of the Company since May 2018. From March 2021 through January 2022 he served as Executive Vice President, Managing Director, Beer Division. From May 2018 through March 2021 he performed the role of Executive Vice President, Chief Marketing Officer.
Prior to that he served as Executive Vice President, Managing Director, Beer Division from March 2021 until January 2022; Executive Vice President, Chief Marketing Officer from May 2018 until March 2021; Chief Marketing Officer of the Company’s Beer Division from 2009 until May 2018; and Vice President, Marketing of the Company’s spirits business from 2007 until 2009.
The inventories of wine are usually at their highest levels during and after the crush of each year’s grape harvest and are reduced as sold throughout the year.
The inventories of wine are usually at their highest levels during and after the crush of each year’s grape harvest and are reduced as sold throughout the year. We currently operate four distilleries in the U.S. for the production of our spirits. Certain of our wines and spirits must be aged for multiple years.
Wine and Spirits segment We are a major, higher-end wine and spirits company in the U.S. market, with a portfolio that includes higher-margin, higher-growth wine and spirits brands. Our wine portfolio is supported by grapes purchased from independent growers, primarily in the U.S. and New Zealand, and vineyard holdings in the U.S., New Zealand, and Italy.
Our wine portfolio is supported by grapes purchased from independent growers, primarily in the U.S. and New Zealand, and vineyard holdings in the U.S., New Zealand, and Italy. Our wine and spirits are primarily marketed in the U.S. and also sold in Australia, Canada, Italy, New Zealand, and other major world markets.
McGrew has been an Executive Vice President of the Company since April 2020. Beginning December 2023, Mr. McGrew has performed the role of Executive Vice President, and Chief Communications, Strategy, ESG & Diversity Officer of the Company. From December 2020 to November 2023 he performed the role of Executive Vice President, and Chief Communications, CSR, and Diversity Officer. Mr.
Michael McGrew Age 51 Executive Vice President, Chief Communications, CSR, and Inclusion Officer Mr. McGrew is the Executive Vice President, Chief Communications, CSR, and Inclusion Officer of the Company. He has been an Executive Vice President of the Company since April 2020 when he was promoted to Executive Vice President, Chief Communications and CSR Officer. Mr.
We also have various licenses and distribution agreements for the sale, or the production and sale, of our products and products of others. These licenses and distribution agreements have varying terms and durations. Within the Beer segment, we have an exclusive sub-license to use trademarks related to our Mexican beer brands in the U.S. This sub-license agreement is perpetual.
We sell products under a number of trademarks, which we own or use under license. We also have various licenses and distribution agreements for the sale, or the production and sale, of our products and products of others. These licenses and distribution agreements have varying terms and durations.
We believe we have adequate access to water to support these breweries’ ongoing requirements, as well as future requirements after the completion of planned expansion, optimization, and/or construction activities at our breweries. These breweries employ comprehensive water management practices that focus on water efficiency and wastewater treatment operations to reuse water consumed as part of the production process.
BUSINESS Table of Contents The current Mexican breweries each receive water originating from separate and distinct aquifers. We believe we have adequate access to water to support these breweries’ ongoing requirements, as well as future requirements after the completion of planned expansion, optimization, and/or construction activities at our breweries.
From October 2009 until February 2016, he served as the Vice President, Corporate Development of the Company. From October 2007 until October 2009, Mr. Hankinson served as the Vice President, Business Development for Constellation’s prior Canadian business, Constellation Brands Canada, Inc., which was a Canadian subsidiary of the Company during that time.
Prior to that he served as the Company’s Senior Vice President, Corporate Development from February 2016 until January 2020; Vice President, Corporate Development from October 2009 until February 2016; Vice President, Business Development for Constellation’s prior Canadian business from October 2007 until October 2009; and Director of Corporate Development from March 2004 until October 2007.
Governmental bodies may propose changes to international trade agreements, treaties, tariffs, taxes, and other government rules and regulations including but not limited to environmental treaties and regulations.
The countries in which we operate impose duties, excise taxes, and/or other taxes on beverage alcohol products, and/or on certain raw materials used to produce our beverage alcohol products in varying amounts. Governmental bodies may propose changes to international trade agreements, treaties, tariffs, taxes, and other government rules and regulations including but not limited to environmental treaties and regulations.
State governments can also affect prices paid by consumers for our products through the imposition of taxes. Trademarks and distribution agreements Trademarks are an important aspect of our business. We sell products under a number of trademarks, which we own or use under license.
As is the case with all other beverage alcohol companies, products sold through these agencies are subject to obtaining and maintaining listings to sell our products in that agency’s state. State governments can also affect prices paid by consumers for our products through the imposition of taxes. Trademarks and distribution agreements Trademarks are an important aspect of our business.
Expansion, optimization, and/or construction activities continue at our breweries in Mexico to support expected future business needs. We expect to spend approximately $3 billion over Fiscal 2025 through Fiscal 2028 on such activities. We believe these investments allow us the opportunity to further expand our leadership position in the high-end segment of the U.S. beer market.
During Fiscal 2025, we spent nearly $940 million on (i) planned expansions and execution of optimization initiatives and (ii) ongoing construction of the Veracruz Brewery. Expansion, optimization, and/or construction activities continue at our breweries in Mexico to support expected future business needs. We expect to spend approximately $2 billion over Fiscal 2026 through Fiscal 2028 largely on such activities.
However, most of this acreage is used to supply a large portion of the grapes used for the production of certain of our higher-end wines. We continue to consider the purchase or lease of additional vineyards, and additional land for vineyard plantings, to supplement our grape supply.
This acreage supplied only a small percentage of our overall total grape needs for wine production. However, most of this acreage was used to supply a large portion of the grapes used for the production of certain of our higher-end wines.
Our wine and spirits sales are typically highest during the third quarter of our fiscal year, primarily due to seasonal holiday buying. ESG During the course of our history, we have been committed to safeguarding our environment, making a positive difference in our communities, and advocating for responsible consumption of beverage alcohol products.
Our wine and spirits sales have generally been highest during the third quarter of our fiscal year, primarily due to seasonal holiday buying.
Newlands Age 65 President and Chief Executive Officer Mr. Newlands has served as Chief Executive Officer of the Company and as a director since March 2019 and as President since February 2018. He served as Chief Operating Officer from January 2017 through February 2019 and as Executive Vice President of the Company from January 2015 until February 2018.
Information with respect to our executive officers as of April 23, 2025, is as follows: William A. Newlands Age 66 President and Chief Executive Officer Mr. Newlands has served as Chief Executive Officer of the Company and as a director since March 2019 and as President since February 2018.
FY 2024 Form 10-K #WORTHREACHINGFOR I 6 PART I ITEM 1. BUSINESS Table of Contents Resources and availability of production materials The principal components in the production of our Mexican beer brands include water; agricultural products, such as yeast and grains; and packaging materials, which include glass, aluminum, and cardboard.
Therefore, our inventories of wines and spirits may be larger in relation to sales and total assets than in many other businesses. Resources and availability of production materials The principal components in the production of our Mexican beer brands include water; agricultural products, such as yeast and grains; and packaging materials, which include glass, aluminum, and cardboard.
BUSINESS Table of Contents The distilled spirits manufactured and imported by us require various agricultural products, neutral grain spirits, and bulk spirits, which we fulfill through purchases from various sources by contractual arrangement and through purchases on the open market. We believe that adequate supplies of the aforementioned products are available at the present time.
However, when demand for certain wine products exceeds expectations, we look to source the extra requirements from the bulk wine markets around the world. The distilled spirits manufactured and imported by us require various agricultural products, neutral grain spirits, and bulk spirits, which we fulfill through purchases from various sources by contractual arrangement and through purchases on the open market.
Some of our well-known wine and spirits brands and portfolio of brands include: Wine Brands Wine Portfolio of Brands Spirits Brands Cook’s California Champagne Mount Veeder My Favorite Neighbor Casa Noble Mi CAMPO Kim Crawford Ruffino Robert Mondavi Winery Copper & Kings Nelson’s Green Brier Meiomi SIMI Schrader High West SVEDKA The Prisoner Wine Company In Fiscal 2024, the broader wine category experienced deceleration in both the U.S. wholesale and international markets, and, as a result, our largest mainstream and premium brands experienced a decline.
Some of our well-known wine and spirits brands and portfolio of brands include: Wine Brands (1) Wine Portfolio of Brands Spirits Brands Kim Crawford Ruffino My Favorite Neighbor Austin Cocktails Mi CAMPO Mount Veeder Sea Smoke Schrader Cellars Casa Noble Nelson’s Green Brier Robert Mondavi Winery The Prisoner Wine Company High West (1) Excludes brands that are part of the 2025 Wine Divestitures Transaction, including Meiomi and SIMI, which each ranked in the 100 top-selling higher-end wine brands in the U.S.
The following factors are organized under relevant headings; however, they may be relevant to other headings as well.
These factors, some of which have occurred and/or are occurring, and any of which could occur in the future, are not the only ones we face. The following factors are organized under relevant headings; however, they may be relevant to other headings as well.
BRG sponsorship - CPN supporting our parents and caregivers James A. Sabia, Jr. Age 62 Executive Vice President and President, Beer Division Mr. Sabia is the Company’s Executive Vice President and President, Beer Division of the Company, having performed these roles since January 2022 and February 2022, respectively.
FY 2025 Form 10-K #WORTHREACHINGFOR I 11 PART I ITEM 1. BUSINESS Table of Contents James A. Sabia, Jr. Age 63 Executive Vice President and President, Beer Division Mr. Sabia is the Executive Vice President and President, Beer Division of the Company, having served in the roles since January 2022 and February 2022, respectively.
Monteiro has performed the role of Executive Vice President, Chief Growth & Digital Officer and Managing Director, Beer Brands. From March 2021 to November 2023, Ms. Monteiro performed the role of Executive Vice President, and Chief Growth, Strategy, and Digital Officer.
Monteiro is the Executive Vice President, Managing Director, Beer Brands and Interim Chief Growth and Strategy Officer of the Company, having served in the roles since October 2024 and March 2025 (with respect to her Interim role).
These uncertainties and changes, as well as the decisions, policies, and economic strength of our suppliers and distributors, could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
A substantial adverse judgment or other unfavorable resolution of these matters or our failure to otherwise protect our intellectual property rights as well as the costs associated with such activities could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Collective bargaining agreements expiring within one year are minimal. We consider our employee relations generally to be good.
Collective bargaining agreements expiring within one year are minimal. We consider our employee relations generally to be good. Workforce inclusive culture To achieve our mission of building brands that people love, we believe it is essential to cultivate a workforce that reflects the consumers and communities we serve.
Our wine and spirits are primarily marketed in the U.S. and also sold in Canada, New Zealand, and other major world markets. In the U.S., we have 7 of the 100 top-selling higher-end wine brands, with Meiomi and Kim Crawford achieving the 4 th and 10 th spots, respectively.
In the U.S., we had 6 of the 100 top-selling higher-end wine brands, with Kim Crawford achieving the 10 th spot (1) .
BUSINESS Table of Contents Employee engagement We assess employee engagement through global engagement and targeted pulse surveys, which provide feedback on a variety of topics, such as company direction and strategy, resources, support, enablement, empowerment, and well-being. Safety We are committed to ensuring the safety of our employees.
As part of the succession planning process, we review and discuss potential successors to key roles and examine backgrounds, capabilities, and appropriate developmental opportunities. Employee engagement We assess employee engagement through global engagement and targeted pulse surveys, which provide feedback on a variety of topics, such as belonging, teamwork, recognition, enablement, and well-being.
BUSINESS Table of Contents Information about our Executive Officers Executive officers of the Company are generally chosen or elected to their positions annually and hold office until the earlier of their removal or resignation or until their successors are chosen and qualified. Information with respect to our executive officers as of April 23, 2024, is as follows: William A.
We match donations ranging from a maximum of $5,000 to $50,000 per year, depending on employee level, to charitable organizations. $8.0 million Fiscal 2025 corporate charitable contributions, including Company match of employee donations Information about our Executive Officers Executive officers of the Company are generally chosen or elected to their positions annually and hold office until the earlier of their removal or resignation or until their successors are chosen and qualified.
Bourdeau Age 59 Executive Vice President and Chief Legal Officer Mr. Bourdeau is the Executive Vice President and Chief Legal Officer of the Company, having served in the role since December 2017 and as the Company’s Secretary since April 2017.
Erickson is the Executive Vice President and Chief Human Resources Officer of the Company, having served in the role since April 2025. Before joining the Company, Ms. Erickson served as Senior Vice President, Chief People, Culture, and Communications Officer with Beam Suntory Inc.
Our business continues to progressively expand into DTC channels (including hospitality), 3-tier eCommerce, and international markets, while remaining a major supplier in U.S. 3-tier brick-and-mortar distribution. For further information on our strategy, see “Overview” within MD&A.
We remain a key supplier in U.S. 3-tier brick-and-mortar distribution. In addition, we are advancing our aim to become a global, omni-channel competitor in line with consumer preferences as we continue our efforts to progressively expand into DTC channels (including hospitality), 3-tier eCommerce, and international markets.
Divestitures, acquisitions, and investments In connection with executing our strategy as outlined above, during Fiscal 2024 we completed the following transactions: Date Strategic Contribution Beer segment Craft Beer Divestitures June 2023 Divestitures of the Four Corners and Funky Buddha craft beer businesses; supported our focus on continuing to grow our high-end imported beer brands.
Divestitures, acquisitions, and investments In connection with executing our strategy as outlined above, during Fiscal 2025 we completed the following transactions: Date Description Beer segment Mexicali Brewery July 2024 Sale of the remaining assets at the canceled brewery construction project located in Mexicali, Baja California, Mexico.
The principal components in the production of our wine and spirits products are agricultural products, such as grapes and grain, and packaging materials, primarily glass. Most of our annual grape requirements are satisfied by grower purchases from each year’s harvest.
These breweries employ comprehensive water management practices that focus on water efficiency and wastewater treatment operations to reuse water consumed as part of the production process. The principal components in the production of our wine and spirits products are agricultural products, such as grapes and grain, and packaging materials, primarily glass.
Human capital resources As of February 29, 2024, we had approximately 10,600 employees, including approximately 1,300 employees through our equally-owned joint venture with Owens-Illinois. The number of employees may change throughout the year, as we employ additional workers during the grape crushing seasons. Approximately 20% of the employees are covered by collective bargaining agreements.
This is in addition to other benefits we provide, including local job creation and fueling economic development. Human capital resources As of February 28, 2025, we had approximately 10,600 employees, including approximately 1,300 employees through our equally-owned joint venture with Owens-Illinois.
We also assess metrics throughout the human resource lifecycle to identify potential bias and barriers in our processes, including talent acquisition, turnover, engagement scores, or participation in BRG events. Compensation and benefits We strive to provide pay, benefits, and services that meet the needs of our employees.
BUSINESS Table of Contents Compensation and benefits We strive to provide pay, benefits, and services that meet the needs of our employees.
Business & Global Supply Chain Communications and from October 2013 to September 2014 he served as Senior Director, Communications – Americas, among other roles of increasing responsibility. BRG sponsorships - ASIAA supporting employees and communities of Asian descent SAGE supporting experienced career professionals Stellar PRIDE supporting our LGBTQ+ employees and communities Constellation Brands, Inc.
Business & Global Supply Chain Communications; and from October 2013 to September 2014 he served as Senior Director, Communications – Americas, among other roles. Mallika Monteiro Age 46 Executive Vice President, Managing Director, Beer Brands and Interim Chief Growth and Strategy Officer Ms.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeChoice-of-forum provision in our Amended and Restated By-laws regarding certain stockholder litigation Our Amended and Restated By-laws provide that, unless we consent in writing to the selection of an alternative forum, (i) the Court of Chancery of Delaware (or if such court lacks subject matter jurisdiction, the federal district court of Delaware) will be, to the fullest extent permitted by law, the sole and exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, or stockholders to us or our stockholders; any action asserting a claim arising pursuant to any provision of the DGCL, our Amended and Restated Charter, or our Amended and Restated By-laws, or as to which the DGCL confers jurisdiction on the Court of Chancery of Delaware; or any action asserting a claim governed by the internal affairs doctrine, and (ii) the federal district courts of the U.S. will, to the fullest extent permitted by law, be the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act.
Biggest changeRISK FACTORS Table of Contents duty owed by any of our current or former directors, officers, or stockholders to us or our stockholders; any action asserting a claim arising pursuant to any provision of the DGCL, our Amended and Restated Charter, or our Amended and Restated By-laws, or as to which the DGCL confers jurisdiction on the Court of Chancery of Delaware; or any action asserting a claim governed by the internal affairs doctrine, and (ii) the federal district courts of the U.S. will, to the fullest extent permitted by law, be the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act.
Severe weather events and natural disasters, such as our experiences with drought, flooding, and/or wildfires in California and Oregon, severe winter storms in California, Texas, or Mexico, or late frosts or flooding in New Zealand, and climate change may negatively affect agricultural productivity in the regions from which we source our various agricultural raw materials or the energy powering our production facilities.
Severe weather events and natural disasters, such as our experiences with wildfires, drought, and/or flooding in California and Oregon, severe winter storms in California, Texas, or Mexico, or late frosts or flooding in New Zealand, and climate change may negatively affect agricultural productivity in the regions from which we source our various agricultural raw materials or the energy powering our production facilities.
Our operations and the operations of our suppliers may become less efficient or otherwise be negatively impacted if our or their executive management or other key operational personnel are unable to work or if a significant percentage of our workforce is unable to work at all or at their normal production or other facility.
Our operations and the operations of our suppliers may become less efficient or otherwise be negatively impacted if our or their executive management or other key operational personnel are unable to work or if a significant percentage of our workforce is unable to work at all or at their normal production facility.
International operations, worldwide and regional economic trends and financial market conditions, geopolitical uncertainty, or other governmental rules and regulations Risks associated with international operations, any of which could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations, include: • changes in political, economic, social, and labor conditions in U.S., Mexico, and international locales, including as a result of elections, potential government shutdowns, or other events; • potential disruption from wars and military conflicts, terrorism, civil unrest, kidnapping, and drug-related, workplace, or other types of violence; • restrictions on foreign ownership and investments or on repatriation of cash earned in countries outside the U.S.; • import and export requirements and border accessibility; • protectionist trade policies, sanctions, and tariffs; • foreign currency exchange rate fluctuations, which may reduce the U.S. dollar value of net sales, earnings, and cash flows from non-U.S. markets or increase our supply chain costs, as measured in U.S. dollars, in those markets; • a less developed and less certain legal and regulatory environment in some countries, which, among other things, can create uncertainty regarding contract enforcement, intellectual property rights, privacy obligations, real property rights, and liability issues; and • inadequate levels of compliance with applicable domestic and foreign anti-bribery and anti-corruption laws, including the Foreign Corrupt Practices Act.
International operations, worldwide and regional economic trends and financial market conditions, geopolitical uncertainty, or other governmental rules and regulations Risks associated with international operations, any of which could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations, include: • changes in political, economic, social, and labor conditions in U.S., Mexico, and international locales, including as a result of elections, potential government shutdowns, or other events; • potential disruption from wars and military conflicts, terrorism, civil unrest, kidnapping, and drug-related, workplace, or other types of violence; • restrictions on foreign ownership and investments or on repatriation of cash earned in countries outside the U.S.; • import and export requirements and border accessibility; • protectionist trade policies, sanctions, tariffs, and foreign or domestic legal and regulatory requirements, including those that could result in adverse tax consequences; • foreign currency exchange rate fluctuations, which may reduce the U.S. dollar value of net sales, earnings, and cash flows from non-U.S. markets or increase our supply chain costs, as measured in U.S. dollars, in those markets; • a less developed and less certain legal and regulatory environment in some countries, which, among other things, can create uncertainty regarding contract enforcement, intellectual property rights, privacy obligations, real property rights, and liability issues; and • inadequate levels of compliance with applicable domestic and foreign anti-bribery and anti-corruption laws, including the Foreign Corrupt Practices Act.
We fund our cash dividends and share repurchases through a combination of cash flow from operations, borrowings, and divestiture proceeds. However, we are not required to declare dividends or to make any share repurchases under our share repurchase program. We may discontinue, limit, suspend, delay, or increase our dividends and share repurchases at any time without prior notice.
We typically fund our cash dividends and share repurchases through a combination of cash flow from operations, borrowings, and/or divestiture proceeds. However, we are not required to declare dividends or to make any share repurchases under our share repurchase program. We may discontinue, limit, suspend, delay, or increase our dividends and share repurchases at any time without prior notice.
In addition, certain of our current and future debt and derivative financial instruments have, or in the future, could have interest rates that are tied to reference rates, such as SOFR. The volatility and availability of such reference rates, including establishment of alternative reference rates, is out of our control.
In addition, certain of our debt and derivative financial instruments have, or in the future could have, interest rates that are tied to reference rates, such as SOFR. The volatility and availability of such reference rates, including establishment of alternative reference rates, is out of our control.
Similarly, power disruptions, such as the outage at our Nava Brewery due to severe winter weather events in early 2021, could adversely impact our production processes and the quality of our products. We or our suppliers of agricultural raw materials may not succeed in preventing contamination in existing or future vineyards, fields, or production facilities.
Similarly, power disruptions, such as the outage at our Nava Brewery due to severe winter weather events in calendar 2021, could adversely impact our production processes and the quality of our products. We or our suppliers of agricultural raw materials may not succeed in preventing contamination in existing or future vineyards, fields, or production facilities.
Severe weather events and natural disasters or changes in their frequency or intensity can also impact product quality; disrupt our supply chains, which may affect production operations, insurance cost and coverage, and delivery of our products to wholesalers, retailers, and consumers; and negatively affect the ability of consumers to purchase our products.
Severe weather events and natural or man-made disasters or changes in their frequency or intensity can also impact product quality; disrupt our supply chains, which may affect production operations, insurance cost and coverage, and delivery of our products to wholesalers, retailers, and consumers; and negatively affect the ability of consumers to purchase our products.
The achievement of such targets along with our broader value chain engagement efforts have required and will continue to require us and in some cases third parties with which we do business, such as our suppliers, to make investments and allocate resources.
The achievement of such targets or aspirations along with our broader value chain engagement efforts have required and will continue to require us and in some cases third parties with which we do business, such as our suppliers, to make investments and allocate resources.
Channels of entry may be closed or operate at reduced capacity, or transportation of product within a region or country may be limited.
Channels of entry may be closed or operate at reduced capacity, or transportation of product or materials within a region or country may be limited.
RISK FACTORS Table of Contents Governance Risks Sands Family Stockholder Class A Stock ownership and Board of Directors nomination rights Until November 2027 and so long as the Sands Family Stockholders, collectively, have beneficial or record ownership of at least 10% of the issued and outstanding shares of Class A Stock, our Board of Directors will, subject to the procedures and limitations set forth in the Reclassification Agreement, nominate two individuals designated by WildStar for election to our Board of Directors at any annual meeting of our stockholders at which directors are to be elected (or otherwise in connection with any action by written consent pursuant to which a majority of the Board of Directors will be elected).
Governance Risks Sands Family Stockholder Class A Stock ownership and Board of Directors nomination rights Until November 2027 and so long as the Sands Family Stockholders, collectively, have beneficial or record ownership of at least 10% of the issued and outstanding shares of Class A Stock, our Board of Directors will, subject to the procedures and limitations set forth in the Reclassification Agreement, nominate two individuals designated by WildStar for election to our Board of Directors at any annual meeting of our stockholders at which directors are to be elected (or otherwise in connection with any action by written consent pursuant to which a majority of the Board of Directors will be elected).
If our insurance coverage is adversely affected, or to the extent we have elected to self-insure, we may be at greater risk that we may experience an adverse impact to our business, liquidity, financial condition, and/or results of operations.
If our insurance coverage is adversely affected, or to the extent we have elected to self-insure, there may be greater risk that we may experience an adverse impact to our business, liquidity, financial condition, and/or results of operations.
The replacement or poor performance of our major wholesalers, retailers, or government agencies could result in temporary or longer-term sales disruptions or could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Such activities or the replacement or poor performance of our major wholesalers, retailers, or government agencies could result in temporary or longer-term sales disruptions and could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Adverse developments in lawsuits related to such matters as well as the time and costs associated with such activities or a significant decline in the social acceptability of beverage alcohol products or for our products specifically that may result from lawsuits could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations. Constellation Brands, Inc.
Adverse developments in lawsuits related to such matters as well as the time and costs associated with such activities or a significant decline in the social acceptability of beverage alcohol products or for our products specifically that may result from lawsuits could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Our insurance policies do not cover certain types of catastrophes and may not cover certain events such as pandemics. Economic conditions and uncertainties in global markets may adversely affect the cost and other terms upon which we are able to obtain property damage and business interruption insurance.
Our insurance policies do not cover certain types of catastrophes and may not cover certain events such as pandemics. Economic conditions and uncertainties in global markets may adversely affect the cost and other terms upon which we are able to obtain insurance coverage, including for property damage and business interruption.
Any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock will be deemed to have notice of and consented to the choice-of-forum provision described above. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 29 PART I OTHER KEY INFORMATION Table of Contents
Any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock will be deemed to have notice of and consented to the choice-of-forum provision described above. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 27 PART I OTHER KEY INFORMATION Table of Contents
An event of default could also result in events of default under other debt facilities or agreements Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 26 PART I ITEM 1A. RISK FACTORS Table of Contents that contain cross-acceleration or cross-default provisions, which could permit counterparties thereunder to exercise remedies.
An event of default could also result in events of default under other debt facilities or agreements Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 23 PART I ITEM 1A. RISK FACTORS Table of Contents that contain cross-acceleration or cross-default provisions, which could permit counterparties thereunder to exercise remedies.
In addition, our business may not generate sufficient cash flow from operations to meet all our debt service requirements, return value to stockholders such as through payment of dividends or repurchase of shares of our common stock, achieve our target net leverage ratio, and fund our general corporate and capital requirements.
In addition, our business may not generate sufficient cash flow from operations to meet all our debt service requirements, return value to stockholders such as through payment of dividends or repurchases of shares of our common stock, achieve or maintain our target comparable net leverage ratio, and fund our general corporate and capital requirements.
Unfavorable global or regional economic conditions, including economic slowdown or recession, instability in the banking sector, and the disruption, volatility, and tightening of credit and capital markets, as well as unemployment, tax increases, governmental spending cuts, or continuing high levels of inflation, could affect consumer spending patterns and purchases of our products.
Unfavorable global or regional economic conditions, including trade barriers, tariffs, trade wars, economic slowdown or recession, instability in the banking sector, and the disruption, volatility, and tightening of credit and capital markets, as well as unemployment, tax increases, governmental spending cuts, or continuing high levels of inflation, could affect consumer spending patterns and purchases of our products.
Outbreaks of communicable infections or diseases, pandemics, or other widespread public health crises in the markets in which our consumers or employees live and/or in which we or our distributors, retailers, and suppliers operate Communicable disease outbreaks, including the COVID-19 pandemic, and other widespread public health crises have resulted and in the future could result in disruptions and damage to our business caused by potential negative consumer purchasing behavior and reduced consumption as well as disruption to our supply chains, production processes, and operations.
Outbreaks of communicable infections or diseases, pandemics, or other widespread public health crises impacting our consumers, employees, distributors, retailers, and/or suppliers Communicable disease outbreaks, including the COVID-19 pandemic, and other widespread public health crises have resulted and in the future could result in disruptions and damage to our business caused by potential negative consumer purchasing behavior and reduced consumption as well as disruption to our supply chains, production processes, and operations.
We may also incur costs associated with environmental compliance arising from events we cannot control, such as natural disasters.
We may also incur costs associated with environmental compliance arising from events we cannot control, such as natural or man-made disasters.
A downgrade to our credit ratings would increase our borrowing costs and could affect our ability to issue commercial paper. Certain of our debt facilities also contain change of control provisions which, if triggered, may result in an acceleration of our obligation to repay the debt.
A downgrade to our credit ratings would increase our borrowing costs and could affect our ability to issue commercial paper or negatively impact the terms under which we refinance our debt. Certain of our debt facilities also contain change of control provisions which, if triggered, may result in an acceleration of our obligation to repay the debt.
A significant write-down of any of our intangible assets could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
A future significant impairment of any of our intangible assets could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
We could also be affected by nationalization of our international operations, unstable governments, unfamiliar or biased legal systems, intergovernmental disputes, or animus against the U.S. or products produced in Mexico.
We could also be affected by nationalization of our international operations, unstable governments, unfamiliar or biased legal systems, intergovernmental disputes, or animus against the U.S. or Mexico, including products produced in those or other countries where we produce our products.
Financial and Economic Risks Indebtedness and interest rate fluctuations We have incurred indebtedness to finance investments and acquisitions, refinance other indebtedness, fund beer operations expansion, optimization, and construction activities, pay cash dividends, and repurchase shares of our common stock.
Financial and Economic Risks Indebtedness and interest rate fluctuations We have incurred indebtedness to finance investments and acquisitions, refinance other indebtedness, fund beer operations expansion, optimization, and construction activities and other capital expenditures, pay cash dividends, repurchase shares of our common stock, and fund other general corporate purposes, including working capital.
We may not allot sufficient resources to attain, may not ultimately achieve, and/or may be subject to proceedings or litigation related to our ESG targets, and our costs in relation to any of the foregoing matters may exceed our projections, which could have a material adverse effect upon our business, liquidity, financial condition, and/or results of operations.
We may not allot sufficient resources to attain, may not ultimately achieve, may be unable to satisfy all stakeholders regarding, and/or may be subject to government enforcement actions, fines, proceedings, or litigation related to our targets and aspirations, and our costs in relation to any of the foregoing matters may exceed our projections, which could have a material adverse effect upon our business, liquidity, financial condition, and/or results of operations.
The landscape related to ESG regulation, compliance, and reporting is constantly evolving, including expanding in scope and complexity.
The landscape related to environmental sustainability and CSR-related regulation, compliance, and reporting is constantly evolving, including changing in scope and complexity.
Alternative facilities with sufficient capacity or capabilities may not readily be available, may cost substantially more, or may take a significant time to start production, any of which could have a material adverse effect on our product supply, business, liquidity, financial condition, and/or results of operations.
RISK FACTORS Table of Contents available, may cost substantially more, or may take a significant time to start production, any of which could have a material adverse effect on our product supply, business, liquidity, financial condition, and/or results of operations.
FY 2024 Form 10-K #WORTHREACHINGFOR I 22 PART I ITEM 1A.
FY 2025 Form 10-K #WORTHREACHINGFOR I 26 PART I ITEM 1A.
We could be exposed to lawsuits relating to product liability or marketing or sales practices, including product labeling. With our international operations, we have been and may continue to be subject to risk of a wide variety of other legal claims and proceedings by external parties, employees, and stockholders.
With our international operations, we have been and may continue to be subject to risk of a wide variety of other legal claims and proceedings by external parties, employees, and stockholders.
Wholesalers and retailers of our products offer directly competing products that vie for retail shelf space, promotional support, and consumer purchases, and wholesalers or retailers may give higher priority to products of our competitors.
Wholesalers and retailers of our products offer directly competing products that vie for retail shelf space, promotional support, and consumer purchases, and wholesalers or retailers may give higher priority to products of our competitors. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 21 PART I ITEM 1A.
Class action or other litigation, including relating to abuse or misuse of our products, product liability, marketing or sales practices including product labeling, or other matters There has been public attention directed at the beverage alcohol industry, which we believe is due to concerns related to harmful use of alcohol, including drinking and driving, underage drinking, and health consequences from the misuse of alcohol.
There has also been public attention directed at the beverage alcohol industry, which we believe is due to concerns related to harmful use of alcohol, including drinking and driving, underage drinking, and health consequences from the misuse of alcohol.
Additionally, any share repurchases may not enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock, and short-term stock price fluctuations could reduce the program’s effectiveness. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 28 PART I ITEM 1A.
Additionally, any share repurchases may not enhance stockholder value because the market price of our common stock has, at times, declined and may once again decline below the levels at which we repurchased shares of common stock, and short-term stock price fluctuations could reduce the program’s effectiveness.
We have disclosed various ESG-related targets, including on restoration of water withdrawals, Scope 1 and Scope 2 GHG emissions, enhancing social equity within our industry and communities, waste reduction, and circular packaging, and we may disclose new or updated ESG-related targets in the future.
We have disclosed various targets in these areas, including on restoration of water withdrawals, GHG emissions, waste reduction, and circular packaging, and we may disclose new or updated targets or aspirations in these areas in the future.
Litigation is inherently unpredictable and subject to substantial uncertainties and unfavorable developments and resolutions could occur. In addition, the amount of time and cost to defend ourselves could be substantial.
The claims asserted in these derivative complaints arise from substantially the same allegations made in the complaint filed in Meza . Litigation is inherently unpredictable and subject to substantial uncertainties and unfavorable developments and resolutions could occur. In addition, the amount of time and cost to defend ourselves could be substantial.
A significant disruption at our current Mexican breweries, or the Glass Plant, even on a short-term basis, could impair our ability to produce and ship products to market on a timely basis.
Under such circumstances, we may be unable to obtain our Mexican beer at a reasonable price from another source, if at all. A significant disruption at our current Mexican breweries, or the Glass Plant, even on a short-term basis, could impair our ability to produce and ship products to market on a timely basis.
Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 21 PART I ITEM 1A. RISK FACTORS Table of Contents If any of our products become unsafe or unfit for consumption, are misbranded, or cause injury, we may have to engage in additional product recalls and/or be subject to liability and incur additional costs.
If any of our products become unsafe or unfit for consumption, are misbranded, or cause injury, we may have to engage in additional product recalls and/or be subject to liability and incur additional costs.
Reliance on wholesale distributors, major retailers, and government agencies Local market structures and distribution channels vary worldwide. Within our primary market in the U.S., we offer a range of beverage alcohol products with generally separate distribution networks utilized for our beer portfolio and our wine and spirits portfolio.
Within our primary market in the U.S., we offer a range of beverage alcohol products with generally separate distribution networks utilized for our beer portfolio and our wine and spirits portfolio. In the U.S., we sell our products principally to wholesalers for resale to retail outlets and directly to government agencies.
These changes, when enacted by the various jurisdictions in which we do business, may significantly increase our taxes in these jurisdictions. Cash dividends and share repurchases are subject to a number of uncertainties and may affect the price of our common stock Our capital allocation strategy contemplates quarterly cash dividends and periodic share repurchases under our share repurchase program.
RISK FACTORS Table of Contents Cash dividends and share repurchases are subject to a number of uncertainties and may affect the price of our common stock Our capital allocation strategy contemplates quarterly cash dividends and periodic share repurchases under our share repurchase program.
Climate change; ESG regulatory compliance; failure to meet emissions, stewardship, and other ESG targets Our business depends upon agricultural activity and natural and human capital resources. There has been much public discussion related to concerns that GHGs may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters.
There has been much public discussion related to concerns that GHGs may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters.
FY 2024 Form 10-K #WORTHREACHINGFOR I 27 PART I ITEM 1A. RISK FACTORS Table of Contents Intangible assets, such as goodwill and trademarks We have a significant amount of intangible assets such as goodwill and trademarks and may acquire more intangible assets in the future. Intangible assets are subject to a periodic impairment evaluation under applicable accounting standards.
Intangible assets, such as goodwill and trademarks We have a significant amount of intangible assets such as goodwill and trademarks and may acquire more intangible assets in the future, and we have recognized significant impairment losses, such as our recent Wine and Spirits impairments. Intangible assets are subject to a periodic impairment evaluation under applicable accounting standards.
In the future, we may continue to incur additional indebtedness for any or all of these activities as well as to fund other general corporate purposes. We are exposed to risks associated with interest rate fluctuations, and we have recently experienced a rising interest rate environment.
In the future, we may continue to incur additional indebtedness for any or all of these activities. We are exposed to risks associated with interest rate fluctuations, and while the U.S. Federal Reserve has recently been reducing the federal funds rate, we continue to experience an elevated interest rate environment relative to recent historically low interest rates.
A substantial adverse judgment or other unfavorable resolution of these matters or our failure to otherwise protect our intellectual property rights as well as the costs associated with such activities could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
These uncertainties and changes, as well as the decisions, policies, and economic strength of our suppliers and distributors, could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Another widespread health crisis or pandemic conditions could negatively affect the economies and financial markets of many countries resulting in a global economic downturn which could negatively impact demand for our products and our ability to borrow money. Any of these events could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
A future widespread health crisis could once again negatively affect the economies and financial markets of many countries resulting in a global economic downturn which could negatively impact demand for our Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 22 PART I ITEM 1A. RISK FACTORS Table of Contents products and our ability to borrow money.
Our failure to adequately manage the risks associated with acquisitions, divestitures, investments, or NPDs, or the failure of an entity in which we have an equity or membership interest, could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Any of these events could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
For example, the SEC and the European Commission have promulgated final rules that would require significantly increased disclosures related to climate change, although the SEC has issued an order to stay the rules pending the completion of judicial review of multiple petitions challenging the rules.
For example, the European Commission and the SEC have promulgated rules that would require significantly increased disclosures related to climate change, although each body has taken subsequent actions to limit or abandon their rules, such as the European Commission’s adoption of a package of proposals to simplify and delay various European Union rules and the SEC’s stay of the effectiveness of its rules and its withdrawal of its defense of the rules in the pending Constellation Brands, Inc.
We may experience significant future increases in the costs associated with regulatory compliance for ESG matters, including fees, licenses, personnel, consultants, reporting, and the cost of capital improvements for our operating Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 20 PART I ITEM 1A.
We may experience significant future increases in the costs associated with environmental sustainability and CSR-related matters, including fees, licenses, personnel, consultants, reporting, and the cost of capital improvements for our operating facilities to meet environmental regulatory requirements, to address other regulations, standards, frameworks, ratings, and activities from various governmental entities and other stakeholders, in our ongoing handling of investor, activist, or influencer activities and campaigns, and/or in the event of investigations or litigation related to such matters.
Removed
ITEM 1A. RISK FACTORS Table of Contents the future. Under such circumstances, we may be unable to obtain our Mexican beer at a reasonable price from another source, if at all.
Added
RISK FACTORS Table of Contents Significant new or increased tariffs, import and excise duties, or other taxes on or impacting beverage alcohol products, including raw and packaging materials, particularly on imports from Mexico, Italy, and New Zealand, and any additional retaliatory tariffs imposed by those governments on product imports from the U.S., could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
Removed
RISK FACTORS Table of Contents facilities to meet environmental regulatory requirements, as well as to address other regulations, standards, frameworks, and ratings from various governmental entities and other stakeholders or activist campaigns.
Added
Meanwhile, escalating geopolitical tensions and trade disputes, have resulted and may continue to result in additional sanctions, tariffs, import-export restrictions, boycotts, or trade wars.
Removed
In the U.S., we sell our products principally to wholesalers for resale to retail outlets and directly to government agencies.
Added
These activities, when combined with any retaliatory actions that have or may be taken by other countries, have impacted and could continue to pose a significant risk to our business as well as the global economy, such as by shifting consumer behaviors, inhibiting sales, increasing costs, causing further economic and supply chain disruptions (including impacts on prices and supply of certain commodities, such as aluminum, corn, crude oil, natural gas, and steel) and inflationary pressures, and reducing economic activity.
Removed
Strategic Risks Potential decline in the consumption of products we sell; dependence on sales of our Mexican beer brands Our business depends upon consumers’ consumption of our beer, wine, and spirits brands, and sales of our Mexican beer brands in the U.S. are a significant portion of our business.
Added
The extent and duration of tariffs and the resulting impacts on general economic conditions; stock, credit, and capital market volatility; and our business are uncertain and depend on various factors, many of which are out of our control.
Removed
Consumer preferences, behaviors, perception, and sentiment may shift due to a variety of factors, including changes in taste preferences and leisure, dining, and beverage purchasing and consumption patterns, trends involving demographics and ESG matters, changing market dynamics, including consumer-led premiumization and betterment trends, pricing considerations, perceived value, branding and marketing, and reputational considerations.
Added
In addition, governmental agencies extensively regulate the beverage alcohol products industry concerning such matters as licensing, warehousing, trade and pricing practices, permitted and required labeling, advertising, and relations with wholesalers and retailers. Certain regulations also require warning labels and signage.
Removed
Further, a limited or general decline in consumption in one or more of our product categories could occur in the future due to a variety of factors, including: • a general decline in economic or geopolitical conditions; • inflation, including the impact of reduced discretionary income of consumers available to purchase our products and increased commodities and other costs; • concern about the health consequences of consuming beverage alcohol products, including betterment trends, and about drinking and driving or other safety considerations; • reduced consumption of beverage alcohol products, including as a result of stricter laws relating to consumption or driving while under the influence of alcohol or resulting from weight loss regimens and pharmaceuticals, including GLP-1 drugs; Constellation Brands, Inc.
Added
We may be subject to new or revised regulations, increased licensing fees, requirements, or taxes, regulatory enforcement actions, or longer review periods for applicable regulatory approvals.
Removed
RISK FACTORS Table of Contents • increased activity from governmental entities, anti-alcohol groups, or other bodies, such as the World Health Organization, advocating measures or guidelines designed to reduce the consumption of beverage alcohol products or require more stringent labeling; • increased excise or other taxes on beverage alcohol products and possible restrictions on beverage alcohol advertising and marketing; • increased import and excise duties, other taxes, or tariffs on or impacting beverage alcohol products; • increased regulation restricting the purchase or consumption of beverage alcohol products; • the inability of our wine and spirits business to become a global, omni-channel competitor; and • wars, disease outbreaks or pandemics, quarantines, weather, and natural or man-made disasters.
Added
Additionally, various jurisdictions may seek to adopt significant additional product labeling or warning requirements, limitations, or guidelines on the marketing or sale of our products because of what our products contain or allegations that our products cause adverse health effects.
Removed
If these or any other factors cause a decline in the growth rate, amount, or profitability of our sales of the Mexican beer brands in the U.S. or any material shift in consumer preferences, behaviors, perception, and sentiment in our major markets away from our beer, wine, and spirits brands, and our Mexican beer brands in particular, or from the categories in which they compete, it could adversely affect our business, liquidity, financial condition, and/or results of operations.
Added
If these types of requirements become applicable to one or more of our major products under current or future laws or regulations, they may inhibit sales of such products or increase our costs.
Removed
Acquisition, divestiture, investment, and NPD strategies and activities From time to time, we acquire businesses, assets, or securities of companies that we believe will provide a strategic fit with our business. We integrate acquired businesses with our existing operations; our overall internal control over financial reporting processes; and our financial, operations, and information systems.
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Supply of quality water, agricultural, and other raw materials, certain raw and packaging materials purchased under supply contracts; supply chain disruptions and other factors; limited group of certain suppliers The quality and quantity of water available for use is important to the supply of our agricultural raw materials and our ability to operate our business.
Removed
If the financial performance of our business, as supplemented by the assets and businesses acquired, does not meet our expectations, it may make it more difficult for us to service our debt obligations and our results of operations may fail to meet market expectations.
Added
Water is a limited resource in many parts of the world. If climate patterns change and droughts continue or become more severe or other restrictions on currently available water resources are imposed, there may be a scarcity of water or poor water quality which may affect our and our suppliers’ operations, increase production costs, or impose capacity constraints.
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We may not effectively assimilate the business or product offerings of acquired companies into our business or within the anticipated costs or timeframes, retain key customers and suppliers or key employees of acquired businesses, or successfully implement our business plan for the combined business.
Added
We are dependent on sufficient amounts of quality water for operation of our breweries, wineries, and distilleries, as well as to irrigate our vineyards and conduct our other operations. The suppliers of the agricultural raw materials we purchase are also dependent upon sufficient supplies of quality water for their vineyards and fields.
Removed
In addition, our final determinations and appraisals of the estimated fair value of assets acquired and liabilities assumed in our acquisitions may vary materially from earlier estimates and we may fail to fully realize anticipated cost savings, growth opportunities, or other potential synergies. The fair value of acquired businesses or investments may not remain constant.
Added
In addition, water purification and waste treatment infrastructure limitations could increase costs or constrain operations at our production facilities and vineyards. A substantial reduction in water supplies could result in material losses of crops, such as corn, barley, hops, or grapes as well as grape vines which could lead to a shortage of our product supply.
Removed
We also divest businesses, assets, or securities of companies from time to time, including those that we believe no longer provide a strategic fit with our business. We may provide various indemnifications in connection with divestitures of businesses or assets. Divestitures of portions of our business may also result in costs stranded in our remaining business.
Added
We have substantial brewery operations in Mexico and substantial wine operations in the U.S. (primarily in California), New Zealand, and Italy as well as brewery and distillery operations in the U.S. California has endured and may continue to experience prolonged drought conditions which have resulted in the imposition of certain restrictions on water usage and which could recur.
Removed
Delays in developing or implementing plans to address such costs could delay or prevent the accomplishment of our financial objectives. The amount of contingent consideration, if any, received in divestitures may also vary based on various factors including actual future brand performance.
Added
Over the last several years, certain areas of California have also experienced wildfires and flooding. If these conditions or restrictions persist and/or increase in severity, it could have an adverse effect upon those operations.
Removed
We have also acquired or retained ownership interests in companies which we do not control, such as our joint venture to operate the Glass Plant, our interest in Canopy, and investments made through our corporate venture capital function, and we have acquired control of companies which we do not wholly own, such as our majority ownership interest in Nelson’s Green Brier Distillery, LLC.
Added
The water supplies for our current Mexican breweries and the Veracruz Brewery, which originate from separate and distinct aquifers, are subject to disruption which could impact our ability to produce our products. The sources of water, methods of water delivery, water quality, or water needs to support our ongoing requirements may change materially in the future.
Removed
Our joint venture partners or the other parties that hold the remaining ownership interests in companies which we do not control may at any time have economic, business, or legal interests or goals that are inconsistent with our goals or the goals of the joint ventures or those companies.
Added
We may incur additional expenses for improving water delivery, quality, and efficiency as well as for securing additional water sources. Our breweries, the Glass Plant, our wineries, and our distilleries use a large volume of agricultural and other raw materials to produce our products.
Removed
Our joint venture arrangements and the arrangements through which we acquired or hold our other equity or membership interests may require us to, among other matters, pay certain costs, make capital investments, fulfill alone our joint venture partners’ obligations, or purchase other parties’ interests.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAmong other things, the IRP sets forth roles and responsibilities in connection with detecting, assessing, and mitigating cybersecurity incidents and outlines applicable communication and escalation protocols. Under the CMP, our Crisis Management Committee will assume overall responsibility in an effort to Constellation Brands, Inc.
Biggest changeAmong other things, the IRP sets forth roles and responsibilities in connection with detecting, assessing, and mitigating cybersecurity incidents and outlines applicable communication and escalation Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 28 PART I OTHER KEY INFORMATION Table of Contents protocols.
Our enterprise-wide cybersecurity program is managed by a dedicated information security team, including our Cyber and Privacy Risk Committee described above, led by our CISO. Our CISO has more than 25 years of technology experience across various disciplines, including nearly 15 years of experience as a CISO in the financial, manufacturing, and CPG industries.
Our enterprise-wide cybersecurity program is managed by a dedicated information security team, including our Cyber and Privacy Risk Committee described above, led by our CISO. Our CISO has more than 25 years of technology experience across various disciplines, including 15 years of experience as a CISO in the financial, manufacturing, and CPG industries.
In connection with that oversight responsibility, our CDIO and CISO meet with the Audit Committee on a quarterly basis and provide information and updates on a range of cybersecurity topics which may include our cybersecurity program and governance processes; cyber risk monitoring and management; the status of projects to strengthen our cybersecurity and privacy capabilities; recent significant incidents or threats impacting our operations, industry, or third-party suppliers; and the emerging threat landscape.
In connection with that oversight responsibility, our CIO and CISO meet with the Audit Committee on a quarterly basis and provide information and updates on a range of cybersecurity topics which may include our cybersecurity program and governance processes; cyber risk monitoring and management; the status of projects to strengthen our cybersecurity and privacy capabilities; recent significant incidents or threats impacting our operations, industry, or third-party suppliers; and the emerging threat landscape.
We rely upon both internal and external resources for evaluating and enhancing our cyber posture. At least annually, our information security and internal audit teams conduct comprehensive internal and external penetration testing, supplemented by more frequent Purple-team Tests that are designed to identify critical areas of our technical environment and potential vulnerabilities that may need to be addressed.
We rely upon both internal and external resources for evaluating and enhancing our cyber posture. At least annually, our information security and internal audit teams conduct extensive internal and external penetration testing, supplemented by more frequent Purple-team Tests that are designed to identify critical areas of our technical environment and potential vulnerabilities that may need to be addressed.
While our cybersecurity program is designed to prevent unauthorized access and protect sensitive information, including through continuous improvement of our cybersecurity measures, and we have not experienced any material cyber threats or incidents to date, we can give no assurance that we will be able to prevent, identify, respond to, or mitigate the impact of all cyber threats or incidents.
While our cybersecurity program is designed to prevent unauthorized access and protect sensitive information, including through continuous improvement of our cybersecurity measures, and we have not experienced any material cyber threats or incidents to date, we can give no assurance that we will be able to prevent, identify, respond to, or mitigate the impacts of all cyber threats or incidents.
We also require annual cybersecurity training by our employees, conduct regular exercises to help our employees recognize phishing emails and other social engineering tactics, and provide various methods for employees to report suspicious activity that may give rise to a cyber incident or threat.
We also require annual cybersecurity training by our employees, conduct regular exercises to help our employees recognize phishing attempts and other social engineering tactics, and provide various methods for employees to report suspicious activity that may give rise to a cyber incident or threat.
Our ERM function manages enterprise-wide risk and has established a governance structure in charge of continuous risk management. It has defined risk management processes related specifically to cybersecurity, which include targeted cyber risk reviews and annual cyber risk assessments over our IT and operations.
Our ERM function manages enterprise-wide risk and has established a governance structure in charge of continuous risk management. It has defined risk management processes related specifically to cybersecurity, which include targeted cyber risk reviews, annual cyber risk assessments over our IT and operations, and integration with our information security function.
Item 1C. Cybersecurity Cybersecurity risk management and strategy We have developed and implemented an enterprise-wide cybersecurity program designed to provide structured and thorough cybersecurity risk management and governance. Our cybersecurity program prioritizes, among other things, prevention of unauthorized access; protection of sensitive information; detection, assessment, and response to cyber threats; and continuous improvement of our cybersecurity measures.
Item 1C. Cybersecurity Cybersecurity risk management and strategy We have developed and implemented an enterprise-wide cybersecurity program designed to provide structured and thorough cybersecurity risk management and governance. Our cybersecurity program prioritizes, among other things, prevention of unauthorized access; protection of confidential, personal, or sensitive information; cyber threat detection, assessment, and response; and continuous improvement of our cybersecurity measures.
Our cybersecurity program is aligned with various frameworks for managing cybersecurity risks, such as the National Institute of Standards and Technology Cyber Security Framework for IT systems and International Electrotechnical Commission 62443 which governs cybersecurity for Industrial Control Systems. This program is a component of our ERM function.
Our cybersecurity program is aligned with various frameworks for managing cybersecurity risks, such as the National Institute of Standards and Technology Cyber Security Framework for IT systems and International Electrotechnical Commission 62443 which governs cybersecurity for Industrial Control Systems. This program is integrated into our ERM processes.
Our CISO reports to our CDIO, who meets regularly with other members of our executive team and provides relevant updates on our cybersecurity program. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 31 PART I OTHER KEY INFORMATION Table of Contents
Our CISO reports to our CIO, who meets regularly with other members of our executive team and provides relevant updates on our cybersecurity program. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 29 PART I OTHER KEY INFORMATION Table of Contents
Our head of ERM also meets with our executive management team and the Audit Committee on a quarterly basis and with the Board of Directors on an annual basis and reports on applicable cyber risk management processes and activities pertinent to the ERM function.
Our head of ERM also meets with our executive management team and the Audit Committee on a quarterly basis and with the Board of Directors on an annual basis and reports on applicable cyber risk management processes and activities pertinent to the ERM function. The Audit Committee has also periodically participated in certain of our cyber tabletop exercises.
Our information security team also retains external cybersecurity firms to review and provide feedback on improving our cybersecurity program, including in the areas of data protection, threat and vulnerability management, and end-point protection. We conduct tabletop exercises to prepare for potential cyber incidents and assess our cybersecurity preparedness and processes.
Our information security team also retains external cybersecurity firms to review and provide feedback on improving our cybersecurity program, including in the areas of data protection, threat and vulnerability management, and end-point protection.
He has led our global information security organization for almost four years.
He has led our global information security organization for more than five years.
FY 2024 Form 10-K #WORTHREACHINGFOR I 30 PART I OTHER KEY INFORMATION Table of Contents ensure that the appropriate functions and work streams are mobilized and coordinated to effectively manage any significant cyber events. As with all large IT systems, we have been a target of cyberattackers and other hacking activities, as have certain of our third-party service providers.
Under the CMP, our Crisis Management Committee will assume overall responsibility in an effort to ensure that the appropriate functions and work streams are mobilized and coordinated to effectively manage any significant cyber events. As with all large IT systems, we have been a target of cyberattackers and other hacking activities, as have certain of our third-party service providers.
Added
We conduct a range of activities to assess our cybersecurity preparedness and processes and to prepare for potential cyber incidents, including tabletop exercises, simulations, and practical application drills with internal teams and external entities.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of February 29, 2024, our principal physical properties by segment, all of which are owned, consist of: Beer Wine and Spirits Breweries • Nava Brewery in Nava • Obregon Brewery in Obregon Production facility • Glass Plant in Nava Wineries • Gonzales Winery in Gonzales, California • Mission Bell Winery in Madera, California • Woodbridge Winery in Acampo, California • Kim Crawford Winery in Marlborough, New Zealand Warehouse, distribution, and other production facilities • Lodi Distribution Center in Lodi, California • Pontassieve Winery in Florence, Italy Within our Wine and Spirits segment, as of February 29, 2024, we owned, leased, or had interests in approximately 10,100 acres of vineyards in the U.S., 6,700 acres of vineyards in New Zealand, and 1,400 acres of vineyards in Italy.
Biggest changeAs of February 28, 2025, our principal physical properties by segment, all of which are owned unless otherwise noted, consist of: Beer Wine and Spirits Breweries • Nava Brewery in Nava • Obregón Brewery in Obregón Warehouse, distribution, and other production facilities • Glass Plant in Nava • Warehouse in Arlington, Texas (1) • Warehouse in Hutchins, Texas (1) • Warehouse in Jacksonville, Florida (1) • Warehouse in Jurupa Valley, California (1) Wineries • Gonzales Winery in Gonzales, California (2) • Kim Crawford Winery in Marlborough, New Zealand • Mission Bell Winery in Madera, California • Woodbridge Winery in Acampo, California (2) Warehouse, distribution, and other production facilities • Lodi Distribution Center in Lodi, California • Pontassieve Winery in Florence, Italy (1) This is a leased facility.
Within the Beer segment, we have adequate capacity to meet our current needs and we have undertaken activities to increase our production capacity to address our anticipated future demand. Within the Wine and Spirits segment, we have adequate capacity to meet our needs for the foreseeable future.
Within the Beer segment, we believe we have adequate capacity to meet our current needs and we have undertaken activities to increase our production capacity to address our anticipated future demand. Within the Wine and Spirits segment, we believe we have adequate capacity to meet our needs for the foreseeable future.
In addition to our principal physical properties described below, certain of our businesses maintain office space for sales and similar activities and offsite warehouse and distribution facilities in a variety of geographic locations. Our corporate headquarters are located in leased offices in Victor, New York.
In addition to our principal physical properties described below, certain of our businesses maintain office space for sales and similar activities and offsite warehouse and distribution facilities in a variety of geographic locations. Our corporate headquarters are located in a leased office in Rochester, New York.
Item 2. Properties We operate breweries, wineries, distilleries, and bottling plants, many of which include warehousing and distribution facilities on the premises, and through a joint venture, we operate a glass production plant.
Item 2. Properties We operate breweries, wineries, distilleries, and bottling plants, many of which include warehousing and distribution facilities on the premises, as well as standalone warehouses and through a joint venture, we operate a glass production plant.
We plan to relocate our corporate headquarters to a leased office in Rochester, New York in June 2024. Our segments also maintain leased office spaces in other locations in the U.S. and internationally. We believe that our facilities, taken as a whole, are in good condition and working order.
Our segments also maintain leased office spaces in other locations in the U.S. and internationally. We believe that our facilities, taken as a whole, are in good condition and working order.
Added
(2) In April 2025, we entered into the 2025 Wine Divestitures Transaction which includes two of our principal physical properties for the Wine and Spirits segment: the Gonzales Winery and the Woodbridge Winery as well as approximately 6,600 acres of vineyards in the U.S. For further information about this transaction, refer to “Recent Development” in MD&A and Note 2.
Added
Within our Wine and Spirits segment, as of February 28, 2025, we owned, leased, or had interests in approximately 9,900 acres of vineyards in the U.S., 6,600 acres of vineyards in New Zealand, and 1,500 acres of vineyards in Italy.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMD&A Table of Contents • Net sales increased 5% largely due to an increase in Beer net sales driven primarily by shipment volume growth and favorable impact from pricing, partially offset by a decline in Wine and Spirits net sales driven primarily by a decrease in branded shipment volume. • Operating income increased 11% largely due to the improvements within (i) the Beer segment as shipment volume outpaced the growth of cost of product sold, driven by the successful execution of cost savings initiatives, (ii) the Wine and Spirits segment driven by lower transportation and warehousing costs, and (iii) the Corporate Operations and Other segment from lower Digital Business Acceleration investments as compared to Fiscal 2023, partially offset by the decline in branded wine and spirits shipment volume. • Net income attributable to CBI and diluted net income per common share attributable to CBI increased largely due to the items discussed above.
Biggest changeFiscal 2025 compared to Fiscal 2024 • Net sales increased 2% largely due to an increase in Beer net sales driven primarily by shipment volume growth and favorable impact from pricing, partially offset by a decline in organic Wine and Spirits net sales driven primarily by a decrease in branded shipment volume. • Operating income decreased 89% largely due to (i) the Fiscal 2025 wine and spirits goodwill and wine trademark assets impairments and (ii) an impairment of assets held for sale largely in connection with the 2025 Wine Divestitures Transaction, partially offset by (i) improvements within the Beer segment as the net sales growth and successful execution of cost savings initiatives outpaced higher marketing spend and (ii) a net gain related to the SVEDKA Divestiture. • Net income (loss) attributable to CBI and diluted net income (loss) per common share attributable to CBI each decreased 105% largely due to the items discussed above, partially offset by (i) a benefit from income taxes as compared to a provision for income taxes for Fiscal 2024, (ii) no longer recognizing equity losses from Canopy’s results following the conversion of our Canopy common shares to Exchangeable Shares, and (iii) a Fiscal 2024 impairment of our then-existing Canopy Equity Method Investment.
We continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.
Additionally, we continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.
Our conclusion was based primarily on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recorded significant costs in its fourth quarter of fiscal 2023 results designed to align its Canadian cannabis operations and resources in response to continued unfavorable market trends, (iii) the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, and (iv) Canopy’s identification of material misstatements in certain of its previously reported financial results related to sales in its BioSteel reporting unit that were accounted for incorrectly, including the recording of a goodwill impairment during its restated second quarter of fiscal 2023.
Our conclusion was based on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recorded significant costs in its fourth quarter of fiscal 2023 results designed to align its Canadian cannabis operations and resources in response to continued unfavorable market trends, (iii) the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, and (iv) Canopy’s identification of material misstatements in certain of its previously reported financial results related to sales in its BioSteel Sports Nutrition Inc. reporting unit that were accounted for incorrectly, including the recording of a goodwill impairment during its restated second quarter of fiscal 2023.
As a result, the Canopy Equity Method Investment with a carrying value of $266.2 million was written down to its estimated fair value of $142.7 million, resulting in an impairment of $123.5 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for Fiscal 2024.
As a result, the Canopy Equity Method Investment with a $266.2 million carrying value was written down to $142.7 million, its estimated fair value, resulting in a $123.5 million impairment. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for Fiscal 2024.
Amounts included in the Corporate Operations and Other segment consist of costs of corporate development, corporate finance, corporate strategy, executive management, growth, human resources, internal audit, investor relations, IT, legal, and public relations, as well as our Canopy investment and investments made through our corporate venture capital function .
Amounts included in the Corporate Operations and Other segment consist of costs of corporate communications, corporate development, corporate finance, corporate strategy and growth , executive management, human resources, internal audit, investor relations, IT, legal, and public affairs, as well as our Canopy investment and investments made through our corporate venture capital function .
Liquidity and capital resources. This section provides an analysis of our cash flows, outstanding debt, liquidity position, and commitments. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our ongoing operations and future commitments, as well as a discussion of other financing arrangements. Critical accounting policies and estimates.
Liquidity and capital resources. This section provides an analysis of our cash flows, outstanding debt, liquidity position, and commitments. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our on-going operations and future commitments, as well as a discussion of other financing arrangements. Critical accounting policies and estimates.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Liquidity and Capital Resources” located in our Form 10-K for the fiscal year ended February 28, 2023, filed on April 20, 2023, for reference to discussion of the fiscal year ended February 28, 2022, the earliest of the three fiscal years presented.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Liquidity and Capital Resources” located in our Form 10-K for the fiscal year ended February 29, 2024, filed on April 23, 2024, for reference to discussion of the fiscal year ended February 28, 2023, the earliest of the three fiscal years presented.
Expansion, optimization, and/or construction activities continue under our Mexico Beer Projects to align with our anticipated future growth expectations, and we expect to spend approximately $3 billion over Fiscal 2025 through Fiscal 2028 on these activities. See “Capital expenditures” below.
Expansion, optimization, and/or construction activities continue under our Mexico Beer Projects to align with our anticipated future growth expectations, and we expect to spend approximately $2 billion over Fiscal 2026 through Fiscal 2028 largely on these activities. See “Capital Expenditures” below.
This MD&A, which should be read in conjunction with our Financial Statements, is organized as follows: Overview. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends. Strategy .
This MD&A, which should be read in conjunction with our Financial Statements, is organized as follows: Overview. This section provides a general description of our business and brief descriptions of recent goodwill and trademarks impairments, which we believe is important in understanding the results of our operations, financial condition, and potential future trends. Strategy .
We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to achieve earnings per share growth as well as our target net leverage ratio and dividend payout ratio; investing to support the growth of our business; and delivering additional returns to stockholders through periodic share repurchases.
We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to continue to achieve comparable earnings per share growth as well as our target ratios for (i) comparable net leverage and (ii) dividend payout; investing to support the growth of our business; and delivering additional returns to stockholders through periodic share repurchases.
At April 16, 2024, the number of holders of record of our Class A Stock and Class 1 Stock were 483 and 17, respectively. For information regarding dividends and share repurchase programs, see (i) MD&A and (ii) Note 17.
At April 16, 2025, the number of holders of record of our Class A Stock and Class 1 Stock were 459 and 19, respectively. For information regarding dividends and share repurchase programs, see (i) MD&A and (ii) Note 17.
This transaction also included the acquisition of a trademark and inventory. The results of operations of Lingua Franca are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.
This transaction also included the acquisition of goodwill, inventory, and a trademark. The results of operations of Sea Smoke are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.
Within our primary market in the U.S., we offer a range of beverage alcohol products across the imported beer, ABA, and branded wine and spirits categories, with generally separate distribution networks utilized for (i) our beer portfolio and (ii) our wine and spirits portfolio. The environment for our products is competitive in each of our markets.
In addition, market dynamics and consumer trends vary across each of our markets. Within our primary market in the U.S., we offer a range of beverage alcohol products across the imported beer, ABA, and branded wine and spirits categories, with generally separate distribution networks utilized for (i) our beer portfolio and (ii) our wine and spirits portfolio.
To partially offset the increases in cost of product sold we executed efficiency initiatives focused largely on logistics and procurement that resulted in nearly $205 million of net cost savings for Fiscal 2024 . Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 41 PART II ITEM 7.
To partially offset the expected increases in cost of product sold we executed initiatives focused largely on logistics and procurement that resulted in over $200 million of cost savings for Fiscal 2025 . Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 40 PART II ITEM 7.
Furthermore, to the extent climate-related severe weather events, such as droughts, floods, wildfires, extreme heat, and/or late frosts, continue to occur or accelerate in future periods, it could have a material impact on our results of operations and financial condition.
Furthermore, to the extent severe weather events that impact our business, such as wildfires, droughts, floods, extreme heat, and/or late frosts, or other weather conditions that constrain purchasing occasions for our consumers, continue to occur or accelerate in future periods, it could have a material impact on our results of operations and financial condition.
Income (loss) from unconsolidated investments We recognized income (loss) primarily from (i) comparable adjustments to equity in losses from Canopy’s results, (ii) impairments of our Canopy Equity Method Investment, (iii) unrealized net losses from the changes in fair value of our securities measured at fair value, and (iv) impairments of certain other equity method investments (Fiscal 2024).
Income (loss) from unconsolidated investments We recognized income (loss) primarily from (i) unrealized net losses from the changes in fair value of our securities measured at fair value, (ii) impairments of certain other equity method investments, (iii) a net gain in connection with Exchangeable Shares (Fiscal 2025), (iv) comparable adjustments to equity in losses from Canopy’s results (Fiscal 2024), and (v) an impairment of our then-existing Canopy Equity Method Investment (Fiscal 2024).
Transition services agreements activity We recognized costs in connection with transition services agreements related to the previous sale of a portion of our wine and spirits business .
Transition services agreements activity We recognized costs in connection with transition services agreements related to the previous sale of a portion of our wine and spirits business . Transaction, integration, and other acquisition-related costs We recognized costs in connection with our investments, acquisitions, and divestitures.
Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 37 PART II ITEM 7.
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 38 PART II ITEM 7.
Gain (loss) on sale of business We recognized a net gain (loss) primarily from (i) the Craft Beer Divestitures and the sale of the Daleville Facility (Fiscal 2024) and (ii) the completion of the Wine Divestiture (Fiscal 2023). For additional information, refer to Notes 2 and 5.
Gain (loss) on sale of business We recognized a net gain (loss) from the (i) SVEDKA Divestiture (Fiscal 2025), (ii) Craft Beer Divestitures (Fiscal 2024), and (iii) sale of the Daleville Facility (Fiscal 2024). For additional information, refer to Note 2.
Selling, general, and administrative expenses Restructuring and other strategic business development costs We recognized costs primarily in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure.
Selling, general, and administrative expenses Restructuring and other strategic business reconfiguration costs We recognized costs in connection with certain activities, which are intended to streamline, increase efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment, as well as those associated with the 2025 Restructuring Initiative.
As more fully described herein and in the related Notes, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows: Fiscal 2024 Fiscal 2023 (in millions) Cost of product sold Net gain (loss) on undesignated commodity derivative contracts $ (44.2) $ (15.0) Flow through of inventory step-up (3.6) (4.5) Settlements of undesignated commodity derivative contracts 15.0 (76.7) Strategic business development costs — (1.2) Net flow through of reserved inventory — 1.2 Recovery of (loss on) inventory write-down — 0.2 Comparable Adjustments, Cost of product sold (32.8) (96.0) Selling, general, and administrative expenses Restructuring and other strategic business development costs (46.3) (9.9) Transition services agreements activity (24.9) (20.5) Gain (loss) on sale of business (15.1) 15.0 Transaction, integration, and other acquisition-related costs (0.6) (1.4) Insurance recoveries 55.1 5.2 Costs associated with the Reclassification 0.2 (37.8) Impairments of assets — (66.5) Other gains (losses) (11.4) 18.1 Comparable Adjustments, Selling, general, and administrative expenses (43.0) (97.8) Comparable Adjustments, Operating income (loss) $ (75.8) $ (193.8) Comparable Adjustments, Income (loss) from unconsolidated investments $ (478.0) $ (1,907.7) Constellation Brands, Inc.
As more fully described herein and in the related Notes, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows: Fiscal 2025 Fiscal 2024 (in millions) Cost of product sold Settlements of undesignated commodity derivative contracts $ 26.8 $ 15.0 Strategic business reconfiguration costs (10.7) — Flow through of inventory step-up (10.2) (3.6) Net gain (loss) on undesignated commodity derivative contracts (0.3) (44.2) Other gains (losses) 0.6 — Comparable Adjustments, Cost of product sold 6.2 (32.8) Selling, general, and administrative expenses Restructuring and other strategic business reconfiguration costs (79.3) (46.3) Transition services agreements activity (22.6) (24.9) Transaction, integration, and other acquisition-related costs (1.2) (0.6) Insurance recoveries — 55.1 Other gains (losses) (13.4) (11.2) Comparable Adjustments, Selling, general, and administrative expenses (116.5) (27.9) Constellation Brands, Inc.
For information on securities authorized for issuance under our equity compensation plans, see Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters under Item 12. of this Form 10-K. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 33 PART II ITEM 7. MD&A Table of Contents Item 7.
For information on securities authorized for issuance under our equity compensation plans, see Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters under Item 12. of this Form 10-K.
Gross profit Fiscal 2024 Fiscal 2023 Dollar Change Percent Change (in millions) Beer $ 4,214.2 $ 3,937.8 $ 276.4 7 % Wine and Spirits 836.1 927.2 (91.1) (10 %) Comparable Adjustments (32.8) (96.0) 63.2 NM Consolidated gross profit $ 5,017.5 $ 4,769.0 $ 248.5 5 % The increase in Beer gross profit is primarily due to (i) $299.9 million of shipment volume growth and (ii) the $147.6 million of favorable impact from pricing, partially offset by (i) $163.7 million of higher cost of product sold and (ii) $12.0 million of unfavorable product mix.
Gross profit Fiscal 2025 Fiscal 2024 Dollar Change Percent Change (in millions) Beer $ 4,566.1 $ 4,214.2 $ 351.9 8 % Wine and Spirits 742.3 836.1 (93.8) (11 %) Comparable Adjustments 6.2 (32.8) 39.0 NM Consolidated gross profit $ 5,314.6 $ 5,017.5 $ 297.1 6 % The increase in Beer gross profit is primarily due to (i) the $168.1 million of favorable impact from pricing, (ii) $141.5 million of shipment volume growth, and (iii) $75.8 million of reduced cost of product sold, partially offset by $33.5 million of unfavorable product mix.
The higher cost of product sold is primarily due to (i) $113.8 million of higher material costs, including malt, aluminum, glass, and starch, driven by inflation and global supply chain constraints, (ii) $28.4 million of higher depreciation resulting from the Mexico Beer Projects, (iii) $21.6 million of costs related to the write-off of a value-added tax receivable, (iv) $13.7 million of costs related to a voluntary product recall of select kegs for quality assurance, and (v) a $9.6 million increase in brewery costs, including compensation and benefits and IT expenses, partially offset by (i) $21.0 million of decreased transportation costs and (ii) $15.3 million of favorable fixed cost absorption related to increased production levels as compared to Fiscal 2023.
The reduced cost of product sold is primarily due to (i) $41.0 million of favorable fixed cost absorption related to increased production levels as compared to Fiscal 2024, (ii) $38.8 million of decreased transportation costs, (iii) $21.6 million of costs related to the Fiscal 2024 write-off of an indirect tax receivable, (iv) $16.3 million of lower material costs, including cartons, wooden pallets, aluminum, lumber, and glass each driven by efficiency initiatives, tempered by higher malt costs, and (v) $13.7 million of costs related to a Fiscal 2024 voluntary product recall of select kegs, partially offset by (i) a $33.0 million increase in brewery costs, including compensation and benefits, and (ii) $26.8 million of higher depreciation expense resulting from the Mexico Beer Projects.
For additional information on these divestitures, acquisitions, and investments, refer to Notes 2, 5, 7, and 10. Results of Operations Financial Highlights References to organic throughout the following discussion exclude the impact of the Wine Divestiture, as appropriate.
For additional information on these divestitures, acquisitions, and investments, refer to Notes 2, 5, 7, and 10. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 36 PART II ITEM 7. MD&A Table of Contents Results of Operations Financial Highlights References to organic throughout the following discussion exclude the impact of the SVEDKA Divestiture, as appropriate.
Other Canopy investments — In July 2022, we received 29.2 million common shares of Canopy following the exchange of C$100.0 million principal amount of our Canopy Debt Securities. In April 2023, we extended the maturity of the remaining C$100.0 million principal amount of our Canopy Debt Securities by exchanging them for the 2023 Canopy Promissory Note.
We no longer apply the equity method to our investment in Canopy following the April 2024 conversion of our Canopy common shares to Exchangeable Shares. Other Canopy investments — In April 2023, we extended the maturity of the remaining C$100.0 million principal amount of our then-existing Canopy Debt Securities by exchanging them for the 2023 Canopy Promissory Note.
This was driven by (i) 135 basis points of rate decline from higher cost of product sold within the Beer segment, driven by the increase in material costs, and (ii) approximately 30 basis points of rate decline resulting from unfavorable channel mix within the Wine and Spirits segment, offset by (i) approximately 60 basis points of favorable impact from Beer pricing in select markets, (ii) a favorable change of approximately 50 basis points in Comparable Adjustments, and (iii) approximately 35 basis points of rate growth from lower cost of product sold within the Wine and Spirits segment.
This increase was largely due to (i) approximately 80 basis points of favorable impact from Beer pricing, (ii) 75 basis points of rate growth from lower cost of product sold within the Beer segment, (iii) a favorable change in Comparable Adjustments, contributing approximately 40 basis points, and (iv) 15 basis points of rate growth from the decline in bulk wine net sales, partially offset by approximately 30 basis points of rate decline resulting from unfavorable product mix within the Wine and Spirits segment.
MD&A Table of Contents The decrease in Wine and Spirits gross profit is due to a $68.4 million decrease in organic gross profit and $22.7 million from the Wine Divestiture.
MD&A Table of Contents The decrease in Wine and Spirits gross profit is due to a $83.1 million decrease in organic gross profit and $10.7 million from the SVEDKA Divestiture that are no longer part of the business.
Other gains (losses) We recognized other gains (losses) primarily from (i) a net loss from changes in the indemnification of liabilities associated with prior period divestitures (Fiscal 2024), (ii) net decreases in estimated fair values of contingent liabilities associated with prior period acquisitions , and (iii) a gain recognized on the remeasurement of our previously held equity interest to the acquisition-date fair value (Fiscal 2023).
Other gains (losses) We recognized other gains (losses) primarily from (i) a net loss on foreign currency as a result of the resolution of various tax examinations and assessments (Fiscal 2025), (ii) net decreases in estimated fair values of contingent liabilities associated with prior period acquisitions , and (iii) a net loss from changes in the indemnification of liabilities associated with prior period divestitures (Fiscal 2024).
Accordingly, our consolidated results of operations include the results of operations of such craft beer brands through the dates of these divestitures. The Craft Beer Divestitures are consistent with our strategic focus on continuing to grow our high-end imported beer brands through maintenance of leading margins and enhancements to our results of operations.
The Craft Beer Divestitures are consistent with our strategic focus on continuing to grow our high-end imported beer brands through maintenance of leading margins and enhancements to our results of operations. Daleville Facility sale In May 2023, we sold the Daleville Facility in connection with our decision to exit the craft beer business.
Overview Effective May 31, 2023, we changed o ur internal management financial reporting to consist of two business divisions: (i) Beer and (ii) Wine and Spirits and we now report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other following the removal of the Canopy operating segment.
Overview Our internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits and we report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs.
Transaction, integration, and other acquisition-related costs We recognized costs in connection with our investments, acquisitions, and divestitures. Insurance recoveries We recognized business interruption and other recoveries largely related to severe winter weather events. For additional information on the Fiscal 2024 recoveries, refer to Note 16.
Insurance recoveries We recognized business interruption and other recoveries largely related to severe winter weather events. For additional information, refer to Note 16.
The decrease in organic gross profit is attributable to (i) an $88.0 million decrease in branded wine and spirits shipment volume, (ii) $31.7 million of unfavorable channel mix led by lower-margin, non-branded net sales, and (iii) an $11.2 million decrease in non-branded gross profit on net sales, partially offset by (i) $39.9 million of lower cost of product sold and (ii) the $21.4 million favorable impact from pricing.
The decrease in organic gross profit is attributable to (i) a $58.7 million decrease in branded wine and spirits shipment volume, (ii) $28.7 million of unfavorable product mix from lower-margin net sales, (iii) the $16.1 million of unfavorable pricing, and (iv) $12.2 million of increased cost of product sold, partially offset by the $29.9 million from higher contractual distributor payments.
Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 40 PART II ITEM 7. MD&A Table of Contents Wine and Spirits segment Fiscal 2024 Fiscal 2023 Dollar Change Percent Change (in millions, branded product, 9-liter case equivalents) Net sales $ 1,799.2 $ 1,987.6 $ (188.4) (9 %) Shipments Total 23.8 27.1 (12.2 %) Organic (1) 23.8 26.5 (10.2 %) U.S.
MD&A Table of Contents Wine and Spirits segment Fiscal 2025 Fiscal 2024 Dollar Change Percent Change (in millions, branded product, 9-liter case equivalents) Net sales $ 1,668.9 $ 1,799.2 $ (130.3) (7 %) Shipments Total 22.1 23.8 (7.1 %) Organic (1) 22.1 23.2 (4.7 %) U.S. Wholesale 19.2 21.0 (8.6 %) Organic U.S.
For additional information, refer to Note 22. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S.
We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio that includes higher-end wine brands complemented by certain higher-end spirits brands.
MD&A Table of Contents we exchanged our 2023 Canopy Promissory Note for 9.1 million Exchangeable Shares and forgave all accrued but unpaid interest together with the remaining principal amount of the note. For additional information, refer to Note 10. Divestitures, acquisitions, and investments Beer segment Craft Beer Divestitures In June 2023, we completed the Craft Beer Divestitures.
Additionally, in April 2024, we exchanged C$81.2 million of the principal amount of our 2023 Canopy Promissory Note for 9.1 million Exchangeable Shares and forgave all accrued but unpaid interest together with the remaining principal amount of the note.
Our Wine and Spirits segment divestiture and acquisitions support our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumers. Corporate Operations and Other segment Corporate ventures As of August 31, 2023, we evaluated certain equity method investments, made through our corporate venture capital function, and determined there were other-than-temporary impairments due to business underperformance.
Corporate Operations and Other segment Corporate ventures investments As of February 28, 2025, August 31, 2024, November 30, 2023, and August 31, 2023, we evaluated certain equity method investments and other securities measured at fair value, made through our corporate venture capital function, and determined there were other-than-temporary impairments due to business underperformance for the respective periods.
The decrease in Wine and Spirits selling, general, and administrative expenses is largely due to $19.0 million and $17.0 million of decreased marketing spend and general and administrative expenses, respectively. The decrease in marketing spend is primarily driven by less planned media investments for our mainstream and premium brands as compared to Fiscal 2023.
The decrease in Wine and Spirits selling, general, and administrative expenses is largely driven by $17.5 million and $2.8 million of decreased general and administrative expenses and marketing spend, respectively. The decrease in general and administrative expenses is primarily due to lower (i) litigation expenses, (ii) consulting services, and (iii) depreciation expense as compared to Fiscal 2024.
We expect some or all of these impacts to continue into Fiscal 2025 which could have a material impact on our results of operations. We intend to continue to monitor the inflationary environment and the impact on the consumer when we consider passing along rising costs through further selling price increases, subject to normal competitive conditions.
We expect some or all of these market conditions and their impacts to continue into Fiscal 2026 which could have a material impact on our results of operations and financial condition. We intend to continue to monitor the evolving consumer demand and economic environments and their impacts on our business.
In addition, we are continuing our commodity and foreign exchange hedging programs while also seeking to identify additional cost savings initiatives. However, there can be no assurance that we will be able to fully mitigate rising costs through increased selling prices and/or cost savings initiatives.
However, there can be no assurance that we will be able to adequately respond to softer consumer demand trends or fully mitigate rising costs, including as a result of new or increased tariffs, through increased selling prices, cost savings, productivity, efficiency, and inventory management initiatives, optimized marketing plans, and/or our commodity and foreign exchange hedging programs.
Selling, general, and administrative expenses Fiscal 2024 Fiscal 2023 Dollar Change Percent Change (in millions) Beer $ 1,119.8 $ 1,076.3 $ 43.5 4 % Wine and Spirits 437.4 474.1 (36.7) (8 %) Corporate Operations and Other 247.6 277.9 (30.3) (11 %) Comparable Adjustments 43.0 97.8 (54.8) NM Consolidated selling, general, and administrative expenses $ 1,847.8 $ 1,926.1 $ (78.3) (4 %) The increase in Beer selling, general, and administrative expenses is largely driven by $31.1 million and $11.8 million of increased general and administrative expenses and marketing spend, respectively.
Selling, general, and administrative expenses Fiscal 2025 Fiscal 2024 Dollar Change Percent Change (in millions) Beer $ 1,171.7 $ 1,119.8 $ 51.9 5 % Wine and Spirits 417.2 437.4 (20.2) (5 %) Corporate Operations and Other 244.6 247.6 (3.0) (1 %) Comparable Adjustments 116.5 27.9 88.6 NM Consolidated selling, general, and administrative expenses $ 1,950.0 $ 1,832.7 $ 117.3 6 % The increase in Beer selling, general, and administrative expenses is largely driven by $80.5 million of additional marketing spend primarily led by increased media investment to support our high-end imported beer brands , partially offset by $27.6 million of decreased general and administrative expenses.
The decrease in Wine and Spirits net sales is due to a $149.9 million decrease in organic net sales and $38.5 million from the Wine Divestiture.
The decrease in Wine and Spirits net sales is due to a $107.7 million decrease in organic net sales and $22.6 million from the SVEDKA Divestiture that are no longer part of our business.
The decrease in branded wine and spirits shipment volume is primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our mainstream and premium brands. The favorable impact from pricing was driven by price increases, partially offset by lower contractual distributor payments as compared to Fiscal 2023.
The decrease in branded wine and spirits shipment volume is attributable to our U.S. wholesale market, primarily driven by declines in both the overall wine market and in our mainstream and premium wine brands, as well as retailer inventory destocking. For Fiscal 2026, we expect depletion volume to outpace shipment volume, most notably during the first quarter.
Strategy Our business strategy for the Beer segment focuses on upholding our leadership position in the U.S. beer market, including the high-end segment, and continuing to grow our high-end imported beer brands through Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 34 PART II ITEM 7.
Strategy Our business strategy for the Beer segment focuses on upholding our leadership position in the U.S. beer market, including the high-end segment, and continuing to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth.
Our results of operations and financial condition have been affected by inflation, changing prices, reductions in discretionary income of consumers available to purchase our products, and shifting consumer behaviors, as well as other unfavorable global and regional economic conditions, global supply chain disruptions and constraints, and geopolitical events.
These factors include subdued spend, value-seeking behaviors, and reductions in the discretionary income available to purchase our products among consumers, elevated unemployment, changing prices, inflation, other unfavorable global and regional economic conditions, demographic trends in the U.S., global supply chain disruptions and constraints, and geopolitical events, as well as retailer destocking impacting our Wine and Spirits segment.
Wholesale 21.0 23.5 (10.6 %) Organic U.S. Wholesale (1) 21.0 23.1 (9.1 %) Depletions (1) (7.1 %) (1) Includes adjustments to remove volumes associated with the Wine Divestiture for the period March 1, 2022, through October 5, 2022.
Wholesale (1) 19.2 20.4 (5.9 %) Depletions (1) (9.3 %) (1) Includes adjustments to remove volumes associated with the SVEDKA Divestiture for the period January 6, 2024, through February 29, 2024.
The decrease in organic net sales is driven by a $175.2 million decrease in branded wine and spirits shipment volume, partially offset by (i) $21.4 million of favorable impact from pricing and (ii) $4.3 million of favorable product mix, driven by consumer-led premiumization.
The increase in Beer net sales is due to (i) $264.2 million of shipment volume growth and (ii) $168.1 million of favorable impact from pricing in select markets, partially offset by $55.1 million of unfavorable product mix primarily from a shift in package types.
Business Segments Net sales Fiscal 2024 Fiscal 2023 Dollar Change Percent Change (in millions) Beer $ 8,162.6 $ 7,465.0 $ 697.6 9 % Wine and Spirits: Wine 1,552.1 1,722.7 (170.6) (10 %) Spirits 247.1 264.9 (17.8) (7 %) Total Wine and Spirits 1,799.2 1,987.6 (188.4) (9 %) Consolidated net sales $ 9,961.8 $ 9,452.6 $ 509.2 5 % Beer segment Fiscal 2024 Fiscal 2023 Dollar Change Percent Change (in millions, branded product, 24-pack, 12-ounce case equivalents) Net sales $ 8,162.6 $ 7,465.0 $ 697.6 9 % Shipments 418.1 389.2 7.4 % Depletions 7.5 % The increase in Beer net sales is largely due to (i) $564.5 million of shipment volume growth, which benefited from continued consumer demand for our Mexican beer portfolio, and (ii) $147.6 million of favorable impact from pricing in select markets, partially offset by an $11.5 million decline in net sales from the Craft Beer Divestitures.
Business Segments Net sales Fiscal 2025 Fiscal 2024 Dollar Change Percent Change (in millions) Beer $ 8,539.8 $ 8,162.6 $ 377.2 5 % Wine and Spirits: Wine 1,450.1 1,552.1 (102.0) (7 %) Spirits 218.8 247.1 (28.3) (11 %) Total Wine and Spirits 1,668.9 1,799.2 (130.3) (7 %) Consolidated net sales $ 10,208.7 $ 9,961.8 $ 246.9 2 % Beer segment Fiscal 2025 Fiscal 2024 Dollar Change Percent Change (in millions, branded product, 24-pack, 12-ounce case equivalents) Net sales $ 8,539.8 $ 8,162.6 $ 377.2 5 % Shipments 431.8 418.1 3.3 % Depletions (1) 2.9 % (1) Includes an adjustment to remove volumes associated with the Craft Beer Divestitures for the period March 1, 2023, through May 31, 2023.
The decrease in general and administrative expenses is primarily due to lower incentive accruals and decreased consulting services both as compared to Fiscal 2023 , partially offset by higher litigation expenses.
The decrease in general and administrative expenses is primarily due to (i) lower short-term incentive accruals, (ii) decreased legal expenses, and (iii) favorable foreign currency impact, partially offset by higher other compensation and benefits, including stock-based compensation expense.
Marketing, sales, and distribution of our products are primarily managed on a geographic basis allowing us to leverage leading market positions. In addition, market dynamics and consumer trends vary across each of our markets.
We have a contractual arrangement with Southern Glazer’s Wine and Spirits which consolidated our U.S. distribution and currently represents approximately 60% of our U.S. branded wine and spirits volume. Marketing, sales, and distribution of our products are primarily managed on a geographic basis allowing us to leverage leading market positions.
MD&A Table of Contents Canopy Equity Method Investment — We evaluated the Canopy Equity Method Investment as of May 31, 2023, and determined there was an other-than-temporary impairment.
The Exchangeable Share activity for Fiscal 2025 resulted in a total net gain of $7.2 million which was included in income (loss) from unconsolidated investments within our consolidated results. Canopy Equity Method Investment — We evaluated our then-existing Canopy Equity Method Investment as of May 31, 2023, and determined there was an other-than-temporary impairment.
Strategic business development costs We recognized costs in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure within the Wine and Spirits segment. Net flow through of reserved inventory We sold reserved inventory previously written down following the 2020 U.S. West Coast wildfires.
Strategic business reconfiguration costs We recognized costs primarily in connection with losses on write-downs of excess inventory resulting from our initiatives to streamline, increase efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment.
In October 2023, we exited one of these equity method investments in exchange for a note receivable. Canopy investment We have an investment in Canopy, a North American cannabis and CPG company providing medical and adult-use cannabis products, which expands our portfolio into adjacent categories. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 36 PART II ITEM 7.
These losses from impairment and on securities measured at fair value were included in income (loss) from unconsolidated investments within our consolidated results for the respective periods. In October 2023, we exited one of these equity method investments in exchange for a note receivable. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 35 PART II ITEM 7.
FY 2024 Form 10-K #WORTHREACHINGFOR I 38 PART II ITEM 7. MD&A Table of Contents Cost of product sold Undesignated commodity derivative contracts Net gain (loss) on undesignated commodity derivative contracts represents a net gain (loss) from the changes in fair value of undesignated commodity derivative contracts.
MD&A Table of Contents Fiscal 2025 Fiscal 2024 (in millions) Goodwill and intangible assets impairment (2,797.7) — Assets held for sale impairment (478.0) — Gain (loss) on sale of business 266.0 (15.1) Comparable Adjustments, Operating income (loss) $ (3,120.0) $ (75.8) Comparable Adjustments, Income (loss) from unconsolidated investments $ (49.3) $ (478.0) Cost of product sold Undesignated commodity derivative contracts Net gain (loss) on undesignated commodity derivative contracts represents a net gain (loss) from the changes in fair value of undesignated commodity derivative contracts.
Gross profit as a percent of net sales remained relatively flat at 50.4% for Fiscal 2024 compared with 50.5% for Fiscal 2023.
Selling, general, and administrative expenses as a percent of net sales increased to 19.1% for Fiscal 2025 as compared with 18.4% for Fiscal 2024.
Our business continues to progressively expand into DTC channels (including hospitality), 3-tier eCommerce, and international markets, while remaining a major supplier in U.S. 3-tier brick-and-mortar distribution.
In addition, we are advancing our aim to become a global, omni-channel competitor in line with evolving consumer preferences as we continue our efforts to progressively expand into international markets, DTC channels (including hospitality), and 3-tier eCommerce.
Removed
In the Wine and Spirits segment, we sell a portfolio that includes higher-end wine brands complemented by certain higher-end spirits brands.
Added
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) (in millions, except share and per share data) December 1 – 31, 2024 — $ — — $ 1,945.6 January 1 – 31, 2025 1,499,241 $ 183.26 1,499,241 $ 1,670.8 February 1 – 28, 2025 1,060,314 $ 170.70 1,060,314 $ 1,489.9 Total 2,559,555 $ 178.06 2,559,555 (1) In November 2023, we announced that our Board of Directors authorized the repurchase of up to $2.0 billion of our publicly traded common stock under the 2023 Authorization.
Removed
MD&A Table of Contents maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth.
Added
The Board of Directors did not specify a date upon which the 2023 Authorization would expire. Share repurchases for the periods included herein pursuant to the 2023 Authorization were effected through open market transactions and exclude the impact of Federal excise tax owed pursuant to the IRA.
Removed
This includes continued focus on growing our beer portfolio in the U.S. through expanding distribution for key brands, including within the 3-tier eCommerce channel, as well as investing in the next increment of modular capacity additions required to sustain our momentum.
Added
In April 2025, we announced that our Board of Directors authorized the repurchase of up to $4.0 billion of our publicly traded common stock under the 2025 Authorization. The 2025 Authorization replaced the 2023 Authorization in its entirety and no further repurchases will be made pursuant to the 2023 Authorization. The 2025 Authorization expires on February 29, 2028.
Removed
Additionally, we are pursuing the sale of the remaining assets at the canceled Mexicali Brewery after exploring various options; however, we may not be successful in completing any such sale or obtaining other forms of recovery. Our business strategy for the Wine and Spirits segment continues to focus on higher-end brands, improving margins, and creating operating efficiencies.
Added
Subsequent to February 28, 2025, we repurchased 494,094 shares of Class A Stock pursuant to the 2025 Authorization at an average cost of $185.53 per share through open market transactions. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 31 PART II ITEM 7. MD&A Table of Contents Item 7.
Removed
We have reshaped our portfolio primarily through an enhanced focus on higher-margin, higher-growth wine and spirits brands. Our business is organized into two distinct commercial teams, one focused on our fine wine and craft spirits brands and the other focused on our mainstream and premium brands.
Added
Goodwill impairment In connection with continued negative trends within our Wine and Spirits business primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our mainstream and premium wine brands, management updated its Fiscal 2025 outlook and latest financial projections for this reporting unit.
Removed
While each team has its own distinct strategy, both remain aligned to the goal of accelerating performance by growing organic net sales and expanding margins. In addition, we are advancing our aim to become a global, omni-channel competitor in line with consumer preferences.
Added
Based on the aforementioned factors, we performed an interim quantitative assessment, as of August 31, 2024, and an annual quantitative assessment for goodwill impairment which resulted in a $2,740.7 Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 32 PART II ITEM 7. MD&A Table of Contents million total goodwill impairment and the carrying value being written down to zero.
Removed
In markets where it is feasible, we entered into a contractual arrangement with Southern Glazer’s Wine and Spirits to consolidate our U.S. distribution in order to obtain dedicated distributor selling resources which focus on our U.S. wine and spirits portfolio to drive organic growth. This distributor currently represents about 70% of our branded wine and spirits volume in the U.S.
Added
This loss from impairment was included in goodwill and intangible assets impairment within our consolidated results for Fiscal 2025. See Notes 7, 8, and 13 for further discussion.
Removed
Recent Development Conversion of Canopy common stock ownership and exchange of investment into Exchangeable Shares In April 2024, the Canopy Amendment was approved by Canopy’s shareholders. We subsequently elected to convert our 17.1 million Canopy common shares into Exchangeable Shares on a one-for-one basis. Additionally, Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 35 PART II ITEM 7.
Added
Trademarks impairment In connection with the assessment of the same events and circumstances that resulted in the wine and spirits goodwill carrying value being written down to zero, we completed a quantitative assessment of our wine trademarks. As a result, we recognized a $57.0 million trademark impairment on certain held for sale wine brands.
Removed
Daleville Facility In May 2023, we sold the Daleville Facility in connection with our decision to exit the craft beer business. Wine and Spirits segment Wine Divestiture In October 2022, we sold certain of our mainstream and premium wine brands and related inventory.
Added
This loss was included in goodwill and intangible assets impairment within our consolidated results of operations for Fiscal 2025. See Note 7 for further discussion.
Removed
Accordingly, our consolidated results of operations include the results of operations of such mainstream and premium wine brands through the date of divestiture. We received cash proceeds of $96.7 million from the Wine Divestiture that were utilized primarily to reduce outstanding borrowings. We recognized a $15.0 million net gain on the sale of business for Fiscal 2023.
Added
In Fiscal 2026, we intend to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization, as well as continue to invest in the next phase of modular capacity additions necessary to support our ongoing growth.
Removed
This gain was included in selling, general, and administrative expenses within our consolidated results. Austin Cocktails acquisition In April 2022, we acquired the remaining 73% ownership interest in Austin Cocktails, which included a portfolio of small batch, RTD cocktails. This transaction primarily included the acquisition of goodwill and a trademark.
Added
Our business strategy for the Wine and Spirits segment continues to focus on delivering growth and improving margins beyond Fiscal 2026 by driving our higher-end brands and operating efficiencies.
Removed
The results of operations of Austin Cocktails are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition. Lingua Franca acquisition In March 2022, we acquired the Lingua Franca business, including a collection of Oregon-based luxury wines, a vineyard, and a production facility.
Added
We are repositioning this business to a portfolio of exclusively higher-end wine and spirits brands that we believe will generate higher growth and higher margins, including through the recently announced 2025 Wine Divestitures Transaction. We remain a key supplier in U.S. 3-tier brick-and-mortar distribution.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+22 added−26 removed16 unchanged
Biggest changeCash Flows Fiscal 2024 Fiscal 2023 Dollar Change (in millions) Net cash provided by (used in): Operating activities $ 2,780.0 $ 2,756.9 $ 23.1 Investing activities (1,285.9) (999.4) (286.5) Financing activities (1,474.6) (1,819.9) 345.3 Effect of exchange rate changes on cash and cash equivalents (0.6) (3.5) 2.9 Net increase (decrease) in cash and cash equivalents $ 18.9 $ (65.9) $ 84.8 Operating activities The increase in net cash provided by (used in) operating activities consists of: Fiscal 2024 Fiscal 2023 Dollar Change (in millions) Net income (loss) $ 1,765.2 $ (38.5) $ 1,803.7 Deferred tax provision (benefit) 147.9 207.8 (59.9) Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings 321.2 971.8 (650.6) Impairment of equity method investments 136.1 1,060.3 (924.2) Other non-cash adjustments 697.4 830.0 (132.6) Change in operating assets and liabilities, net of effects from purchase and sale of business (287.8) (274.5) (13.3) Net cash provided by (used in) operating activities $ 2,780.0 $ 2,756.9 $ 23.1 The $13.3 million net change in operating assets and liabilities was driven by an increase in accounts payable for both the Beer and Wine and Spirits segments largely due to the timing of payments.
Biggest changeMD&A Table of Contents Cash Flows Fiscal 2025 Fiscal 2024 Dollar Change (in millions) Net cash provided by (used in): Operating activities $ 3,152.2 $ 2,780.0 $ 372.2 Investing activities (974.8) (1,285.9) 311.1 Financing activities (2,261.8) (1,474.6) (787.2) Effect of exchange rate changes on cash and cash equivalents 0.1 (0.6) 0.7 Net increase (decrease) in cash and cash equivalents $ (84.3) $ 18.9 $ (103.2) Operating activities The increase in net cash provided by (used in) operating activities consists of: Fiscal 2025 Fiscal 2024 Dollar Change (in millions) Net income (loss) $ (31.1) $ 1,765.2 $ (1,796.3) Deferred tax provision (benefit) (210.3) 147.9 (358.2) Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings (5.4) 321.2 (326.6) Equity method investments impairment 8.7 136.1 (127.4) Assets held for sale impairment 478.0 — 478.0 (Gain) loss on sale of business (266.0) 15.1 (281.1) Goodwill and intangible assets impairment 2,797.7 — 2,797.7 Other non-cash adjustments 514.8 682.3 (167.5) Change in operating assets and liabilities, net of effects from purchase and sale of business (134.2) (287.8) 153.6 Net cash provided by (used in) operating activities $ 3,152.2 $ 2,780.0 $ 372.2 The $153.6 million net change in operating assets and liabilities was largely driven by lower accounts payable resulting from beer cost-savings initiatives and the timing of payments as well as higher inventory levels for both the beer and the wine and spirits segments.
Absent deterioration of market conditions, we believe that cash flows from operating and financing activities will provide adequate resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments, periodic share repurchases, and anticipated capital expenditure requirements for both our short-term and long-term capital needs.
Absent deterioration of market conditions, we believe that cash flows from operating and financing activities will provide adequate resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments, periodic share repurchases, and planned capital expenditure requirements for both our short-term and long-term capital needs.
We currently expect to continue to pay a regular quarterly cash dividend to stockholders of our common stock in the future, but such payments are subject to approval of our Board of Directors and are dependent upon our financial condition, results of operations, capital requirements, and other factors, including those set forth under Item 1A.
While we currently expect to continue to pay a regular quarterly cash dividend to stockholders of our common stock in the future, such payments are subject to approval of our Board of Directors and are dependent upon our financial condition, results of operations, capital requirements, and other factors, including those set forth under Item 1A.
If the commercial paper market is not available to us for any reason when commercial paper borrowings mature, we will utilize unused commitments under our revolving credit facility under our 2022 Credit Agreement to repay commercial paper borrowings.
If the commercial paper market is not available to us for any reason when commercial paper borrowings mature, we expect to utilize unused commitments under our revolving credit facility under our 2022 Credit Agreement to repay commercial paper borrowings.
Absent deterioration of market conditions, we believe that cash flows from operating and financing activities will provide adequate resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments, periodic share repurchases, and anticipated capital expenditure requirements for both our short-term and long-term capital needs. Constellation Brands, Inc.
Absent deterioration of market conditions, we believe that cash flows from operating and financing activities will provide adequate resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments, periodic share repurchases, and planned capital expenditure requirements for both our short-term and long-term capital needs.
We are subject to income taxes in Canada, Mexico, Switzerland, the U.S., and other jurisdictions. We are regularly audited by federal, state, and foreign tax authorities, but a number of years may elapse before an uncertain tax position is audited and finally resolved. We believe all tax positions are fully supported.
We are subject to income taxes in Italy, Mexico, New Zealand, Switzerland, the U.S., and other jurisdictions. We are regularly audited by federal, state, and foreign tax authorities, but a number of years may elapse before an uncertain tax position is audited and finally resolved. We believe all tax positions are fully supported.
As of February 29, 2024, we and our subsidiaries were subject to covenants that are contained in our 2022 Credit Agreement, including those restricting the incurrence of additional subsidiary indebtedness, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions, and thresholds.
As of February 28, 2025, we and our subsidiaries were subject to covenants that are contained in our 2022 Credit Agreement, including those restricting the incurrence of additional subsidiary indebtedness, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions, and thresholds.
(2) Other long-term liabilities do not include payments for unrecognized tax benefit liabilities of $321.4 million due to the uncertainty of the timing of future cash flows associated with these unrecognized tax benefit liabilities. In addition, other long-term liabilities do not include expected payments for interest and penalties associated with unrecognized tax benefit liabilities as amounts are not material.
(2) Other long-term liabilities do not include payments for unrecognized tax benefit liabilities of $264.0 million due to the uncertainty of the timing of future cash flows associated with these unrecognized tax benefit liabilities. In addition, other long-term liabilities do not include expected payments for interest and penalties associated with unrecognized tax benefit liabilities as amounts are not material.
As of February 29, 2024, we were in compliance with our covenants under our 2022 Credit Agreement and our indentures, and have met all debt payment obligations. For further discussion and presentation of our borrowings and available sources of borrowing, refer to Note 12.
As of February 28, 2025, we were in compliance with our covenants under our 2022 Credit Agreement and our indentures, and have met all debt payment obligations. For further discussion and presentation of our borrowings and available sources of borrowing, refer to Note 12.
The following sets forth information about our outstanding obligations at February 29, 2024. For a detailed discussion of the items noted in the following table, refer to Notes 11 through 16.
The following sets forth information about our outstanding obligations at February 28, 2025. For a detailed discussion of the items noted in the following table, refer to Notes 11 through 16.
General The majority of our outstanding borrowings as of February 29, 2024, consisted of fixed-rate senior unsecured notes, with maturities ranging from calendar 2024 to calendar 2050, as follows: Additionally, we have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.25 billion of commercial paper.
MD&A Table of Contents General The majority of our outstanding borrowings as of February 28, 2025, consisted of fixed-rate senior unsecured notes, with maturities ranging from calendar 2025 to calendar 2050, as follows: Additionally, we have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.25 billion of commercial paper.
For additional information on our goodwill and intangible assets refer to Notes 8 and 9. • Accounting for income taxes.
For additional information on our goodwill and intangible assets refer to Notes 2, 7, 8, 9, and 13. • Accounting for income taxes.
Change in Accounting Guidance Accounting guidance adopted for Fiscal 2024 did not have a material impact on our consolidated financial statements. For information regarding recent accounting pronouncements, not yet adopted, see Note 1. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 53 PART II ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES Table of Contents
Change in Accounting Guidance Accounting guidance adopted for Fiscal 2025 did not have a material impact on our consolidated financial statements. For information on recently adopted accounting guidance and accounting guidance not yet adopted, see Note 1. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 52 PART II ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES Table of Contents
Accordingly, the Beer segment’s Funky Buddha and Four Corners craft beer businesses recognized $9.0 million and $4.0 million impairment losses, respectively, in connection with the write-off of their trademark assets. In Fiscal 2024, we completed the Craft Beer Divestitures. Refer to Notes 2 and 7 for further discussion.
Accordingly, the Beer segment’s Funky Buddha and Four Corners craft beer businesses recognized $9.0 million and $4.0 million impairment losses, respectively, in connection with the write-off of their trademark assets. In Fiscal 2024, we completed the Craft Beer Divestitures.
As of January 1, 2024, we performed sensitivities in our impairment testing of trademarks by (i) decreasing the royalty rate 50 basis points, (ii) increasing the discount rate 50 basis points, (iii) decreasing the expected long-term growth rate 50 basis points, and (iv) decreasing the annual revenue projections 100 basis points.
We proceeded to perform sensitivities in our impairment testing of the remaining brands trademarks by (i) decreasing the royalty rate 50 basis points, (ii) increasing the discount rate 50 basis points, (iii) decreasing the expected long-term growth rate 50 basis points, and (iv) decreasing the annual revenue projections 100 basis points.
We expect to return approximately $740 million to stockholders in Fiscal 2025 through cash dividends.
We expect to return approximately $720 million to stockholders in Fiscal 2026 through cash dividends.
MD&A Table of Contents We perform annual impairment tests and re-evaluate the useful lives of other intangible assets with indefinite lives at the annual impairment test measurement date of January 1 or when circumstances arise that indicate a possible impairment or change in useful life might exist.
We perform annual impairment tests and re-evaluate the useful lives of other intangible assets with indefinite lives at the annual impairment test measurement date of January 1 or when circumstances arise that indicate a possible impairment or change in useful life might exist. Goodwill – Our reporting units with goodwill include the Beer segment and the Wine and Spirits segment.
MD&A Table of Contents businesses retained within the reporting unit. For Fiscal 2023, o ur estimate of fair value for the Wine Divestiture was determined based on the expected proceeds from the transaction. The components sold were a part of the Wine and Spirits segment and were included in that reporting unit through the date of divestiture.
For Fiscal 2025 and Fiscal 2023, o ur estimate of fair value for the SVEDKA Divestiture and the 2022 Wine Divestiture, respectively, were determined based on the expected proceeds from the applicable transaction. The components sold were a part of the Wine and Spirits segment and were included in that reporting unit through the date of divestiture.
We currently expect to continue to repurchase shares in the future, but such repurchases are dependent upon our financial condition, results of operations, capital requirements, and other factors, including those set forth under Item 1A. “Risk Factors” of this Form 10-K. For additional information, refer to Note 17.
We currently expect to return $4.0 billion in share repurchases to stockholders over the next three fiscal years, but such repurchases are dependent upon our financial condition, results of operations, capital requirements, and other factors, including those set forth under Item 1A. “Risk Factors” of this Form 10-K. For additional information, refer to Note 17.
Common Stock Dividends On April 10, 2024, our Board of Directors declared a quarterly cash dividend of $1.01 per share of Class A Stock and $0.91 per share of Class 1 Stock payable on May 17, 2024, to stockholders of record of each class as of the close of business on May 3, 2024.
Common Stock Dividends On April 9, 2025, our Board of Directors declared a quarterly cash dividend of $1.02 per share of Class A Stock and $0.92 per share of Class 1 Stock payable on May 15, 2025, to stockholders of record of each class as of the close of business on April 29, 2025.
FY 2024 Form 10-K #WORTHREACHINGFOR I 49 PART II ITEM 7.
FY 2025 Form 10-K #WORTHREACHINGFOR I 45 PART II ITEM 7.
FY 2024 Form 10-K #WORTHREACHINGFOR I 44 PART II ITEM 7. MD&A Table of Contents We have an agreement with a financial institution for payment services and to facilitate a voluntary supply chain finance program through this participating financial institution. The program is available to certain of our suppliers allowing them the option to manage their cash flow.
We have an agreement with a financial institution for payment services and to facilitate a voluntary supply chain finance program through this participating financial institution. The program is available to certain of our suppliers allowing them the option to manage their cash flow.
If these estimates or their related assumptions change in the future, we may be required to recognize an impairment loss for these assets. The recognition of any resulting impairment loss could have a material adverse impact on our financial statements. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 51 PART II ITEM 7.
If these estimates or their related assumptions change in the future, we may be required to recognize an impairment loss for these assets. The recognition of any resulting impairment loss could have a material adverse impact on our financial statements.
(Provision for) benefit from income taxes The provision for income taxes increased to $456.6 million for Fiscal 2024 from $422.1 million for Fiscal 2023. Our effective tax rate for Fiscal 2024 was 20.6% as compared with 110.0% for Fiscal 2023.
(Provision for) benefit from income taxes The (provision for) benefit from income taxes increased to $51.7 million for Fiscal 2025 from $(456.6) million for Fiscal 2024. Our effective tax rate for Fiscal 2025 was 62.4% as compared with 20.6% for Fiscal 2024.
We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. For additional information, refer to Note 16.
We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. For additional information, refer to Note 16. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 43 PART II ITEM 7.
The most significant assumptions used in the relief from royalty method to determine the estimated fair value of intangible assets with indefinite lives in connection with impairment testing are: (i) the estimated royalty rate, (ii) the discount rate, (iii) the expected long-term growth rate, and (iv) the annual revenue projections.
The most significant assumptions used in the relief from royalty method to determine the estimated fair value of intangible assets with indefinite lives in connection with this impairment testing were: (i) a 3% royalty rate (held for sale brands trademark unit) and a 7% royalty rate (remaining brands trademark unit), (ii) an 11% discount rate, (iii) a 1.5% expected long-term growth rate, and (iv) the annual revenue projections.
None of these sensitivities individually would have resulted in a conclusion that the goodwill of our reporting units was impaired. Other intangible assets – Our intangible assets consist primarily of customer relationships and trademarks obtained through business acquisitions. Customer relationships are amortized over their estimated useful lives. The trademarks that were determined to have indefinite useful lives are not amortized.
Other intangible assets – Our intangible assets consist primarily of customer relationships and trademarks obtained through business acquisitions. Customer relationships are amortized over their estimated useful lives. The trademarks that were determined to have indefinite useful lives are not amortized.
MD&A Table of Contents We had the following remaining borrowing capacity available under our 2022 Credit Agreement: February 29, 2024 April 16, 2024 (in millions) Revolving credit facility (1) $ 1,997.0 $ 2,159.9 (1) Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2022 Credit Agreement and outstanding borrowings under our commercial paper program (excluding unamortized discount) of $241.5 million and $78.7 million as of February 29, 2024 , and April 16, 2024, respectively.
We had the following remaining borrowing capacity available under our 2022 Credit Agreement: February 28, 2025 April 16, 2025 (in millions) Revolving credit facility (1) $ 1,430.7 $ 1,531.0 (1) Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2022 Credit Agreement and outstanding borrowings under our commercial paper program (excluding unamortized discount) of $808.0 million and $707.7 million as of February 28, 2025 , and April 16, 2025, respectively.
Investing activities Net cash used in investing activities increased to $1,285.9 million for Fiscal 2024 from $999.4 million for Fiscal 2023.
Investing activities Net cash used in investing activities decreased to $974.8 million for Fiscal 2025 from $1,285.9 million for Fiscal 2024.
Our largest use of cash in our operations is for purchasing and carrying inventories and carrying seasonal accounts receivable. Historically, we have used this cash flow to repay our short-term borrowings and fund capital expenditures. Additionally, our commercial paper program is used to fund our short-term borrowing requirements and to maintain our access to the capital markets.
Historically, we have used this cash flow to repay our short-term borrowings and fund capital expenditures. Additionally, our commercial paper program is used to fund our short-term borrowing requirements and to maintain our access to the capital markets. We use our short-term borrowings, including our commercial paper program, to support our working capital requirements and capital expenditures, among other things.
The decrease in Wine and Spirits operating income is largely attributable to the decline in branded wine and spirits shipment volume, unfavorable channel mix, and the Wine Divestiture, partially offset by the lower transportation and warehousing costs, the favorable pricing impact, decreased selling, general, and administrative expenses, and the cost savings initiatives, as described above.
The decrease in Wine and Spirits operating income is largely attributable to the decline in organic branded wine and spirits shipment volume, unfavorable product mix and pricing, and the SVEDKA Divestiture, partially offset by the higher contractual distributor payments and decreased general, and administrative expenses, as described above.
None of these sensitivities individually would have resulted in a conclusion that the trademarks of our reporting units were impaired. Divestitures – When some, but not all of a reporting unit that constitutes a business is disposed of, some of the goodwill of the reporting unit should be allocated to the portion of the reporting unit being disposed of.
Divestitures – When some, but not all of a reporting unit that constitutes a business is disposed of, some of the goodwill of the reporting unit should be allocated to the portion of the reporting unit being disposed of.
These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. Changes in current estimates, if significant, could have a material adverse impact on our financial statements. We recognize our deferred tax assets and liabilities based upon the expected future tax outcome of amounts recognized in our results of operations.
In addition, changes in existing tax laws or rates could significantly change our current estimate of our unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. Changes in current estimates, if significant, could have a material adverse impact on our financial statements.
Financing activities The decrease in net cash provided by (used in) financing activities consists of: Fiscal 2024 Fiscal 2023 Dollar Change (in millions) Net proceeds from (payments of) debt, current and long-term, and related activities $ (596.9) $ 1,991.3 $ (2,588.2) Dividends paid (653.8) (587.7) (66.1) Purchases of treasury stock (249.7) (1,700.2) 1,450.5 Net cash provided by stock-based compensation activities 93.3 32.0 61.3 Distributions to noncontrolling interests (52.6) (55.3) 2.7 Payment of contingent consideration (14.9) — (14.9) Payment to holders of Class B Stock in connection with the Reclassification — (1,500.0) 1,500.0 Net cash provided by (used in) financing activities $ (1,474.6) $ (1,819.9) $ 345.3 Debt Total debt outstanding as of February 29, 2024, amounted to $11,879.3 million, a decrease of $582.0 million, or 5%, from February 28, 2023.
MD&A Table of Contents Financing activities The increase in net cash provided by (used in) financing activities consists of: Fiscal 2025 Fiscal 2024 Dollar Change (in millions) Net proceeds from (payments of) debt, current and long-term, and related activities $ (391.8) $ (596.9) $ 205.1 Dividends paid (731.8) (653.8) (78.0) Purchases of treasury stock (1,123.8) (249.7) (874.1) Net cash provided by stock-based compensation activities 60.0 93.3 (33.3) Distributions to noncontrolling interests (57.5) (52.6) (4.9) Payment of contingent consideration (0.7) (14.9) 14.2 Purchase of noncontrolling interest (16.2) — (16.2) Net cash provided by (used in) financing activities $ (2,261.8) $ (1,474.6) $ (787.2) Debt Total debt outstanding as of February 28, 2025, amounted to $11,497.7 million, a decrease of $381.6 million, or 3%, from February 29, 2024.
We use our short-term borrowings, including our commercial paper program, to support our working capital requirements and capital expenditures, among other things. We seek to maintain adequate liquidity to meet working capital requirements, fund capital expenditures, and repay scheduled principal and interest payments on debt.
We seek to maintain adequate liquidity to meet working capital requirements, fund capital expenditures, and repay scheduled principal and interest payments on debt.
We do not expect that fluctuations in demand for commercial paper will affect our liquidity given our borrowing capacity available under our revolving credit facility. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 47 PART II ITEM 7.
We do not expect that fluctuations in demand for commercial paper will affect our liquidity given our borrowing capacity available under our revolving credit facility.
If necessary, we recognize a valuation allowance on deferred tax assets when it is more likely than not they will not be realized.
We recognize our deferred tax assets and liabilities based upon the expected future tax outcome of amounts recognized in our results of operations. If necessary, we recognize a valuation allowance on deferred tax assets when it is more likely than not they will not be realized.
The allocation of goodwill is based on the relative fair values of the portion of the reporting unit being disposed of and the portion of the reporting unit remaining. This approach requires a determination of the fair value of both the business being disposed and the Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 52 PART II ITEM 7.
The allocation of goodwill is based on the relative fair values of the portion of the reporting unit being disposed of and the portion of the reporting unit remaining. This approach requires a determination of the fair value of both the business being disposed and the businesses retained within the reporting unit.
In connection with our annual trademark analysis, we performed a quantitative assessment for the imported beer, wine, and spirits trademarks and concluded that there were no indications of impairment for any of these trademark units.
In connection with our annual trademark analysis, we performed a qualitative assessment for the imported beer and spirits trademarks and concluded that there were no indications of impairment for these trademark units. We re-evaluated the wine units of account in contemplation of the 2025 Wine Divestitures Transaction and determined it was appropriate to have two reporting Constellation Brands, Inc.
The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio, both as defined in our 2022 Credit Agreement. As of February 29, 2024, under our 2022 Credit Agreement, the minimum interest coverage ratio was 2.5x and the maximum net leverage ratio was 4.0x.
MD&A Table of Contents February 28, 2025, under our 2022 Credit Agreement, the minimum interest coverage ratio was 2.5x and the maximum net leverage ratio was 4.0x.
For Fiscal 2023 and Fiscal 2022, as a result of our annual goodwill impairment analyses, we concluded that there were no indications of impairment for either of our reporting units.
For Fiscal 2024 and Fiscal 2023, as a result of our annual goodwill impairment analyses, we concluded that there were no indications of impairment for either of our reporting units, however, we closely monitored broader industry and market conditions and our expectations for future performance as it related to our wine and spirits goodwill.
Liquidity and Capital Resources General Our primary source of liquidity has been cash flow from operating activities.
Liquidity and Capital Resources General Our primary source of liquidity has been cash flow from operating activities. Our ability to consistently generate robust cash flow from our operations is one of our most significant financial strengths.
“Risk Factors” of this Form 10-K. Share Repurchase Program Our Board of Directors authorized the repurchase of our publicly traded common stock of up to $2.0 billion under the 2021 Authorization and an additional repurchase of up to $2.0 billion under the 2023 Authorization.
“Risk Factors” of this Form 10-K. Share Repurchase Program In each of January 2021 and November 2023, our Board of Directors authorized the repurchase of up to $2.0 billion of our publicly traded common stock. The 2021 Authorization was fully utilized during Fiscal 2025, and the 2023 Authorization, of which approximately $1.5 billion remained unused, was canceled during Fiscal 2026.
MD&A Table of Contents Short-term payments Long-term payments Total (in millions) Other long-term liabilities (2) $ 214.6 $ 229.6 $ 444.2 Purchase obligations Raw materials and supplies $ 617.0 $ 2,142.4 $ 2,759.4 Capital expenditures (3) $ 343.9 $ 228.6 $ 572.5 Contract services $ 174.0 $ 344.6 $ 518.6 In-process and finished goods inventories $ 15.8 $ 33.3 $ 49.1 Other: Investments in businesses (4) $ 8.0 $ 80.5 $ 88.5 (1) Interest payments on long-term debt do not include interest related to finance lease obligations as amounts are not material.
MD&A Table of Contents Short-term payments Long-term payments Total (in millions) Purchase obligations Raw materials and supplies $ 1,431.0 $ 4,447.5 $ 5,878.5 Contract services $ 176.1 $ 287.6 $ 463.7 Capital expenditures (3) $ 122.2 $ 83.3 $ 205.5 In-process and finished goods inventories $ 24.4 $ 30.3 $ 54.7 (1) Interest payments on long-term debt do not include interest related to finance lease obligations as amounts are not material.
Our ability to consistently generate robust cash flow from our operations is one of our most significant financial strengths; it enables us to invest in our people and our brands, make capital investments and strategic acquisitions, provide a cash dividend program, and from time-to-time, repurchase shares of our common stock.
It enables us to invest in our people and our brands, make capital investments and strategic acquisitions, provide a cash dividend program, and repurchase shares of our common stock. Our largest use of cash in our operations is for purchasing and carrying inventories and carrying seasonal accounts receivable.
For intangible assets with indefinite lives and for goodwill, impairment testing is required at least annually or more frequently if events or circumstances indicate that these assets might be impaired. We may perform a qualitative evaluation prior to a quantitative test to determine if an impairment exists.
For intangible assets with definite lives, impairment testing is required if conditions exist that indicate the carrying value may not be recoverable. For intangible assets with indefinite lives and for goodwill, impairment testing is required at least annually or more frequently if events or changes in circumstances indicate that these assets might be impaired.
Income (loss) from unconsolidated investments Fiscal 2024 Fiscal 2023 Dollar Change Percent Change (in millions) Impairment of equity method investments $ (136.1) $ (1,060.3) $ 924.2 87 % Unrealized net gain (loss) on securities measured at fair value (85.4) (45.9) (39.5) (86 %) Equity in earnings (losses) from Canopy and related activities (321.3) (949.3) 628.0 66 % Equity in earnings (losses) from other equity method investees and related activities 30.7 19.1 11.6 61 % Net gain (loss) on sale of unconsolidated investment 0.3 — 0.3 NM $ (511.8) $ (2,036.4) $ 1,524.6 75 % Interest expense Interest expense increased to $435.4 million for Fiscal 2024 as compared to $398.7 million for Fiscal 2023.
Income (loss) from unconsolidated investments Fiscal 2025 Fiscal 2024 Dollar Change Percent Change (in millions) Net gain in connection with Exchangeable Shares $ 7.2 $ — $ 7.2 NM Equity method investments impairment (8.7) (136.1) 127.4 94 % Unrealized net gain (loss) on securities measured at fair value (47.9) (85.4) 37.5 44 % Equity in earnings (losses) from Canopy and related activities — (321.3) 321.3 NM Equity in earnings (losses) from other equity method investees and related activities 23.1 31.0 (7.9) (25 %) $ (26.3) $ (511.8) $ 485.5 95 % Interest expense, net Interest expense, net decreased to $411.4 million for Fiscal 2025 as compared to $436.1 million for Fiscal 2024.
MD&A Table of Contents tax owed pursuant to the IRA, or an average cost of $239.34 per share. Subsequent to February 29, 2024, we repurchased 424,783 shares of Class A Stock pursuant to the 2021 Authorization at an aggregate cost of $110.0 million, excluding the impact of Federal excise tax owed pursuant to the IRA, through open market transactions.
During Fiscal 2025, we repurchased 5,252,003 shares of Class A Stock pursuant to the 2021 Authorization and the 2023 Authorization through open market transactions at an aggregate cost of $1,123.8 million, excluding the impact of Federal excise tax owed pursuant to the IRA, or an average cost of $213.98 per share.
We recognize tax assets and liabilities in accordance with the FASB guidance for income tax accounting. Accordingly, we recognize a tax benefit from an uncertain tax position when it is more likely than not the position will be sustained upon examination based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
We recognize tax assets and liabilities in accordance with the FASB guidance for income tax accounting. Accordingly, we recognize a tax benefit from an uncertain tax position when it is more likely than not the position will be sustained upon examination Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 51 PART II ITEM 7.
Short-term payments Long-term payments Total (in millions) Contractual obligations: Short-term borrowings $ 241.4 $ — $ 241.4 Interest payments on short-term debt $ 0.2 $ — $ 0.2 Long-term debt (excluding unamortized debt issuance costs and unamortized discounts) $ 957.5 $ 10,760.3 $ 11,717.8 Interest payments on long-term debt (1) $ 447.9 $ 3,595.3 $ 4,043.2 Operating leases $ 117.2 $ 731.6 $ 848.8 Constellation Brands, Inc.
Short-term payments Long-term payments Total (in millions) Contractual obligations: Short-term borrowings $ 806.7 $ — $ 806.7 Interest payments on short-term debt $ 2.5 $ — $ 2.5 Long-term debt (excluding unamortized debt issuance costs and unamortized discounts) $ 1,404.1 $ 9,354.6 $ 10,758.7 Interest payments on long-term debt (1) $ 418.2 $ 3,174.2 $ 3,592.4 Operating leases $ 113.6 $ 714.6 $ 828.2 Other long-term liabilities (2) $ 236.5 $ 181.0 $ 417.5 Constellation Brands, Inc.
Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. In addition, changes in existing tax laws or rates could significantly change our current estimate of our unrecognized tax benefit liabilities.
MD&A Table of Contents based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities.
We plan to spend from $1.4 billion to $1.5 billion for capital expenditures in Fiscal 2025, including approximately $1.2 billion for the Beer segment associated primarily with the Mexico Beer Projects. The remaining planned Fiscal 2025 capital expenditures consist of improvements to existing operating facilities and replacements of existing equipment and/or buildings.
Capital Expenditures During Fiscal 2025, we incurred $1,214.1 million for capital expenditures, including $991.5 million for the Beer segment primarily for the Mexico Beer Projects. We plan to spend approximately $1.2 billion for capital expenditures in Fiscal 2026, including approximately $1.0 billion for the Beer segment associated primarily with the Mexico Beer Projects.
Operating income (loss) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change (in millions) Beer $ 3,094.4 $ 2,861.5 $ 232.9 8 % Wine and Spirits 398.7 453.1 (54.4) (12 %) Corporate Operations and Other (247.6) (277.9) 30.3 11 % Comparable Adjustments (75.8) (193.8) 118.0 NM Consolidated operating income (loss) $ 3,169.7 $ 2,842.9 $ 326.8 11 % The increase in Beer operating income is largely attributable to the shipment volume growth for our beer portfolio, the cost savings initiatives, and the favorable pricing impact, partially offset by higher material costs.
MD&A Table of Contents Operating income (loss) Fiscal 2025 Fiscal 2024 Dollar Change Percent Change (in millions) Beer $ 3,394.4 $ 3,094.4 $ 300.0 10 % Wine and Spirits 325.1 398.7 (73.6) (18 %) Corporate Operations and Other (244.6) (247.6) 3.0 1 % Comparable Adjustments (3,120.0) (75.8) (3,044.2) NM Consolidated operating income (loss) $ 354.9 $ 3,169.7 $ (2,814.8) (89 %) The increase in Beer operating income is largely attributable to the favorable impact from pricing, shipment volume growth, and reduced cost of product sold, led by cost savings initiatives, partially offset by the increased marketing spend and unfavorable product mix, as described above.
Goodwill and other intangible assets are classified into three categories: (i) goodwill, (ii) intangible assets with definite lives subject to amortization, and (iii) intangible assets with indefinite lives not subject to amortization. For intangible assets with definite lives, impairment testing is required if conditions exist that indicate the carrying value may not be recoverable.
Our critical accounting estimates include: • Goodwill and other intangible assets. Goodwill and other intangible assets are classified into three categories: (i) goodwill, (ii) intangible assets with definite lives subject to amortization, and (iii) intangible assets with indefinite lives not subject to amortization.
Estimates are based on historical experience, observance of trends in the industry, information provided by our customers, and information available from other outside sources, as appropriate. We review estimates to ensure that they appropriately reflect changes in our business on an ongoing basis.
Critical Accounting Policies and Estimates The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect amounts reported in our consolidated financial statements. Estimates are based on historical experience, observance of trends in the industry, information provided by our customers, and information available from other outside sources, as appropriate.
However, if the results of the qualitative evaluation are inconclusive or suggest an impairment may exist, we must proceed to the quantitative test. The qualitative evaluation is an assessment of factors, including market conditions, industry changes, actual results as compared to forecasted results, or the timing of recent acquisitions and/or divestitures.
We may perform a qualitative evaluation prior to a quantitative test to determine if an impairment exists. However, if the results of the qualitative evaluation are inconclusive or suggest an impairment may exist, we must proceed to the quantitative test.
MD&A Table of Contents Business acquisitions and divestitures consist primarily of the following: Acquisitions Divestitures Fiscal 2024 • Domaine Curry • Craft Beer Divestitures Fiscal 2023 • Lingua Franca • Wine Divestiture • Austin Cocktails For additional information on these acquisitions and divestitures, refer to Notes 2 and 8.
Business acquisitions and divestitures consist primarily of the following: Acquisitions Divestitures Fiscal 2025 • Sea Smoke • SVEDKA Divestiture Fiscal 2024 • Domaine Curry • Craft Beer Divestitures For additional information on these acquisitions and divestitures, refer to Notes 2 and 8. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 44 PART II ITEM 7.
Shares may be repurchased through open market or privately negotiated transactions. We may fund future share repurchases with cash generated from operations and/or proceeds from borrowings. Any repurchased shares will become treasury shares.
Share repurchases under the 2025 Authorization may be accomplished at management’s discretion from time to time based on market conditions, our cash and debt position, and other factors as determined by management. Shares may be repurchased through open market or privately negotiated transactions. We may fund future share repurchases with cash generated from operations, proceeds from borrowings, and/or divestiture proceeds.
This increase of $286.5 million, or 29%, was primarily due to (i) $233.7 million of additional capital expenditures for Fiscal 2024 largely related to the Mexico Beer Projects and (ii) $91.3 million of reduced proceeds from the sale of business, driven by the Wine Divestiture in Fiscal 2023.
This decrease of $311.1 million, or 24%, was primarily due to (i) $403.8 million of increased proceeds from the sale of business, driven by the SVEDKA Divestiture, and (ii) $55.0 million of reduced capital expenditures for Fiscal 2025 as compared to Fiscal 2024.
The most significant assumptions used in the discounted cash flow calculation to determine the estimated fair value of our reporting units in connection with the impairment testing are: (i) the discount rate, (ii) the expected long-term growth rate, and (iii) the annual cash flow projections.
The most significant assumptions used in the discounted cash flow model for the Wine and Spirits reporting unit were: (i) a 9% discount rate (for the interim assessment) and a 10% discount rate (for the annual assessment), (ii) a 1.5% expected long-term growth rate, and (iii) the annual cash flow projections.
This increase of $36.7 million, or 9%, is due to approximately $675 million of higher average borrowings and approximately 20 basis points of higher weighted average interest rates, partially offset by an increase in capitalized interest in connection with the Mexico Beer Projects.
This decrease of $24.7 million, or 6%, is largely due to (i) approximately $275 million of lower average borrowings and (ii) an increase in capitalized interest in connection with the Mexico Beer Projects as compared to Fiscal 2024. For additional information, refer to Note 12.
Goodwill – Our reporting units with goodwill include the Beer segment and the Wine and Spirits segment. In the fourth quarter of Fiscal 2024, we performed our annual goodwill impairment analysis using the quantitative assessment.
In the fourth quarter of Fiscal 2025, we performed our annual goodwill impairment analysis using both the qualitative and quantitative assessments. No indication of impairment was noted for our Beer reporting unit utilizing the qualitative assessment, as the estimated fair value of goodwill exceeded its carrying value.
During Fiscal 2024, we repurchased 1,043,366 shares of Class A Stock pursuant to the 2021 Authorization through open market transactions at an aggregate cost of $249.7 million, excluding the impact of Federal excise Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 48 PART II ITEM 7.
Subsequent to February 28, 2025, we repurchased 494,094 shares of Class A Stock pursuant to the 2025 Authorization at an aggregate cost of $91.7 million, excluding the impact of Federal excise tax owed pursuant to the IRA, through open market transactions. We primarily used cash on hand to pay the purchase price for the repurchased shares. Constellation Brands, Inc.
The increase in net cash used in investing activities was partially offset by a $29.6 million decrease in business acquisitions for Fiscal 2024. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 45 PART II ITEM 7.
The decrease in net cash used in investing activities was partially offset by a $151.2 million increase in business acquisitions, driven by the Sea Smoke acquisition.
In April 2024, the October 2022 Credit Agreement Amendment, which revised certain defined terms and covenants in the 2022 Credit Agreement, became effective.
The October 2022 Credit Agreement Amendment revised certain defined terms and covenants in the 2022 Credit Agreement and became effective in April 2024 following the (i) amendment by Canopy of its Articles of Incorporation, (ii) conversion of our Canopy common shares into Exchangeable Shares, and (iii) resignation of our nominees from the board of directors of Canopy. Constellation Brands, Inc.
Based on this analysis, the reporting unit with the lowest amount of estimated fair value in excess of its carrying value was the Wine and Spirits reporting unit with approximately 11% excess fair value.
This assessment indicated the carrying value of the Wine and Spirits reporting unit exceeded its estimated fair value, resulting in a $2,250.0 million goodwill impairment.
This range does not reflect any tax impact associated with our Canopy investment and related activities. Net income (loss) attributable to CBI Net income (loss) attributable to CBI increased to $1,727.4 million for Fiscal 2024 from $(71.0) million for Fiscal 2023.
Net income (loss) attributable to CBI Net income (loss) attributable to CBI decreased to $(81.4) million for Fiscal 2025 from $1,727.4 million for Fiscal 2024.
These changes were largely offset by operating cash flow increases for the Beer segment in both (i) inventory levels and (ii) accounts receivable primarily attributable to the timing of collections. Additionally, net cash provided by operating activities was negatively impacted by higher income tax payments in Fiscal 2024 as compared to Fiscal 2023.
Certain of our inventory was reclassified to assets held for sale, largely in connection with the 2025 Wine Divestitures Transaction, as of February 28, 2025. Additionally, net cash provided by operating activities was positively impacted by lower Fiscal 2025 income tax payments as compared to Fiscal 2024.
Management reviews the capital expenditure program periodically and modifies it as required to meet current and projected future business needs. Critical Accounting Policies and Estimates The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect amounts reported in our consolidated financial statements.
The remaining planned Fiscal 2026 capital expenditures consist of improvements to existing operating facilities and replacements of existing equipment and/or buildings. Management reviews the capital expenditure program periodically and modifies it as required to meet current and projected future business needs.
In comparison to prior year, our income taxes were impacted primarily by: • an increase in the valuation allowance related to our investment in Canopy, driven by the Canopy Equity Method Investment impairment recognized in Fiscal 2023; offset by • a net income tax benefit recognized from the realization of tax losses related to a prior period divestiture recognized in Fiscal 2023; and • the effective tax rates applicable to our foreign businesses.
In comparison to prior year, our effective tax rate was impacted primarily by: • the net income tax impacts resulting from Fiscal 2025 Wine and Spirits-related impairments including the non-deductible portion of the wine and spirits goodwill impairment; and • the net income tax expense resulting from (i) the SVEDKA Divestiture and (ii) adjustments to certain other valuation allowances; partially offset by • a Fiscal 2025 net income tax benefit recognized following the resolution of various tax examinations and assessments related to prior periods.
As of April 23, 2024, total shares repurchased under the 2021 Authorization and the 2023 Authorization are as follows: Class A Stock Repurchase Authorization Dollar Value of Shares Repurchased Number of Shares Repurchased (in millions, except share data) 2021 Authorization $ 2,000.0 $ 1,496.3 6,300,059 2023 Authorization $ 2,000.0 $ — — Share repurchases under the 2021 Authorization and the 2023 Authorization may be accomplished at management’s discretion from time to time based on market conditions, our cash and debt position, and other factors as determined by management.
MD&A Table of Contents As of April 23, 2025, total shares repurchased under the 2021 Authorization, the 2023 Authorization, and the 2025 Authorization are as follows: Class A Stock Repurchase Authorization Dollar Value of Shares Repurchased Number of Shares Repurchased (in millions, except share data) 2021 Authorization (fully utilized during Fiscal 2025) $ 2,000.0 $ 2,000.0 8,337,547 2023 Authorization (canceled during Fiscal 2026) $ 2,000.0 $ 510.1 2,789,732 2025 Authorization (1) $ 4,000.0 $ 91.7 494,094 (1) As of April 23, 2025, $3,908.3 million remains available for future share repurchases, excluding the impact of Federal excise tax owed pursuant to the IRA.
Removed
ITEM 7. MD&A Table of Contents Selling, general, and administrative expenses as a percent of net sales decreased to 18.5% for Fiscal 2024 as compared with 20.4% for Fiscal 2023.
Added
As previously discussed, the Corporate Operations and Other operating loss remained relatively flat as lower net compensation and benefits impacts and the tax credit were offset by higher consulting services and depreciation expense.
Removed
The decrease is driven largely by (i) approximately 95 basis points of rate decline as the increase in Beer net sales exceeded the increase in selling, general, and administrative expenses, (ii) a favorable change in Comparable Adjustments, contributing approximately 60 basis points of rate decline, and (iii) approximately 30 basis points of rate decline from a decrease in the Corporate Operations and Other segment’s selling, general, and administrative expenses.
Added
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 42 PART II ITEM 7. MD&A Table of Contents The OECD introduced a framework under Pillar Two which includes a 15% global minimum tax rate. The current legislation did not have a material impact on our consolidated financial statements. We continue to monitor developments for potential future impacts.
Removed
As previously discussed, the Corporate Operations and Other decrease in operating loss is largely due to the lower third-party Digital Business Acceleration investments.
Added
Additionally, we provide for taxes that may be payable if undistributed earnings of foreign subsidiaries were to be remitted to the U.S., except for those earnings that we consider to be indefinitely reinvested. For additional information, refer to Note 13. We expect our reported effective tax rate for Fiscal 2026 to be in the range of 17% to 19%.
Removed
The higher average borrowings and weighted average interest rates are largely attributable to funding the aggregate cash payment to holders of Class B Stock in connection with the Reclassification. For additional information, refer to Notes 12 and 17. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 43 PART II ITEM 7.
Added
This decrease of $1,808.8 million, or 105%, is largely attributable to Fiscal 2025 Wine and Spirits-related impairments, including (i) wine and spirits goodwill, (ii) wine trademarks, and (iii) assets held for sale, partially offset by the (i) benefit from income taxes as compared to a provision for income taxes for Fiscal 2024, (ii) favorable impact from income (loss) from unconsolidated investments, driven by Fiscal 2024 Canopy-related activities, (iii) Fiscal 2025 improvements within the Beer segment, and (iv) the net gain related to the SVEDKA Divestiture.
Removed
MD&A Table of Contents Loss on extinguishment of debt Loss on extinguishment of debt primarily consists of a premium payment and the write-off of debt issuance costs in connection with the tender offers of our 3.20% February 2018 Senior Notes and 4.25% May 2013 Senior Notes and make-whole payments in connection with the early redemption of those notes (Fiscal 2023).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions, except per share data) For the Years Ended February 29, 2024 February 28, 2023 February 28, 2022 Sales $ 10,711.0 $ 10,177.2 $ 9,529.1 Excise taxes (749.2) (724.6) (708.4) Net sales 9,961.8 9,452.6 8,820.7 Cost of product sold (4,944.3) (4,683.6) (4,113.4) Gross profit 5,017.5 4,769.0 4,707.3 Selling, general, and administrative expenses (1,847.8) (1,926.1) (1,709.7) Impairment of brewery construction in progress — — (665.9) Operating income (loss) 3,169.7 2,842.9 2,331.7 Income (loss) from unconsolidated investments (511.8) (2,036.4) (1,635.5) Interest expense (435.4) (398.7) (356.4) Loss on extinguishment of debt (0.7) (24.2) (29.4) Income (loss) before income taxes 2,221.8 383.6 310.4 (Provision for) benefit from income taxes (456.6) (422.1) (309.4) Net income (loss) 1,765.2 (38.5) 1.0 Net (income) loss attributable to noncontrolling interests (37.8) (32.5) (41.4) Net income (loss) attributable to CBI $ 1,727.4 $ (71.0) $ (40.4) Net income (loss) per common share attributable to CBI: Basic – Class A Stock $ 9.42 $ (0.11) $ (0.22) Basic – Class B Stock NA $ (2.02) $ (0.20) Diluted – Class A Stock $ 9.39 $ (0.11) $ (0.22) Diluted – Class B Stock NA $ (2.02) $ (0.20) Weighted average common shares outstanding: Basic – Class A Stock 183.307 169.337 167.431 Basic – Class B Stock NA 23.206 23.225 Diluted – Class A Stock 183.959 169.337 167.431 Diluted – Class B Stock NA 23.206 23.225 Cash dividends declared per common share: Class A Stock $ 3.56 $ 3.20 $ 3.04 Class B Stock NA $ 2.16 $ 2.76 Comprehensive income (loss): Net income (loss) $ 1,765.2 $ (38.5) $ 1.0 Other comprehensive income (loss), net of income tax effect: Foreign currency translation adjustments 293.1 274.6 (40.4) Unrealized gain (loss) on cash flow hedges 70.0 188.6 (27.8) Pension/postretirement adjustments 1.2 0.1 0.3 Share of other comprehensive income (loss) of equity method investments — 5.1 (12.5) Other comprehensive income (loss), net of income tax effect 364.3 468.4 (80.4) Comprehensive income (loss) 2,129.5 429.9 (79.4) Comprehensive (income) loss attributable to noncontrolling interests (53.8) (59.7) (38.2) Comprehensive income (loss) attributable to CBI $ 2,075.7 $ 370.2 $ (117.6) The accompanying notes are an integral part of these statements.
Biggest changeAND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions, except per share data) For the Years Ended February 28, 2025 February 29, 2024 February 28, 2023 Sales $ 10,956.9 $ 10,711.0 $ 10,177.2 Excise taxes (748.2) (749.2) (724.6) Net sales 10,208.7 9,961.8 9,452.6 Cost of product sold (4,894.1) (4,944.3) (4,683.6) Gross profit 5,314.6 5,017.5 4,769.0 Selling, general, and administrative expenses (1,950.0) (1,832.7) (1,928.1) Goodwill and intangible assets impairment (2,797.7) — (13.0) Assets held for sale impairment (478.0) — — Gain (loss) on sale of business 266.0 (15.1) 15.0 Operating income (loss) 354.9 3,169.7 2,842.9 Income (loss) from unconsolidated investments (26.3) (511.8) (2,036.4) Interest expense, net (411.4) (436.1) (422.9) Income (loss) before income taxes (82.8) 2,221.8 383.6 (Provision for) benefit from income taxes 51.7 (456.6) (422.1) Net income (loss) (31.1) 1,765.2 (38.5) Net (income) loss attributable to noncontrolling interests (50.3) (37.8) (32.5) Net income (loss) attributable to CBI $ (81.4) $ 1,727.4 $ (71.0) Net income (loss) per common share attributable to CBI: Basic – Class A Stock $ (0.45) $ 9.42 $ (0.11) Basic – Class B Stock NA NA $ (2.02) Diluted – Class A Stock $ (0.45) $ 9.39 $ (0.11) Diluted – Class B Stock NA NA $ (2.02) Weighted average common shares outstanding: Basic – Class A Stock 181.476 183.307 169.337 Basic – Class B Stock NA NA 23.206 Diluted – Class A Stock 181.476 183.959 169.337 Diluted – Class B Stock NA NA 23.206 Cash dividends declared per common share: Class A Stock $ 4.04 $ 3.56 $ 3.20 Class B Stock NA NA $ 2.16 Comprehensive income (loss): Net income (loss) $ (31.1) $ 1,765.2 $ (38.5) Other comprehensive income (loss), net of income tax effect: Foreign currency translation adjustments (818.7) 293.1 274.6 Unrealized gain (loss) on cash flow hedges (256.6) 70.0 188.6 Pension/postretirement adjustments 2.2 1.2 0.1 Share of other comprehensive income (loss) of equity method investments (10.6) — 5.1 Other comprehensive income (loss), net of income tax effect (1,083.7) 364.3 468.4 Comprehensive income (loss) (1,114.8) 2,129.5 429.9 Comprehensive (income) loss attributable to noncontrolling interests (6.1) (53.8) (59.7) Comprehensive income (loss) attributable to CBI $ (1,120.9) $ 2,075.7 $ 370.2 The accompanying notes are an integral part of these statements.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 29, 2024 and February 28, 2023, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 29, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated April 23, 2024 expressed an unqualified opinion on those consolidated financial statements.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 28, 2025 and February 29, 2024, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 28, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated April 23, 2025 expressed an unqualified opinion on those consolidated financial statements.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Constellation Brands, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Constellation Brands, Inc. and subsidiaries (the Company) as of February 29, 2024 and February 28, 2023, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 29, 2024, and the related notes (collectively, the consolidated financial statements).
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Constellation Brands, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Constellation Brands, Inc. and subsidiaries (the Company) as of February 28, 2025 and February 29, 2024, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 28, 2025, and the related notes (collectively, the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 29, 2024 and February 28, 2023, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February 29, 2024, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2025 and February 29, 2024, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February 28, 2025, in conformity with U.S. generally accepted accounting principles.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Rochester, New York April 23, 2024 Constellation Brands, Inc.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Rochester, New York April 23, 2025 Constellation Brands, Inc.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 23, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting .
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 23, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Constellation Brands, Inc.: Opinion on Internal Control Over Financial Reporting We have audited Constellation Brands, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of February 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Constellation Brands, Inc.: Opinion on Internal Control Over Financial Reporting We have audited Constellation Brands, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of February 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 62 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC.
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 62 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC.
The effectiveness of the Company’s internal control over financial reporting has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 57 PART II ITEM 8.
The effectiveness of the Company’s internal control over financial reporting has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 56 PART II ITEM 8.
Commodity derivative instruments are or may be used to hedge forecasted commodity purchases from third parties as either economic hedges or accounting hedges. As of February 29, 2024, exposures to commodity price risk which we are currently hedging include aluminum, corn, diesel fuel, and natural gas prices.
Commodity derivative instruments are or may be used to hedge forecasted commodity purchases from third parties as either economic hedges or accounting hedges. As of February 28, 2025, exposures to commodity price risk which we are currently hedging include aluminum, corn, diesel fuel, and natural gas prices.
Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 58 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 57 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of February 29, 2024.
Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of February 28, 2025.
For additional discussion on our market risk, refer to Notes 6 and 7. Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 55 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Item 8. Financial Statements and Supplementary Data CONSTELLATION BRANDS, INC.
For additional discussion on our market risk, refer to Notes 6 and 7. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 54 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Item 8. Financial Statements and Supplementary Data CONSTELLATION BRANDS, INC.
Approximately 79% of our forecasted transactional exposures for the year ending February 28, 2025, were hedged as of February 29, 2024. We have performed a sensitivity analysis to estimate our exposure to market risk of foreign exchange rates and commodity prices reflecting the impact of a hypothetical 10% adverse change in the applicable market.
Approximately 63% of our forecasted transactional exposures for the year ending February 28, 2026, were hedged as of February 28, 2025. We have performed a sensitivity analysis to estimate our exposure to market risk of foreign exchange rates and commodity prices reflecting the impact of a hypothetical 10% adverse change in the applicable market.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
As of February 29, 2024, we had exposures to foreign currency risk primarily related to the Mexican peso, Canadian dollar, New Zealand dollar, and euro. Approximately 100% of our balance sheet exposures and 76% of our forecasted transactional exposures for the year ending February 28, 2025, were hedged as of February 29, 2024.
As of February 28, 2025, we had exposures to foreign currency risk primarily related to the Mexican peso, Canadian dollar, New Zealand dollar, and euro. Approximately 100% of our balance sheet exposures and 72% of our forecasted transactional exposures for the year ending February 28, 2026, were hedged as of February 28, 2025.
Rochester, New York April 23, 2024 Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 61 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC.
Rochester, New York April 23, 2025 Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 60 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC.
AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 29, 2024 Page Management’s Annual Report on Internal Control Over Financial Reporting 57 Reports of Independent Registered Public Accounting Firm (PCAOB ID 185) 58 Consolidated Balance Sheets 62 Consolidated Statements of Comprehensive Income (Loss) 63 Consolidated Statements of Changes in Stockholders’ Equity 64 Consolidated Statements of Cash Flows 65 Notes to Consolidated Financial Statements 1.
AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2025 Page Management’s Annual Report on Internal Control Over Financial Reporting 56 Reports of Independent Registered Public Accounting Firm (PCAOB ID 185) 57 Consolidated Balance Sheets 61 Consolidated Statements of Comprehensive Income (Loss) 62 Consolidated Statements of Changes in Stockholders’ Equity 63 Consolidated Statements of Cash Flows 64 Notes to Consolidated Financial Statements 1.
Other Accrued Expenses and Liabilities 85 12. Borrowings 85 13. Income Taxes 90 14. Deferred Income Taxes and Other Liabilities 93 15. Leases 94 16. Commitments and Contingencies 96 17. Stockholders' Equity 97 18. Stock-Based Employee Compensation 100 19. Net Income (Loss) Per Common Share Attributable to CBI 103 20. Accumulated Other Comprehensive Income (Loss) 104 21.
Other Accrued Expenses and Liabilities 85 12. Borrowings 85 13. Income Taxes 89 14. Deferred Income Taxes and Other Liabilities 93 15. Leases 93 16. Commitments and Contingencies 95 17. Stockholders' Equity 97 18. Stock-Based Employee Compensation 99 19. Net Income (Loss) Per Common Share Attributable to CBI 102 20. Accumulated Other Comprehensive Income (Loss) 103 21.
The aggregate notional value, estimated fair value, and sensitivity analysis for our open foreign currency and commodity derivative instruments are summarized as follows: Aggregate Notional Value Fair Value, Net Asset (Liability) Increase (Decrease) in Fair Value – Hypothetical 10% Adverse Change February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 (in millions) Foreign currency contracts $ 2,781.5 $ 2,801.2 $ 305.8 $ 232.3 $ (179.4) $ (175.8) Commodity derivative contracts $ 397.5 $ 416.5 $ (29.8) $ (2.0) $ 32.1 $ 34.5 Interest rate risk The estimated fair value of our fixed interest rate debt is subject to interest rate risk, credit risk, and foreign currency risk.
The aggregate notional value, estimated fair value, and sensitivity analysis for our open foreign currency and commodity derivative instruments are summarized as follows: Aggregate Notional Value Fair Value, Net Asset (Liability) Increase (Decrease) in Fair Value – Hypothetical 10% Adverse Change February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024 (in millions) Foreign currency contracts $ 3,221.8 $ 2,781.5 $ 20.6 $ 305.8 $ (213.7) $ (179.4) Commodity derivative contracts $ 322.1 $ 397.5 $ (3.2) $ (29.8) $ 28.5 $ 32.1 Interest rate risk The estimated fair value of our fixed interest rate debt is subject to interest rate risk, credit risk, and foreign currency risk.
We have performed a sensitivity analysis to estimate our exposure to market risk of interest rates reflecting the impact of a hypothetical 1% increase in the prevailing interest rates. The volatility of the applicable rates is dependent on many factors which cannot be forecasted with reliable accuracy. Constellation Brands, Inc.
QUANTITATIVE AND QUALITATIVE DISCLOSURES Table of Contents We have performed a sensitivity analysis to estimate our exposure to market risk of interest rates reflecting the impact of a hypothetical 1% increase in the prevailing interest rates. The volatility of the applicable rates is dependent on many factors which cannot be forecasted with reliable accuracy.
Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies 67 2. Acquisitions and Divestitures 72 3. Inventories 74 4. Prepaid Expenses and Other 74 5. Property, Plant, and Equipment 75 6. Derivative Instruments 75 7. Fair Value of Financial Instruments 79 8. Goodwill 82 9. Intangible Assets 83 10. Equity Method Investments 83 11.
Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies 66 2. Acquisitions, Divestitures, and Restructuring 71 3. Inventories 74 4. Prepaid Expenses and Other 74 5. Property, Plant, and Equipment 74 6. Derivative Instruments 75 7. Fair Value of Financial Instruments 78 8. Goodwill 82 9. Intangible Assets 83 10. Other Assets 83 11.
Unrecognized tax benefits As discussed in Notes 1 and 13 to the consolidated financial statements, the Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination. The Company has recorded unrecognized tax benefits of $416.1 million as of February 29, 2024. Constellation Brands, Inc.
Unrecognized tax benefits As discussed in Notes 1 and 13 to the consolidated financial statements, the Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination. The Company has recorded unrecognized tax benefits of $318.9 million as of February 28, 2025.
Significant Customers and Concentration of Credit Risk 106 22. Business Segment Information 106 23. Selected Quarterly Financial Information (unaudited) 110 Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 56 PART II ITEM 8.
Significant Customers and Concentration of Credit Risk 104 22. Business Segment Information 105 23. Selected Quarterly Financial Information (unaudited) 105 Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 55 PART II ITEM 8.
QUANTITATIVE AND QUALITATIVE DISCLOSURES Table of Contents The aggregate notional value, estimated fair value, and sensitivity analysis for our outstanding fixed-rate debt, including current maturities, are summarized as follows: Aggregate Notional Value Fair Value Net Asset (Liability) Increase (Decrease) in Fair Value – Hypothetical 1% Rate Increase February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 (in millions) Fixed interest rate debt $ 11,717.8 $ 10,576.2 $ (10,775.8) $ (9,436.8) $ (604.8) $ (586.3) A 1% hypothetical change in the prevailing interest rates would have increased interest expense on our variable interest rate debt by $7.1 million and $11.8 million for the years ended February 29, 2024, and February 28, 2023, respectively.
The aggregate notional value, estimated fair value, and sensitivity analysis for our outstanding fixed-rate debt, including current maturities, are summarized as follows: Aggregate Notional Value Fair Value Net Asset (Liability) Increase (Decrease) in Fair Value – Hypothetical 1% Rate Increase February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024 (in millions) Fixed interest rate debt $ 10,758.7 $ 11,717.8 $ (9,990.0) $ (10,775.8) $ (533.7) $ (604.8) Pre-issuance hedge contracts $ 275.0 $ — $ 2.2 $ — $ 15.7 $ — A 1% hypothetical change in the prevailing interest rates would have increased interest expense on our variable interest rate debt by $5.3 million and $7.1 million for the years ended February 28, 2025, and February 29, 2024, respectively.
Specifically, complex auditor judgment, including the involvement of tax and valuation professionals with specialized skills and knowledge, was required in evaluating the Company’s interpretation of tax law and its estimate of the ultimate resolution of its tax positions. The following are the primary procedures we performed to address this critical audit matter.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents professionals with specialized skills and knowledge, was required in evaluating the Company’s interpretation of tax law and its estimate of the ultimate resolution of its tax positions. The following are the primary procedures we performed to address this critical audit matter.
FY 2024 Form 10-K #WORTHREACHINGFOR I 59 PART II ITEM 8.
FY 2025 Form 10-K #WORTHREACHINGFOR I 58 PART II ITEM 8.
In addition, we also have variable interest rate debt outstanding (primarily SOFR-based), certain of which includes a fixed margin subject to the same risks identified for our fixed interest rate debt. There were no outstanding cash flow designated or undesignated interest rate swap contracts or Pre-issuance hedge contracts outstanding as of February 29, 2024, or February 28, 2023.
In addition, we also have variable interest rate debt outstanding (primarily SOFR-based), certain of which includes a fixed margin subject to the same risks identified for our fixed interest rate debt. As of February 28, 2025, we had $275.0 million of outstanding cash flow designated, Pre-issuance hedge contracts designed to minimize interest rate volatility on our future debt issuances.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) February 29, 2024 February 28, 2023 ASSETS Current assets: Cash and cash equivalents $ 152.4 $ 133.5 Accounts receivable 832.8 901.6 Inventories 2,078.3 1,898.7 Prepaid expenses and other 666.0 562.3 Total current assets 3,729.5 3,496.1 Property, plant, and equipment 8,055.2 6,865.2 Goodwill 7,980.3 7,925.4 Intangible assets 2,731.7 2,728.1 Equity method investments 170.6 663.3 Deferred income taxes 2,055.0 2,193.3 Other assets 969.4 790.9 Total assets $ 25,691.7 $ 24,662.3 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term borrowings $ 241.4 $ 1,165.3 Current maturities of long-term debt 956.8 9.5 Accounts payable 1,107.1 941.5 Other accrued expenses and liabilities 836.4 852.0 Total current liabilities 3,141.7 2,968.3 Long-term debt, less current maturities 10,681.1 11,286.5 Deferred income taxes and other liabilities 1,804.3 1,673.6 Total liabilities 15,627.1 15,928.4 Commitments and contingencies (Note 16) CBI stockholders’ equity: Preferred Stock, $0.01 par value – Authorized, 1,000,000 shares; Issued, none — — Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,698,298 shares and 212,697,428 shares, respectively 2.1 2.1 Class 1 Stock, $0.01 par value – Authorized, 25,000,000 shares; Issued, 23,661 shares and 22,705 shares, respectively — — Additional paid-in capital 2,047.3 1,903.0 Retained earnings 13,417.2 12,343.9 Accumulated other comprehensive income (loss) 376.8 28.5 15,843.4 14,277.5 Less: Treasury stock – Class A Stock, at cost, 29,809,881 shares and 29,498,426 shares, respectively (6,100.3) (5,863.9) Total CBI stockholders’ equity 9,743.1 8,413.6 Noncontrolling interests 321.5 320.3 Total stockholders’ equity 10,064.6 8,733.9 Total liabilities and stockholders’ equity $ 25,691.7 $ 24,662.3 The accompanying notes are an integral part of these statements.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) February 28, 2025 February 29, 2024 ASSETS Current assets: Cash and cash equivalents $ 68.1 $ 152.4 Accounts receivable 736.5 832.8 Inventories 1,437.2 2,078.3 Prepaid expenses and other 561.1 666.0 Assets held for sale 913.5 — Total current assets 3,716.4 3,729.5 Property, plant, and equipment 7,409.8 8,055.2 Goodwill 5,126.8 7,980.3 Intangible assets 2,532.3 2,731.7 Deferred income taxes 1,805.3 2,055.0 Other assets 1,061.7 1,140.0 Total assets $ 21,652.3 $ 25,691.7 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term borrowings $ 806.7 $ 241.4 Current maturities of long-term debt 1,402.0 956.8 Accounts payable 939.8 1,107.1 Other accrued expenses and liabilities 886.7 836.4 Total current liabilities 4,035.2 3,141.7 Long-term debt, less current maturities 9,289.0 10,681.1 Deferred income taxes and other liabilities 1,193.3 1,804.3 Total liabilities 14,517.5 15,627.1 Commitments and contingencies (Note 16) CBI stockholders’ equity: Preferred Stock, $0.01 par value – Authorized, 1,000,000 shares; Issued, none — — Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,698,298 shares and 212,698,298 shares, respectively 2.1 2.1 Class 1 Stock, $0.01 par value – Authorized, 25,000,000 shares; Issued, 27,037 shares and 23,661 shares, respectively — — Additional paid-in capital 2,144.6 2,047.3 Retained earnings 12,603.4 13,417.2 Accumulated other comprehensive income (loss) (662.7) 376.8 Class A Stock in treasury, at cost, 34,505,141 shares and 29,809,881 shares, respectively (7,205.4) (6,100.3) Total CBI stockholders’ equity 6,882.0 9,743.1 Noncontrolling interests 252.8 321.5 Total stockholders’ equity 7,134.8 10,064.6 Total liabilities and stockholders’ equity $ 21,652.3 $ 25,691.7 The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. FY 2024 Form 10-K #WORTHREACHINGFOR I 63 PART II
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 88 PART II ITEM 8.
We identified the evaluation of the fair value of the Wine and Spirits reporting unit as a critical audit matter due to the sensitivity of key assumptions used in the discounted cash flow model. A high degree of subjective auditor judgment was required to evaluate the key assumptions, including the discount rate, revenue growth rates, and long-term growth rate.
A high degree of subjective auditor judgment was required to evaluate the key assumptions used in the discounted cash flow model, including the discount rate, projected revenue growth rates and operating margins, and long-term growth rate. Changes to these key assumptions could have a significant impact on the fair value of the reporting unit.
FY 2024 Form 10-K #WORTHREACHINGFOR I 54 PART II ITEM 7A.
FY 2025 Form 10-K #WORTHREACHINGFOR I 76 PART II ITEM 8.
We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s goodwill impairment assessment process, including controls related to the determination of the key assumptions. We evaluated the Company’s revenue growth rates by comparing them to the Company’s historical performance and to relevant market data.
We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s goodwill impairment assessment process, including controls related to the determination of the key assumptions used to estimate the fair value of the reporting unit.
FY 2024 Form 10-K #WORTHREACHINGFOR I 60 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents We identified the evaluation of certain of the Company’s unrecognized tax benefits as a critical audit matter.
We identified the evaluation of certain of the Company’s unrecognized tax benefits as a critical audit matter. Specifically, complex auditor judgment, including the involvement of tax and valuation Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 59 PART II ITEM 8.
Changes to these assumptions could have a significant impact on the fair value of the reporting unit. Additionally, specialized skills and knowledge were required to assess certain of these assumptions. The following are the primary procedures we performed to address this critical audit matter.
Additionally, specialized skills and knowledge were required to assess the discount rate and long-term growth rate assumptions used in determining the fair value. The following are the primary procedures we performed to address this critical audit matter.
The Company performs goodwill impairment testing on an annual basis, or sooner, if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In connection with the impairment testing, the Company estimated the fair value of its reporting units using a discounted cash flow model.
Fair value of the Wine and Spirits reporting unit As discussed in Notes 1, 7, and 8 to the consolidated financial statements, the Company performs goodwill impairment testing on an annual basis, or more frequently, if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Removed
Fair value of the Wine and Spirits reporting unit As discussed in Notes 1 and 8 to the consolidated financial statements, the Company’s goodwill balance for the Wine and Spirits reporting unit as of February 29, 2024 was $2,742.1 million.
Added
There were no other cash flow designated or undesignated interest rate swap contracts or Pre-issuance hedge contracts outstanding as of February 28, 2025, or February 29, 2024. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 53 PART II ITEM 7A.
Added
During the three months ended August 31, 2024, in connection with negative trends within the Wine and Spirits business, the Company updated its outlook for the Wine and Spirits reporting unit. The updated forecast indicated it was more likely than not that the fair value of the reporting unit might be below its carrying value.
Added
Accordingly, the Company performed an interim quantitative assessment for goodwill impairment using a discounted cash flow model to estimate the fair value of this reporting unit. The assessment indicated that the carrying value of this reporting unit exceeded its estimated fair value, resulting in a $2,250.0 million goodwill impairment.
Added
During the three months ended February 28, 2025, the Company performed its annual impairment analysis and updated its estimate of the fair value of the Wine and Spirits reporting unit using a discounted cash flow model to reflect the latest financial projections and an increase in the discount rate.
Added
As a result, the Company recognized an additional $490.7 million goodwill impairment charge to write-off the remaining goodwill balance for the Wine and Spirits reporting unit as of February 28, 2025. We identified the evaluation of the fair value of the Wine and Spirits reporting unit as a critical audit matter.
Added
We evaluated the Company’s projected revenue growth rates and operating margins by comparing them to the Company’s historical performance and to relevant market data.
Added
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 61 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC.
Added
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Non-controlling Interests Total Class A Class B Balance at February 28, 2022 $ 1.9 $ 0.3 $ 1,808.9 $ 14,505.4 $ (412.7) $ (4,171.9) $ 315.9 $ 12,047.8 Comprehensive income (loss): Net income (loss) — — — (71.0) — — 32.5 (38.5) Other comprehensive income (loss), net of income tax effect — — — — 441.2 — 27.2 468.4 Comprehensive income (loss) 429.9 Reclassification payment — — — (1,500.0) — — — (1,500.0) Retirement of treasury shares — (0.1) — (2.2) — 2.3 — — Conversion of common shares 0.2 (0.2) — — — — — — Repurchase of shares — — — — — (1,700.2) — (1,700.2) Dividends declared — — — (588.3) — — — (588.3) Noncontrolling interest distributions — — — — — — (55.3) (55.3) Shares issued under equity compensation plans — — 25.7 — — 5.9 — 31.6 Stock-based compensation — — 68.4 — — — — 68.4 Balance at February 28, 2023 2.1 — 1,903.0 12,343.9 28.5 (5,863.9) 320.3 8,733.9 Comprehensive income (loss): Net income (loss) — — — 1,727.4 — — 37.8 1,765.2 Other comprehensive income (loss), net of income tax effect — — — — 348.3 — 16.0 364.3 Comprehensive income (loss) 2,129.5 Repurchase of shares — — — — — (249.7) — (249.7) Dividends declared — — — (654.1) — — — (654.1) Noncontrolling interest distributions — — — — — — (52.6) (52.6) Shares issued under equity compensation plans — — 80.6 — — 13.3 — 93.9 Stock-based compensation — — 63.7 — — — — 63.7 Balance at February 29, 2024 2.1 — 2,047.3 13,417.2 376.8 (6,100.3) 321.5 10,064.6 Comprehensive income (loss): Net income (loss) — — — (81.4) — — 50.3 (31.1) Other comprehensive income (loss), net of income tax effect — — — — (1,039.5) — (44.2) (1,083.7) Comprehensive income (loss) (1,114.8) Repurchase of shares — — — — — (1,123.8) — (1,123.8) Dividends declared — — — (732.4) — — — (732.4) Noncontrolling interest distributions — — — — — — (57.5) (57.5) Shares issued under equity compensation plans — — 33.5 — — 18.7 — 52.2 Stock-based compensation — — 71.9 — — — — 71.9 Purchase of noncontrolling interest — — (8.1) — — — (17.3) (25.4) Balance at February 28, 2025 $ 2.1 $ — $ 2,144.6 $ 12,603.4 $ (662.7) $ (7,205.4) $ 252.8 $ 7,134.8 The accompanying notes are an integral part of these statements.
Added
Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 63 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) For the Years Ended February 28, 2025 February 29, 2024 February 28, 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (31.1) $ 1,765.2 $ (38.5) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Unrealized net (gain) loss on securities measured at fair value 47.9 85.4 45.9 Deferred tax provision (benefit) (210.3) 147.9 207.8 Depreciation 445.7 427.9 383.8 Stock-based compensation 72.2 63.6 68.5 Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings (5.4) 321.2 971.8 Noncash lease expense 112.4 91.3 89.3 Amortization of debt issuance costs and loss on extinguishment of debt 10.4 11.7 34.0 Equity method investments impairment 8.7 136.1 1,060.3 Long-lived assets impairment — — 53.5 Assets held for sale impairment 478.0 — — (Gain) loss on sale of business (266.0) 15.1 (15.0) Gain (loss) on settlement of Pre-issuance hedge contracts — 1.9 20.7 Net gain in connection with Exchangeable Shares (7.2) — — Goodwill and intangible assets impairment 2,797.7 — 13.0 Change in operating assets and liabilities, net of effects from purchase and sale of business: Accounts receivable 90.3 73.2 (3.9) Inventories (152.2) (182.3) (356.4) Prepaid expenses and other current assets (89.4) (76.5) 197.9 Accounts payable 101.5 24.7 114.9 Deferred revenue (35.5) (11.0) 12.8 Other accrued expenses and liabilities (48.9) (115.9) (239.8) Other (166.6) 0.5 136.3 Total adjustments 3,183.3 1,014.8 2,795.4 Net cash provided by (used in) operating activities 3,152.2 2,780.0 2,756.9 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant, and equipment (1,214.1) (1,269.1) (1,035.4) Purchase of business, net of cash acquired (158.7) (7.5) (37.1) Investments in equity method investees and securities (35.0) (34.6) (30.8) Proceeds from sale of assets 35.5 21.9 6.7 Proceeds from sale of business 409.2 5.4 96.7 Other investing activities (11.7) (2.0) 0.5 Net cash provided by (used in) investing activities (974.8) (1,285.9) (999.4) Constellation Brands, Inc.
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FY 2025 Form 10-K #WORTHREACHINGFOR I 64 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) For the Years Ended February 28, 2025 February 29, 2024 February 28, 2023 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt — 1,144.4 3,344.9 Principal payments of long-term debt (957.0) (809.7) (2,159.7) Net proceeds from (repayments of) short-term borrowings 565.3 (923.9) 842.3 Dividends paid (731.8) (653.8) (587.7) Purchases of treasury stock (1,123.8) (249.7) (1,700.2) Proceeds from shares issued under equity compensation plans 73.8 104.5 42.4 Payments of minimum tax withholdings on stock-based payment awards (13.8) (11.2) (10.4) Payments of debt issuance, debt extinguishment, and other financing costs (0.1) (7.7) (36.2) Distributions to noncontrolling interests (57.5) (52.6) (55.3) Payment of contingent consideration (0.7) (14.9) — Purchase of noncontrolling interest (16.2) — — Payment to holders of Class B Stock in connection with the Reclassification — — (1,500.0) Net cash provided by (used in) financing activities (2,261.8) (1,474.6) (1,819.9) Effect of exchange rate changes on cash and cash equivalents 0.1 (0.6) (3.5) Net increase (decrease) in cash and cash equivalents (84.3) 18.9 (65.9) Cash and cash equivalents, beginning of year 152.4 133.5 199.4 Cash and cash equivalents, end of year $ 68.1 $ 152.4 $ 133.5 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year Interest, net of interest capitalized $ 416.1 $ 418.6 $ 386.3 Income taxes, net of refunds received $ 197.1 $ 333.5 $ 129.7 Noncash investing and financing activities Additions to property, plant, and equipment $ 143.1 $ 269.6 $ 183.3 Purchase of noncontrolling interest $ 9.2 $ — $ — The accompanying notes are an integral part of these statements.
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Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 65 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents CONSTELLATION BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 2025 1.
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DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of business We operate primarily in the beverage alcohol industry with operations in the U.S., Mexico, New Zealand, and Italy producing a powerful portfolio of consumer-connected, high-end imported beer brands, and higher-end wine and spirits brands.
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Basis of presentation Principles of consolidation Our consolidated financial statements include our accounts and our majority-owned and controlled domestic and foreign subsidiaries. In addition, we have an equally-owned joint venture with Owens-Illinois. The joint venture owns and operates a state-of-the-art glass production plant which provides bottles exclusively for the Nava Brewery.
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We have determined that we are the primary beneficiary of this variable interest entity and accordingly, the results of operations of the joint venture are reported in the Beer segment and are included in our consolidated results of operations. All intercompany accounts and transactions are eliminated in consolidation.
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Reclassification We reclassified equity method investments to other assets on our consolidated balance sheet as of February 29, 2024, to conform with current year presentation.
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Equity method investments If we are not required to consolidate our investment in another entity, we use the equity method when we (i) can exercise significant influence over the other entity and (ii) hold common stock and/or in-substance common stock of the other entity.
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Under the equity method, investments are carried at cost, plus or minus our equity in the increases and decreases in the investee’s net assets after the date of acquisition. We monitor our equity method investments for factors indicating other-than-temporary impairment. Dividends received from the investee reduce the carrying amount of the investment.
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Management’s use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
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Actual results could differ from those estimates. Summary of significant accounting policies Revenue recognition Our revenue (referred to in our financial statements as “sales”) consists primarily of the sale of beer, wine, and spirits domestically in the U.S. Sales of products are for cash or otherwise agreed-upon credit terms.
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Our payment terms vary by location and customer, however, the time period between when revenue is recognized and when payment is due is not significant. Our customers consist primarily of wholesale distributors.
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Our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution, and shipping terms. We have elected to treat shipping as a fulfillment activity.
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Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. Our sales terms do not allow for a right of return except for matters related to any manufacturing defects on our part. Amounts billed to customers for shipping and handling are included in sales.
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As noted, the majority of our revenues are generated from the domestic sale of beer, wine, and spirits to wholesale distributors in the U.S. Our other revenue generating activities include the export of certain of our Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 66 PART II ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents products to select international markets, as well as the sale of our products through state alcohol beverage control agencies, on-premise, retail locations in certain markets, and 3-tier eCommerce and DTC channels.
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We have evaluated these other revenue generating activities under the disaggregation disclosure criteria and concluded that they are immaterial for separate disclosure. See Note 22 for disclosure of net sales by product type.
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Sales reflect reductions attributable to consideration given to customers in various customer incentive programs, including pricing discounts on single transactions, volume discounts, promotional and advertising allowances, coupons, and rebates. This variable consideration is recognized as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized.
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For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors’ sales to retailers.
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Other common forms of variable consideration include volume rebates for meeting established sales targets, and coupons and mail-in rebates offered to the consumer. The determination of the reduction of the transaction price for variable consideration requires that we make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recognized.
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We estimate this variable consideration by taking into account factors such as the nature of the promotional activity, historical information, and current trends, availability of actual results and expectations of customer and consumer behavior. Excise taxes remitted to tax authorities are government-imposed excise taxes primarily on our beverage alcohol products.
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Excise taxes are shown on a separate line item as a reduction of sales and are recognized in our results of operations when the related product sale is recognized. Excise taxes are recognized as a current liability in other accrued expenses and liabilities, with the liability subsequently reduced when the taxes are remitted to the tax authority.
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Cost of product sold The types of costs included in cost of product sold are raw materials, packaging materials, manufacturing costs, plant administrative support and overheads, and freight and warehouse costs (including distribution network costs). Distribution network costs include inbound freight charges and outbound shipping and handling costs, purchasing and receiving costs, inspection costs, and warehousing and internal transfer costs.
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Selling, general, and administrative expenses The types of costs included in selling, general, and administrative expenses consist predominately of advertising and non-manufacturing administrative and overhead costs. We expense advertising (hereafter referred to as “marketing”) costs as incurred, shown, or distributed.
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Marketing expense for the years ended February 28, 2025, February 29, 2024, and February 28, 2023, was $931.2 million, $853.5 million, and $860.8 million, respectively. Foreign currency translation The functional currency of our foreign subsidiaries is generally the respective local currency.
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The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate for the period. The resulting translation adjustments are recognized as a component of AOCI.
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Gains or losses resulting from foreign currency denominated transactions are included in selling, general, and administrative expenses. Cash and cash equivalents Cash equivalents consist of highly liquid investments with an original maturity when purchased of three months or less and are stated at cost, which approximates fair value.
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Inventories Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor, and overhead. Constellation Brands, Inc. FY 2025 Form 10-K #WORTHREACHINGFOR I 67 PART II ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Table of Contents Bulk wine inventories are included as in-process inventories within current assets, in accordance with the general practices of the wine industry, although a portion of such inventories may be aged for periods greater than one year.
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A substantial portion of barreled whiskey and brandy will not be sold within one year because of the duration of the aging process. All barreled spirits are classified as in-process inventories and are included in current assets, in accordance with industry practice.
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Warehousing, insurance, value added taxes, and other carrying charges applicable to barreled spirits held for aging are included in inventory costs.
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We assess the valuation of our inventories and reduce the carrying value of those inventories that are obsolete or in excess of our forecasted usage to their estimated net realizable value based on analyses and assumptions including, but not limited to, historical usage, future demand, and market requirements. Property, plant, and equipment Property, plant, and equipment is stated at cost.

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