U.S.

Non-U.S.

- Canada

- New Zealand

- Italy

- Other

Total Revenue

c627cf95f620fab7e2d019eef8d1fdd0b0c218d09e366e31f3c6df544137634e

| Segment / Quarter | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2023 | Q4 2023 |
|-------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Beer Segment (Million USD)** | **2,098.6**  **[0000016918-23-000101_stzex991_53120238k10q.htm:12]** **[0000016918-23-000103_stz-20230531.htm:33]** **[0000016918-23-000101_stzex991_53120238k10q.htm:0]**  | **2,392.7**  **[0000016918-23-000189_stzex991_83120238k10q.htm:12]** **[0000016918-23-000190_stz-20230831.htm:37]**  | **1,968.5**  **[0000016918-24-000005_stz-20231130.htm:43]** **[0000016918-24-000004_stzex991_113020238k10q.htm:14]**  | **1,702.8**  **[0000016918-24-000031_stzex991_2292024earnings.htm:14]**  | **2,272.8**  **[0000016918-24-000109_stzex991_53120248k10q.htm:9]** **[0000016918-24-000111_stz-20240531.htm:28]**  | **2,530.2**  **[0000016918-24-000178_stz-20240831.htm:36]**  | **1,891.9**  **[0000016918-23-000006_stz-20221130.htm:52]**  | **7,465.0**  **[0000016918-23-000045_stz-20230228.htm:14]**  |
| **Wine and Spirits Segment (Million USD)** | **416.3**  **[0000016918-23-000101_stzex991_53120238k10q.htm:12]** **[0000016918-23-000103_stz-20230531.htm:33]** **[0000016918-23-000101_stzex991_53120238k10q.htm:0]**  | **444.1**  **[0000016918-23-000189_stzex991_83120238k10q.htm:12]** **[0000016918-23-000190_stz-20230831.htm:37]**  | **502.4**  **[0000016918-24-000005_stz-20231130.htm:43]** **[0000016918-24-000004_stzex991_113020238k10q.htm:14]**  | **436.4**  **[0000016918-24-000031_stzex991_2292024earnings.htm:14]**  | **389.0**  **[0000016918-24-000109_stzex991_53120248k10q.htm:9]** **[0000016918-24-000111_stz-20240531.htm:28]**  | **388.7**  **[0000016918-24-000178_stz-20240831.htm:36]**  | **544.6**  **[0000016918-23-000006_stz-20221130.htm:52]**  | **1,987.6**  **[0000016918-23-000045_stz-20230228.htm:14]**  |
| **Total Consolidated Net Sales (Million USD)** | **2,514.9**  **[0000016918-23-000101_stzex991_53120238k10q.htm:12]** **[0000016918-23-000103_stz-20230531.htm:33]** **[0000016918-23-000101_stzex991_53120238k10q.htm:0]**  | **2,836.8**  **[0000016918-23-000189_stzex991_83120238k10q.htm:12]** **[0000016918-23-000190_stz-20230831.htm:37]**  | **2,470.9**  **[0000016918-24-000005_stz-20231130.htm:43]** **[0000016918-24-000004_stzex991_113020238k10q.htm:14]**  | **2,139.2**  **[0000016918-24-000031_stzex991_2292024earnings.htm:14]**  | **2,661.8**  **[0000016918-24-000109_stzex991_53120248k10q.htm:9]** **[0000016918-24-000111_stz-20240531.htm:28]**  | **2,918.9**  **[0000016918-24-000178_stz-20240831.htm:36]**  | **2,436.5**  **[0000016918-23-000006_stz-20221130.htm:52]**  | **9,452.6**  **[0000016918-23-000045_stz-20230228.htm:14]**  |

7950ec409d37af986e8b4d749d126ecde4998738b3b0740b6891336895c335ec

| Metric | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 |
|--------|---------|---------|---------|---------|---------|---------|---------|---------|
| Beer Shipments | **97.8**  **[0000016918-23-000006_stz-20221130.htm:52]**  | **78.7**  **[0000016918-23-000026_stzex991_2282023earnings.htm:1]**  | **107.0**  **[0000016918-23-000101_stzex991_53120238k10q.htm:11]** **[0000016918-23-000101_stzex991_53120238k10q.htm:0]**  | **123.0**  **[0000016918-23-000189_stzex991_83120238k10q.htm:12]**  | **101.1**  **[0000016918-24-000004_stzex991_113020238k10q.htm:13]** **[0000016918-24-000004_stzex991_113020238k10q.htm:1]**  | **87.0**  **[0000016918-24-000031_stzex991_2292024earnings.htm:13]**  | **115.1**  **[0000016918-24-000109_stzex991_53120248k10q.htm:9]** **[0000016918-24-000111_stz-20240531.htm:28]**  | **128.6**  **[0000016918-24-000178_stz-20240831.htm:36]** **[0000016918-24-000177_stzex991_83120248k10q.htm:10]**  |
| Wine & Spirits Shipments | **6.9**  **[0000016918-23-000006_stz-20221130.htm:53]**  | **6.0**  **[0000016918-23-000026_stzex991_2282023earnings.htm:2]** **[0000016918-23-000026_stzex991_2282023earnings.htm:14]**  | **5.9**  **[0000016918-23-000103_stz-20230531.htm:34]**  | **6.1**  **[0000016918-23-000189_stzex991_83120238k10q.htm:12]**  | **6.1**  **[0000016918-24-000004_stzex991_113020238k10q.htm:13]** **[0000016918-24-000004_stzex991_113020238k10q.htm:1]**  | **5.7**  **[0000016918-24-000031_stzex991_2292024earnings.htm:13]**  | **5.6**  **[0000016918-24-000109_stzex991_53120248k10q.htm:9]**  | **5.5**  **[0000016918-24-000178_stz-20240831.htm:36]**  |

a3a34aceb085e4d8741f79fcd6135e9f9b0468d8d5be010678e707e7aa737194

c9ca3f177777538c6daa240d1e2bc207215879d521ba40fe7574bd21e672b0a5

Constellation Brands, Inc. is an international producer and marketer of beer, wine, and spirits, with operations in the U.S., Mexico, New Zealand, and Italy. The company is the second-largest beer company in the U.S. and holds a strong position in the high-end beer segment, with brands such as Corona Extra, Modelo Especial, and Pacifico **[0000016918-24-000102_stz-20240530.htm:4]** **[0000016918-24-000054_stz-20240229.htm:9]**. Their business is organized into two main divisions: Beer, and Wine and Spirits, with the Beer segment being the largest contributor to revenue **[0000016918-24-000054_stz-20240229.htm:11]**. Constellation Brands continues to expand its market presence through strategic investments and innovations, particularly in consumer-led premiumization trends and digital channels **[0000016918-24-000054_stz-20240229.htm:10]** **[0000016918-24-000111_stz-20240531.htm:22]**.

1. **Beer** - Produces and markets high-end imported beer brands, including Corona Extra, Modelo Especial, and Pacifico, which account for the majority of the company's revenue. Notable achievements include Modelo Especial becoming the best-selling beer in the U.S. **[0000016918-24-000054_stz-20240229.htm:11]**.
2. **Wine and Spirits** - Focuses on higher-end brands with a portfolio that includes well-known names like Robert Mondavi Winery and Kim Crawford. This segment has been reshaped to emphasize higher-margin, higher-growth brands **[0000016918-24-000054_stz-20240229.htm:9]** **[0000016918-24-000054_stz-20240229.htm:11]**.

b9459b20772b109668ee748a7c15efa72ac1d73045dca997312611b2e001a03b

1. In the Wine and Spirits segment, despite mentioning "green shoots," the business continues to face challenges, including a significant impairment from $3 billion to $500 million. Can you explain the drivers behind such a dramatic change and what strategic actions are being taken to turn around this segment?  **[STZ_3402594_16]** **[STZ_3402594_17]** 

2. Now that you've achieved your leverage target and have $2.2 billion remaining in share repurchase authorization, how do you plan to balance further capital returns to shareholders with potential investments in growth opportunities, especially considering the expected uplift in free cash flow beyond fiscal '25?  **[STZ_3402594_8]** **[STZ_3402594_7]** 

3. Given that shipments have been ahead of depletions in the first half and you expect a reversal in Q3 due to maintenance activities, how confident are you in achieving the higher end of your Beer top-line growth guidance amid potential macroeconomic headwinds?  **[STZ_3402594_13]** **[STZ_3402594_3]** 

4. With Beer gross margins benefiting from cost savings and efficiency initiatives, and with increased marketing spend and less fixed cost absorption expected in the second half, how sustainable is your margin expansion going forward, and what risks might impact these margins?  **[STZ_3402594_15]** 

5. Despite the significant shelf space gains in the spring resets, can you quantify the actual sales lift from these gains, and how does this factor into your expectations for accelerated top-line growth in the Beer segment in the second half, considering the current macroeconomic pressures on consumer demand?  **[STZ_3402594_10]** 

d6e6130b2229355d74bb0bf954faa388efa5e464f6837993089470fc3ad6f89c

557ea07e1036a2c0474b40408d5d9171f91a19e3badf44859b0dc7d54b5ba73a

6e0e8e4e552e3f2c675c9965f1a27aab01ea6cf2cf971ed68d189a7ac6530fcb

a7079197adf8dee55d388dfdc532c80bf0f6259210a73608b696464a8ece7286

- **Anheuser-Busch InBev** - Competitor in the beer segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **The Boston Beer Company** - Competitor in the beer segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Heineken** - Competitor in the beer segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Mark Anthony** - Competitor in the beer segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Molson Coors** - Competitor in the beer segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Deutsch Family Wine & Spirits** - Competitor in the wine segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Duckhorn Portfolio** - Competitor in the wine segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **E. & J. Gallo Winery** - Competitor in both wine and spirits segments  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Ste. Michelle Wine Estates** - Competitor in the wine segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Treasury Wine Estates** - Competitor in the wine segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Trinchero Family Estates** - Competitor in the wine segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **The Wine Group** - Competitor in the wine segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Bacardi USA** - Competitor in the spirits segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Beam Suntory** - Competitor in the spirits segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Brown-Forman** - Competitor in the spirits segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Diageo** - Competitor in the spirits segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Fifth Generation** - Competitor in the spirits segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Pernod Ricard** - Competitor in the spirits segment  **[0000016918-24-000054_stz-20240229.htm:14]** .
- **Sazerac Company** - Competitor in the spirits segment  **[0000016918-24-000054_stz-20240229.htm:14]** .

93c61e030627008371c7eb5cbf3fa7d773442eca57c48c0ed34bfefd223c6327

Beer Shipments

Wine & Spirits Shipments

73ad93df82c28fb8d2e1907315f36ec491d4a353db449564c4820853e38d4ad6

Constellation’s Q3: Beer margin at 39–40%, volumes +4–7%, Wine & Spirits premium labels up 7%, craft spirits +9%. Returned $670M YTD, with $1.9B buyback left. Despite overall beer softness, Modelo’s growing awareness remains a key engine for outperformance.

8989ec30d7866af4beac4bb579dd083e9a4c14c1186f679af8a4740060a8bde8

### Q2 2025 Earnings Call
- **Issued Period**: Q2 2025
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Enterprise Net Sales**: Expected to grow **4% to 6%**  **[STZ_3402594_4]** .
  2. **Enterprise Comparable Operating Income**: Expected to grow **8% to 9%**  **[STZ_3402594_4]** .
  3. **Comparable EPS**: **$13.60 to $13.80**  **[STZ_3402594_4]** .
  4. **Beer Business**:
     - Net Sales Growth: **6% to 8%**  **[STZ_3402594_5]** .
     - Operating Income Growth: **11% to 12%**  **[STZ_3402594_2]** .
     - Operating Margin: Approximately **39%**  **[STZ_3402594_5]** .
  5. **Wine and Spirits Business**:
     - Net Sales Decline: **4% to 6%**  **[STZ_3402594_2]** .
     - Operating Income Decline: **16% to 18%**  **[STZ_3402594_2]** .
  6. **Interest Expense**: Approximately **$430 million**  **[STZ_3402594_6]** .
  7. **Comparable Effective Tax Rate**: **18.5%**  **[STZ_3402594_6]** .
  8. **Free Cash Flow**: **$1.4 billion to $1.5 billion**  **[STZ_3402594_7]** .
  9. **Marketing Expense for Beer**: Approximately **8.5%** of net sales  **[STZ_3402594_5]** .
  10. **SG&A Expense for Beer**: Approximately **5%** of net sales  **[STZ_3402594_5]** .

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Enterprise Net Sales Growth**: **6% to 7%**  **[STZ_3392996_5]** .
  2. **Enterprise Operating Income Growth**: **8% to 10%**  **[STZ_3392996_5]** .
  3. **Comparable EPS Guidance**: **$13.50 to $13.80**  **[STZ_3392996_5]** **[STZ_3392996_6]** .
  4. **Beer Business**:
     - Net Sales Growth: **7% to 9%**  **[STZ_3392996_3]** .
     - Operating Income Growth: **10% to 12%**  **[STZ_3392996_3]** .
     - Operating Margin: Approximately **39%**  **[STZ_3392996_7]** **[STZ_3392996_3]** .
  5. **Wine and Spirits Business**:
     - Net Sales Performance: Relatively stable year-over-year  **[STZ_3392996_7]** .
     - Operating Income Decline: **9% to 11%**  **[STZ_3392996_3]** .
  6. **Corporate Expense**: Approximately **$260 million**  **[STZ_3392996_8]** .
  7. **Interest Expense**: **$445 million to $455 million**  **[STZ_3392996_8]** .
  8. **Comparable Effective Tax Rate**: **18.5%**  **[STZ_3392996_8]** .
  9. **Free Cash Flow**: No specific guidance, but Q1 was **$315 million**  **[STZ_3392996_8]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Enterprise-wide Net Sales Growth**: **6% to 7%**  **[STZ_3379765_7]** .
  2. **Beer Business Net Sales Growth**: **7% to 9%**  **[STZ_3379765_3]** .
  3. **Wine and Spirits Business Net Sales**: **0.5% decline to 0.5% growth**  **[STZ_3379765_7]** .
  4. **Enterprise-wide Operating Income Growth**: **8% to 10%**  **[STZ_3379765_7]** .
  5. **Beer Business Operating Income Growth**: **10% to 12%**  **[STZ_3379765_3]** .
  6. **Wine and Spirits Business Operating Income**: Decline by **9% to 11%**  **[STZ_3379765_3]** .
  7. **Corporate Expense**: Approximately **$260 million**  **[STZ_3379765_7]** .
  8. **Interest Expense**: **$445 million to $455 million**  **[STZ_3379765_8]** .
  9. **Comparable Effective Tax Rate**: **18.5%**  **[STZ_3379765_8]** .
  10. **Noncontrolling Interest**: About **$35 million**  **[STZ_3379765_8]** .
  11. **Weighted Average Diluted Shares Outstanding**: Around **183 million**  **[STZ_3379765_8]** .
  12. **Reported EPS**: **$13.40 to $13.70**  **[STZ_3379765_8]** .
  13. **Comparable EPS**: **$13.50 to $13.80**  **[STZ_3379765_8]** .
  14. **Free Cash Flow**: **$1.4 billion to $1.5 billion**  **[STZ_3379765_8]** .
  15. **Capital Expenditures (CapEx)**: **$1.4 billion to $1.5 billion**  **[STZ_3379765_8]** .
  16. **Beer Operating Margins**: Approximately **39%**  **[STZ_3379765_8]** .
  17. **Wine and Spirits Operating Margins**: Approximately **20%**  **[STZ_3379765_8]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Enterprise Comparable EPS**: **$12 to $12.20**  **[STZ_3369800_7]** **[STZ_3369800_4]** .
  2. **Beer Business**:
     - Net Sales Growth: **8% to 9%**  **[STZ_3369800_7]** .
     - Operating Income Growth: **7% to 8%**  **[STZ_3369800_7]** .
     - Operating Margin: Approximately **38%**  **[STZ_3369800_7]** .
  3. **Wine and Spirits Business**:
     - Organic Net Sales Decline: **7% to 9%**  **[STZ_3369800_7]** .
     - Operating Income Decline: **6% to 8%**  **[STZ_3369800_7]** .
  4. **Corporate Expenses**: **$260 million to $270 million**  **[STZ_3369800_7]** .
  5. **Interest Expense**: Approximately **$450 million**  **[STZ_3369800_7]** .
  6. **Comparable Effective Tax Rate**: Approximately **19%**  **[STZ_3369800_7]** .
  7. **Weighted Average Diluted Shares Outstanding**: Approximately **184 million**  **[STZ_3369800_7]** .
  8. **Free Cash Flow**: **$1.4 billion to $1.5 billion**  **[STZ_3369800_7]** .
     - Operating Cash Flow: **$2.6 billion to $2.8 billion**  **[STZ_3369800_7]** .
     - Capital Expenditures (CapEx): **$1.2 billion to $1.3 billion**  **[STZ_3369800_7]** .

f70abd169b80f83b8a9465c0f649bbc06a330423a25b28e8b5eb4e35125bfee6

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

| Name                | Position                                                                 | Start Date        | Short Bio                                                                                                                                                                                                 |
|---------------------|--------------------------------------------------------------------------|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| William A. Newlands | President and Chief Executive Officer                                    | March 2019        | William A. Newlands has served as CEO since March 2019 and as President since February 2018. He joined the company in January 2015 and has held various senior management roles, including COO and President of the Wine & Spirits Division  **[0000016918-24-000054_stz-20240229.htm:22]** **[0000016918-23-000045_stz-20230228.htm:26]** **[0000016918-24-000102_stz-20240530.htm:20]** . |
| Garth Hankinson     | Executive Vice President and Chief Financial Officer                     | January 2020      | Garth Hankinson has been the CFO since January 2020. He was previously the Senior Vice President of Corporate Development from February 2016 to January 2020, and has been with the company since October 2007  **[0000016918-24-000054_stz-20240229.htm:23]** **[0000016918-23-000045_stz-20230228.htm:28]** .                             |
| James O. Bourdeau   | Executive Vice President and Chief Legal Officer                         | December 2017     | James O. Bourdeau has served as Chief Legal Officer since December 2017 and as Secretary since April 2017. He joined Constellation Brands in September 2014 after working at Nixon Peabody LLP  **[0000016918-24-000054_stz-20240229.htm:22]** **[0000016918-23-000045_stz-20230228.htm:26]** .                                           |
| James A. Sabia, Jr. | Executive Vice President and President, Beer Division                    | February 2022     | James A. Sabia, Jr. has been President of the Beer Division since February 2022. He joined Constellation Brands in August 2007 and has held various roles, including Executive Vice President, Chief Marketing Officer  **[0000016918-24-000054_stz-20240229.htm:24]** **[0000016918-23-000045_stz-20230228.htm:30]** .                      |
| Samuel Glaetzer     | Executive Vice President and President, Wine and Spirits Division        | March 2024        | Samuel Glaetzer has been President of the Wine and Spirits Division since March 2024. He joined the company in March 2014 and previously worked at Treasury Wine Estates  **[0000016918-24-000054_stz-20240229.htm:23]** **[STZ_3379765_1]** .                                                                 |
| Mallika Monteiro    | Executive Vice President, Chief Growth & Digital Officer, Managing Director, Beer Brands | December 2023     | Mallika Monteiro has been an Executive Vice President since October 2019. She began her current role in December 2023 and joined Constellation Brands in October 2016  **[0000016918-24-000054_stz-20240229.htm:24]** .                                                                        |
| Michael McGrew      | Executive Vice President, Chief Communications, Strategy, ESG & Diversity Officer | December 2023     | Michael McGrew has been an Executive Vice President since April 2020. He started his current role in December 2023 and joined Constellation Brands in 2014  **[0000016918-24-000054_stz-20240229.htm:23]** .                                                                                   |

41430b8f606ff6d11ddc78461eda943c43bf619e4351e8b7ae3be230c5504538

| Program Details          | Program 1             | Program 2             |
|--------------------------|-----------------------|-----------------------|
| Approval Date            | January 2021  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** | November 2023  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** |
| End Date/Duration        | No expiration  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** | No expiration  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** |
| Total additional amount  | **$2.0 billion**  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** | **$2.0 billion**  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** |
| Remaining authorization amount | **$164.5 million**  **[0000016918-24-000178_stz-20240831.htm:19]**  | **$2.0 billion**  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:56]** |
| Details                  | Treasury shares  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** | Treasury shares  **[0000016918-24-000178_stz-20240831.htm:19]** **[0000016918-24-000178_stz-20240831.htm:47]** **[0000016918-24-000178_stz-20240831.htm:56]** |

430d167f320ed1c443e42ad55b1e3492ebc6209309df0775135c36d10f73d809

**Annual guidance for FY 2025:**
- **Net Sales Growth**: 2% to 5%  **[STZ_3412290_4]** (lowered from 4% to 6%  **[STZ_3402594_4]** )  
- **Comparable Operating Income Growth**: 6% to 9%  **[STZ_3412290_4]** (lowered from 8% to 9%  **[STZ_3402594_4]** )  
- **Comparable EPS**: $13.40 to $13.80  **[STZ_3412290_4]** (lowered from $13.60 to $13.80  **[STZ_3402594_4]** )  

- **Beer Business Net Sales Growth**: 4% to 7%  **[STZ_3412290_4]** (lowered from 6% to 8%  **[STZ_3402594_5]** )  
- **Beer Business Operating Income Growth**: 9% to 12%  **[STZ_3412290_4]** (lowered from 11% to 12%  **[STZ_3402594_2]** )  
- **Beer Business Operating Margin**: Approximately 39%  **[STZ_3412290_4]** (no change from prior guidance ~39%  **[STZ_3402594_5]** )  

- **Wine and Spirits Net Sales Decline**: 5% to 8%  **[STZ_3412290_4]** (lowered from 4% to 6%  **[STZ_3402594_2]** )  
- **Wine and Spirits Operating Income Decline**: 17% to 19%  **[STZ_3412290_4]** (lowered from 16% to 18%  **[STZ_3402594_2]** )  

- **Corporate Expense**: $250 million  **[STZ_3412290_4]** (no prior guidance)  
- **Interest Expense**: $410 million  **[STZ_3412290_4]** (lowered from $430 million  **[STZ_3402594_6]** )  
- **Comparable Effective Tax Rate**: Approximately 18.5%  **[STZ_3412290_4]** (no change from prior guidance  **[STZ_3402594_6]** )  
- **Operating Cash Flow**: $2.9 billion to $3.1 billion  **[STZ_3412290_4]** (no prior guidance)  
- **Free Cash Flow**: $1.6 billion to $1.8 billion  **[STZ_3412290_4]** (raised from $1.4 billion to $1.5 billion  **[STZ_3402594_7]** )  

6c08497e2df97b1bcbe64f76e4fcf16591392f618c8aba53230be24903067ac8

Beer

Wine and Spirits

- Wine

- Spirits

Canopy Segment

Consolidation and Eliminations

97f79b3953c89baedd96ec3c9b297ff91fb07a0906328881844328c68b5521b0

| Name       | Start Date | End Date | Reason for Change |
|------------|------------|----------|-------------------|
| KPMG LLP   | 2002       | Present  | Current auditor   |  **[0000016918-24-000054_stz-20240229.htm:94]**  |

8f8b30b4bd75a3e11150560f4733a643003a8fe9f237ac2f886e86420f587d7e

7f3720cecf3a099d396dfc72c8ebfe92bd5b769bf4fcae5e791b27898826d7be

- Wine and Spirits Revenue: $431.4 million (-14% YoY)  **[0000016918-24-000005_stz-20231130.htm:29]** **[0000016918-24-000005_stz-20231130.htm:43]** **[0000016918-25-000003_stzex991_113020248k10q.htm:9]**   
- **Net Income**: $629.1 million (+24% YoY)  **[0000016918-25-000004_stz-20241130.htm:7]** **[0000016918-24-000005_stz-20231130.htm:7]**   
- **EPS (Basic)**: $3.38 (+23% YoY)  **[0000016918-25-000004_stz-20241130.htm:7]** **[0000016918-24-000005_stz-20231130.htm:7]**   
- **Capital Expenditures**: $228.4 million (-31% YoY)  **[0000016918-24-000005_stz-20231130.htm:10]** **[0000016918-25-000004_stz-20241130.htm:10]**   

e9855fe8b49cf58536c4172893d17a89c06105800c450a804228fba9e151ed51

1. **Beer Depletion Softness**  
   **Q:** Is beer weakness short-term or long-term? Impact on growth guidance?  
   **A:** Management believes the near-term softness in beer is not structural or long-term. Factors include higher unemployment in **31 states** and spending declines among consumers earning under **$50,000**. Alcohol's share of the consumer basket remains consistent, and they expect to emerge from this trough soon.  **[STZ_3412290_7]** 

2. **Capital Allocation and CapEx**  
   **Q:** How will you adjust CapEx amid slowdown? Prioritize buybacks?  
   **A:** Expansions are modular and can be advanced or delayed based on market conditions. They continue significant share repurchases, with **$220 million** bought back this quarter and **$1.9 billion** remaining authorized. Veracruz is on schedule, with the first module of **3 million hectoliters**, but future capacity expansions can be adjusted. Capital allocation remains disciplined, with a bias toward returning capital to shareholders.  **[STZ_3412290_8]** **[STZ_3412290_17]** 

3. **Beer Category Decline**  
   **Q:** Given category decline, how will you achieve growth targets?  
   **A:** Despite the beer category's weakness, they have consistently outperformed it. **Modelo** has significant growth potential with increasing awareness and household penetration. **Pacifico** and **Victoria** are showing strong double-digit growth. They have outpaced CPG for over a decade and expect to continue doing so.  **[STZ_3412290_11]** 

4. **Tariff Risk and Volumes**  
   **Q:** How would tariffs affect volume and margin priorities?  
   **A:** They have various scenarios but it's too early to speculate. They will adjust their approach depending on developments. Beer volume guidance remains at **4% to 7%** growth, acknowledging macroeconomic risks but optimistic due to positive unemployment data.  **[STZ_3412290_13]** 

5. **Beer Margins Outlook**  
   **Q:** What's the outlook for beer margins considering pricing, commodities, FX?  
   **A:** They maintain beer margin expectations at **39% to 40%**. Tailwinds include volume growth, cost savings, and pricing actions; headwinds are normal inflation, increased depreciation from expansions, and capacity absorption. Margins could vary yearly but expect to stay within this range.  **[STZ_3412290_14]** 

6. **Wine and Spirits Challenges**  
   **Q:** What's behind Wine and Spirits underperformance?  
   **A:** The turnaround is taking **9 to 12 months** as planned. Positive signs in Q3 with **Meiomi** and **Kim Crawford** up **7%**, and craft spirits up **9%**. The lower end of the business is weak; focusing on higher-end brands like **SVEDKA** is part of their strategy, and they remain optimistic for continued improvement.  **[STZ_3412290_10]** 

7. **Pricing Strategy**  
   **Q:** Will you promote more aggressively in light beer segment?  
   **A:** They assess pricing by SKU and market, believing **1% to 2%** pricing increases remain appropriate. They avoid big swings, aiming for consumer-friendly consistency, as during COVID.  **[STZ_3412290_15]** 

8. **Inventories and Shelf Space**  
   **Q:** What's the status of beer inventories and shelf space expectations?  
   **A:** Inventories are consistent with historical levels, with slightly more on hand to mitigate potential order disruptions. After strong double-digit shelf space gains last year, they expect more normal gains in **2025**, continuing to outperform and earn shelf presence.  **[STZ_3412290_12]** 

9. **Shipments vs. Depletions**  
   **Q:** Will shipments and depletions remain aligned? Gap with data?  
   **A:** They expect shipments and depletions to be largely aligned for the full year. Circana data captures only about **50%** of sales; they acknowledge volatility in the gap but suggest questions about it be directed to Circana.  **[STZ_3412290_16]** 

25385daddc58716a349ae445334ef0331d4410e84d620edc8bafe9cae86d9422

ac956cbc68e5f46cf1c1ab6a611ab39a4ffd2a20f785962c54dd7cf37174da03

Beer shipments (millions of 24-pack, 12-ounce case equivalents)

Beer depletions (percentage)

Wine and Spirits shipments (millions of 9-liter case equivalents)

U.S. wholesale shipments for Wine and Spirits (millions of 9-liter case equivalents)

Wine and Spirits depletions (percentage)

Cost savings from efficiency initiatives (million U.S. dollars)

3d09f8500259e1d7081e55aea474f600457e9965c6aa54bf2f0015851965e3e8

| Year     | Amount Due (in millions) | Debt Type                  | Interest Rate (%) | % of Total Debt                                                                 |
|--------------|------------------------------|--------------------------------|-----------------------|------------------------------------------------------------------------------------|
| Fiscal 2025  | $1.0 **[0000016918-25-000004_stz-20241130.htm:19]**                 | Long-Term Debt Principal       | N/A                   | 0.0% = (1.0 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                     |
| Fiscal 2025  | $503.3 **[0000016918-25-000004_stz-20241130.htm:6]**               | Current Maturities of Long-Term Debt | N/A             | 4.3% = (503.3 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]**                                          |
| Fiscal 2025  | $890.1 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**       | Commercial Paper               | 5.0 **[0000016918-25-000004_stz-20241130.htm:19]**           | 7.7% = (890.1 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                   |
| Fiscal 2026  | $1,404.1 **[0000016918-25-000004_stz-20241130.htm:19]**             | Long-Term Debt Principal       | N/A                   | 12.1% = (1,404.1 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                |
| Fiscal 2027  | $603.1 **[0000016918-25-000004_stz-20241130.htm:19]**               | Long-Term Debt Principal       | N/A                   | 5.2% = (603.1 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                   |
| Fiscal 2028  | $1,801.3 **[0000016918-25-000004_stz-20241130.htm:19]**             | Long-Term Debt Principal       | N/A                   | 15.6% = (1,801.3 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                |
| Fiscal 2029  | $900.0 **[0000016918-25-000004_stz-20241130.htm:19]**               | Long-Term Debt Principal       | N/A                   | 7.8% = (900.0 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                   |
| Fiscal 2030  | $800.0 **[0000016918-25-000004_stz-20241130.htm:19]**               | Long-Term Debt Principal       | N/A                   | 6.9% = (800.0 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                   |
| Thereafter   | $5,250.1 **[0000016918-25-000004_stz-20241130.htm:19]**             | Long-Term Debt Principal       | N/A                   | 45.3% = (5,250.1 / 11,579.1) * 100 **[0000016918-25-000004_stz-20241130.htm:6]** **[0000016918-25-000004_stz-20241130.htm:19]**                                |

cfb8f01878b44512f95ca118be1e2d0f99429633e5aa29268af607e6802895b8

1. **Impact of Peso on Margins**  
   **Q:** How does peso weakness affect your margins and pricing?  
   **A:** Our effective hedging policies allow us to manage currency fluctuations. In Q1, we saw significant peso movements greater than **10%** and took advantage by layering in incremental hedges, increasing our hedged position from about mid-70% to **85%** for the fiscal year.  **[STZ_3392996_11]**  This disciplined approach provides flexibility even in periods of peso weakness and has been paying dividends for us.  **[STZ_3392996_11]** 

2. **Operating Profit Guidance**  
   **Q:** What influences high vs. low end of profit guidance?  
   **A:** We feel really good about our full-year guidance of **10% to 12%** operating income growth for beer.  **[STZ_3392996_14]**  Our operating margins are expected to be about **39%** annually, though not necessarily every quarter due to normal seasonality.  **[STZ_3392996_14]**  Higher volumes in the first half and maintenance in the second half can affect margins, but we are on track and expect some favorability in Q4 due to lapping last year's VAT write-off.  **[STZ_3392996_14]** 

3. **Marketing and Advertising Spend**  
   **Q:** Are you underinvesting in marketing this year?  
   **A:** We're actually spending more dollars on marketing than in prior years.  **[STZ_3392996_20]**  We've created efficiencies within our spend, so the percentage of sales is slightly less purely due to efficiency.  **[STZ_3392996_20]**  This doesn't change the fact that we're investing more in our brands than ever before. Engaging consumers through national media and digital platforms is critical to creating awareness and bringing consumers into our franchises.  **[STZ_3392996_20]**  We will not starve our brands to hit a margin profile but will continue to invest for growth.  **[STZ_3392996_20]** 

4. **Potential Tariffs Impact**  
   **Q:** How would potential tariffs affect your business?  
   **A:** It's too early to speculate on the November election outcomes.  **[STZ_3392996_21]**  Our business performed great during the last Trump administration.  **[STZ_3392996_21]**  Our operations involve significant inputs from the Upper Midwest in the U.S., and Mexico remains our biggest trading partner.  **[STZ_3392996_21]**  We're confident we can navigate any changes and will work aggressively to do so.  **[STZ_3392996_21]** 

5. **Consumer Demand Amid Macros**  
   **Q:** How is beer demand across income levels?  
   **A:** Our buy rates remain extremely strong across all consumer segments.  **[STZ_3392996_12]**  The Hispanic community, which is over **50%** of our mix, showed higher buy rates than the total consumer.  **[STZ_3392996_12]**  This loyalty is a long-range benefit, as this community often views beer as a staple.  **[STZ_3392996_12]**  Despite some shifts in pack sizes and channels, our depletion rate was **6.4%**, a very strong quarterly result.  **[STZ_3392996_12]** 

6. **Innovation in Beer**  
   **Q:** Update on beer innovation contributions?  
   **A:** We expanded Modelo Aguas Frescas to **20** additional markets, now covering **70% to 75%** of expected consumption.  **[STZ_3392996_13]**  Corona Sunbrew is being tested in the Northeast, and early consumer sampling suggests it will be a home run.  **[STZ_3392996_13]**  While it's too early for concrete results, these initiatives were introduced after significant consumer testing to ensure high probability of success.  **[STZ_3392996_13]** 

7. **Share Buybacks**  
   **Q:** Thoughts on share buybacks given stock price?  
   **A:** In Q1, we bought back **$200 million** worth of shares, and an additional **$40-plus million** through the end of June.  **[STZ_3392996_22]**  We have about **$2.4 to $2.6 billion** left on our share repurchase authorization.  **[STZ_3392996_22]**  We'll continue to use disciplined capital allocation and buy during periods of dislocation.  **[STZ_3392996_22]** 

8. **Wine Business Turnaround**  
   **Q:** Visibility on wine turnaround and distributor commitments?  
   **A:** We anticipated a **9 to 12 months** period to get our wine business back on track and are pleased with the progress.  **[STZ_3392996_23]**  Improvements are expected to be back-half loaded.  **[STZ_3392996_23]**  We've seen significant engagement with our wholesale network, providing good opportunities later this year.  **[STZ_3392996_23]**  Both our international and DTC businesses are performing ahead of plan.  **[STZ_3392996_23]** 

9. **Veracruz Brewery Progress**  
   **Q:** How is Veracruz brewery construction progressing?  
   **A:** We are well on our plan and expect to open the brewery at the end of the next fiscal year or early the following year.  **[STZ_3392996_16]**  This year is our peak CapEx year due to construction being at full throttle.  **[STZ_3392996_16]**  By the end of FY25, we expect CapEx to reduce from low double-digit percentage of net sales to mid-single-digit range.  **[STZ_3392996_16]**  Specifically for Veracruz, we are on track.  **[STZ_3392996_16]** 

cd9c9d6d466a90e70e3aa8647a4e8424d8cd2ba7f8fbbad16fa4b3f281d00fd8

- **Significant impairment in the Wine and Spirits division, with fair value reduced from $3 billion to $500 million, indicating substantial loss in value.**  **[STZ_3402594_17]**
- **Beer depletion growth has slowed due to higher unemployment in key Hispanic markets and macroeconomic headwinds, potentially impacting future sales.**  **[STZ_3402594_9]**
- **Increasing marketing expenses are necessary to maintain brand performance, potentially pressuring margins in the coming quarters.**  **[STZ_3402594_14]** **[STZ_3402594_15]**

2b6d9c14e4b446f80dc571955b37b6f003e343c9751d8e541d90ae4e8afc4754

- **Decline in the U.S. beer category with acknowledgment from management that the category isn't healthy**, which may impact Constellation Brands' ability to maintain growth in their beer segment. As CEO William Newlands stated: "*the beer category hasn't been particularly healthy*".  **[STZ_3412290_11]**
- **Ongoing underperformance and negative outlook in the Wine and Spirits division**, especially at the lower end which is described as "**not healthy**", indicating challenges in turning around this segment. Analyst Lauren Lieberman noted an "*ongoing negative revision cycle*" for this business  **[STZ_3412290_10]** , to which management agreed that they "*continue to be hit very hard at the lower end of the business*".  **[STZ_3412290_10]**
- **Increased risks and uncertainties** such as potential tariffs, macroeconomic headwinds, higher unemployment, and increased volatility have led to **wider-than-normal guidance ranges**, signaling less visibility into future performance and potential downside risk. As William Newlands mentioned, "*we decided on this particular range... include things like unemployment, potential tariffs... There's been a lot of volatility*".  **[STZ_3412290_9]**  Garth Hankinson acknowledged that "*we acknowledge that the range right now is a little bit wider than we typically are given where we are in the calendar year*".  **[STZ_3412290_13]**

1bc21dfea1dd4d9e55df6bf6f0c2e808c2e497ec39124f7a1c65f92ace97408f

- **Constellation Brands' beer business has consistently outperformed the overall beer category and the CPG sector for over a decade, with key brands like Modelo having significant growth potential due to low awareness and household penetration.**  **[STZ_3412290_11]**
- **The company's strategic focus on higher-end Wine and Spirits brands is showing positive results, with premium brands like Meiomi and Kim Crawford increasing depletions by over **7%**, and the craft spirits portfolio growing by **9%**.**  **[STZ_3412290_10]**
- **Constellation Brands is effectively returning capital to shareholders through significant share repurchases, with approximately **$670 million** returned year-to-date, and a remaining **$1.9 billion** share repurchase authorization, indicating strong commitment to shareholder value.**  **[STZ_3412290_17]** **[STZ_3412290_8]**

9cef8787e0fcbc66c8132fd088a1a57d505498f494ff33cfe025812048ff1895

- **Constellation Brands expects operating income in its Wine and Spirits business to decline by 9% to 11% in fiscal 2025**, due to ongoing category headwinds and increased investments in marketing and sales, potentially impacting overall profitability.  **[STZ_3379765_5]**
- **Operating margins in the beer segment decreased by 40 basis points**, with an absolute **12% increase in cost of goods sold (COGS)**, including a **16% increase in raw materials and packaging costs** and a **19% increase in labor and overhead**, indicating margin pressures from rising costs.  **[STZ_3379765_8]**
- **Interest expense increased by 9% to $435 million in fiscal 2024**, driven by higher average borrowings and weighted average interest rates, which may affect future earnings.  **[STZ_3379765_7]**

abd3d8264130f60003c627d551f9a3da2ded3f5824614351b80cceecf177eeea

- **Constellation Brands achieved the largest market share gain in its history, adding 2 points in total beer and 2.6 points in the high-end segment**, demonstrating its strong position in the growing high-end beer category.  **[STZ_3379765_19]**
- **The company secured low double-digit growth in shelf space during spring resets**, and with **brands averaging over $50 million per SKU in dollar return**, it is well-positioned for future growth.  **[STZ_3379765_11]**
- **Constellation Brands continues to be recognized as the #1 growth company among large CPG companies by Circana in 5 of the last 7 years**, reflecting consistent best-in-class performance and strong execution.  **[STZ_3379765_12]**

f287eb6c335464f939ef0ec9085750a2a48508a6483aa9d48875d882a25e52a6

- **Exceptional beer business performance with depletions growth exceeding 8%**, strong sales around Thanksgiving, and accelerating **share gains of 2 points overall and nearly 3 points in the high end**, demonstrating continuing brand strength and consumer demand.  **[STZ_3369800_24]** ,  **[STZ_3369800_16]** ,  **[STZ_3369800_10]**
- **Expectations of significant shelf space gains in the spring resets**, anticipated to drive further growth and surpass the company's growth profile, reinforcing confidence in achieving **7% to 9% top-line growth**.  **[STZ_3369800_16]** ,  **[STZ_3369800_10]**
- **Optimism about upcoming product innovation**, including the launch of **Corona Sunbrew** in March, expected to provide significant opportunities for growth in the Corona franchise, building on the success of previous launches like **Modelo Oro** and **Aguas Frescas**.  **[STZ_3369800_17]**

e21093c2489d6b217e187be8f14cfd161b9606d7b36cb9c3dbaecf3892d25af1

1. **Wine & Spirits Impairment**  
   **Q:** Why the dramatic impairment in Wine & Spirits value?  
   **A:** The fair value of our Wine & Spirits business was reduced from **$3 billion to $500 million** due to accounting requirements based on future business assumptions.  **[STZ_3402594_17]**  It's a non-cash adjustment and doesn't change our strategic outlook.  **[STZ_3402594_17]** 

2. **Beer Depletions & Outlook**  
   **Q:** Why were beer depletions softer, and what's the outlook?  
   **A:** Softer beer depletions in Q2 were due to higher unemployment in the Hispanic market, affecting **50% of our volume**.  **[STZ_3402594_9]**  We view this as a near-term issue, with strong demand trends picking up in recent weeks  **[STZ_3402594_9]** **[STZ_3402594_12]** . We remain optimistic for the back half of the year.  **[STZ_3402594_9]** 

3. **Corona Brand Performance**  
   **Q:** What's happening with Corona's weaker performance?  
   **A:** Corona was slightly softer in Q2 due to macro factors and challenges in Eastern markets.  **[STZ_3402594_11]**  However, we're seeing improvements in recent data and anticipate growth with the launch of **Corona Sunbrew**.  **[STZ_3402594_11]**  Corona will benefit from increased marketing spend in H2.  **[STZ_3402594_11]** 

4. **Increased Marketing Investment**  
   **Q:** What's new with your marketing spend?  
   **A:** We've decided to invest significantly more in our brands like Corona, Modelo Chelada, and Pacifico.  **[STZ_3402594_14]**  Thanks to cost efficiencies, we're boosting marketing in H2 to capitalize on opportunities when others may be pulling back.  **[STZ_3402594_14]** 

5. **Share Repurchases**  
   **Q:** Will you repurchase shares more aggressively now?  
   **A:** We accelerated share repurchases in Q2, buying back **$249 million**, totaling nearly **$450 million** in H1.  **[STZ_3402594_8]**  With **$2.2 billion** in remaining authorization, we'll continue to be opportunistic.  **[STZ_3402594_8]** 

6. **Shipments vs. Depletions Timing**  
   **Q:** How will shipment and depletion timing reverse?  
   **A:** Shipments exceeded depletions in Q2 due to inventory builds.  **[STZ_3402594_13]**  In Q3, shipments will be lower than depletions due to maintenance, reversing the trend.  **[STZ_3402594_13]**  For the full year, they should align.  **[STZ_3402594_13]** 

7. **Beer Gross Margins**  
   **Q:** How should we think about beer gross margins ahead?  
   **A:** We've achieved our **$300 million** cost savings target.  **[STZ_3402594_15]**  In H2, we'll continue to benefit but expect lower margins due to seasonal volume and higher marketing spend, especially in Q3.  **[STZ_3402594_15]** 

8. **Shelf Space Gains**  
   **Q:** Have distribution gains met expectations?  
   **A:** Yes, we had double-digit share gains in spring resets.  **[STZ_3402594_10]**  Combined with increased marketing, these gains are beneficial, especially as competitors pull back.  **[STZ_3402594_10]** 

9. **Wine & Spirits Turnaround Strategy**  
   **Q:** Do you plan more acquisitions to turn around Wine & Spirits?  
   **A:** No, we're focusing on improving operational performance.  **[STZ_3402594_16]**  We expect sequential improvements in H2 based on efforts made in H1.  **[STZ_3402594_16]** 

c39e85b741e6e163b6370e7fd1416b334eb0c7467c60704d53faf2d4abf8a454

- **Achieved $300 million cost savings target ahead of schedule**, driving significant margin expansion in the Beer business, which allows for **reinvestment in increased marketing efforts** to support growth.  **[STZ_3402594_15]**
- Despite short-term challenges, the company remains **optimistic about the second half of the year**, with **buy rates up mid-single digits over 52 weeks**, and recent trends improving.  **[STZ_3402594_9]**
- Secured **double-digit share gains in shelf space during spring resets**, and plans to **double down on increased marketing investments** to leverage these gains and drive growth in the rest of the year.  **[STZ_3402594_10]**

b3b3712da837f5600e20e1985cf3ccb81e861dfc1a858213fe004277f3cae0f4

- **Constellation Brands has consistently outperformed the beer category due to strong brand performance**, with brands like **Modelo Especial now being the #1 beer brand in U.S. tracked channels**.  **[STZ_3392996_15]**  Their **average SKU takeaway in dollars is 5 times the rate of their chief competitors**, and **Pacifico grew over 20%**, being the **#4 dollar share gainer across the total beer category**.  **[STZ_3392996_15]**
- **The company is executing effective capital allocation priorities**, including **share repurchases of $200 million in the first quarter and an additional $40+ million through June**, with **$2.4 to $2.6 billion left on share reauthorization**.  **[STZ_3392996_22]**
- **Innovation is expected to drive future growth**, with the expansion of successful products like **Modelo Aguas Frescas to 20 additional markets (covering 70% to 75% of expected total consumption)** after it was the **#1 FMB in the Las Vegas test market**.  **[STZ_3392996_13]**  Additionally, testing of **Corona Sunbrew in the Northeast is showing positive initial response**.  **[STZ_3392996_13]**

270451a73664772c81ee354e9238f31cf50e7526e2e1a84c3585f9d7023d0e44

- **The Wine and Spirits business is facing significant challenges**, with a 7% net sales decline in Q1 due to marketplace headwinds, and the expected improvement is heavily weighted towards the second half of the year, making the visibility and timing of this turnaround uncertain.  **[STZ_3392996_23]**
- **Potential political risks from the upcoming U.S. elections**, such as proposed tariffs on Mexican imports, could negatively impact the company, which relies heavily on Mexican imports for its beer business. Management considers it too early to speculate but acknowledges the potential impact.  **[STZ_3392996_21]**
- **Despite strong performance and reiterated guidance, the company's stock price remains similar to 2018 levels**, raising concerns about investor confidence and future growth prospects, particularly in the beer segment where there are tough comparisons ahead.  **[STZ_3392996_22]**

839d39d6c270fec693d9683b71ec7e4dfcfab1a9fac26ba70b504ed8b899b91f

1. **Beer Depletion Growth**  
   **Q:** How strong were beer depletions, and what's driving it?  
   **A:** Beer depletions grew by **8.2%** in Q3, showing strong momentum driven by robust takeout around Thanksgiving and accelerated share gains, particularly in the high-end segment where they gained nearly **3 share points**  **[STZ_3369800_10]** ,.  **[STZ_3369800_11]** 

2. **Wine and Spirits Guidance Cut**  
   **Q:** Why was the wine and spirits guidance revised down, and how will you address it?  
   **A:** The guidance was revised down due to broader category deceleration and gaps in U.S. wholesale expectations. The company is focusing on enhancing operational effectiveness and marketplace execution to improve performance, maintaining targets for net sales and operating margin over the medium term.  **[STZ_3369800_8]** 

3. **Beer Margins and Outlook**  
   **Q:** Why are Q4 beer margins projected to be low, and what's the outlook?  
   **A:** Q4 margins are seasonally lower due to reduced shipments (about **20%-21%** of annual volume in Q4) and increased depreciation costs. Margins are progressing as expected, with improvement over last year, and there is confidence in achieving the **39%-40%** target operating margins over the medium term.  **[STZ_3369800_9]** 

4. **Management Transition in Wine and Spirits**  
   **Q:** What are you looking for in new wine and spirits leadership, and what's controllable?  
   **A:** Seeking a leader who can enhance operational efficiencies and marketplace execution, focusing on improving U.S. wholesale performance and leveraging the higher-end portfolio. Many performance factors are within control, such as execution and working closely with distributor partners.  **[STZ_3369800_11]** 

5. **Pricing Strategy in Beer**  
   **Q:** How does your pricing strategy compare to competitors, and what's planned?  
   **A:** The company maintains a judicious pricing approach with **1%-2%** annual increases to keep consumers loyal, contrasting with competitors who may take larger increases. They are not pulling back on pricing and believe this strategy supports long-term growth.  **[STZ_3369800_17]** 

6. **Cost Savings Initiatives**  
   **Q:** Are you pulling forward cost savings, or improving efficiencies?  
   **A:** Not pulling forward savings but benefiting from shifting focus from building breweries to operating them, resulting in improved efficiencies and significant savings in procurement through digital business acceleration.  **[STZ_3369800_13]** 

7. **Cash Flow Improvement**  
   **Q:** What's driving the improved cash flow outlook?  
   **A:** Key drivers include increased beer operating income, favorable tax impacts, and disciplined cash management, reflecting consistent execution against balanced capital allocation priorities.  **[STZ_3369800_18]** 

8. **Competitive Environment and Shelf Gains**  
   **Q:** What are expectations for shelf space gains and competitive dynamics?  
   **A:** Expecting significant shelf space gains greater than the growth profile in upcoming spring resets, supported by strong velocities and brand loyalty. The promotional environment is expected to remain consistent, and the company continues to drive share gains  **[STZ_3369800_11]** ,.  **[STZ_3369800_16]** 

9. **Innovation Launches**  
   **Q:** Can you share details on upcoming innovations like Corona Sunbrew?  
   **A:** Corona Sunbrew is set to launch with more details to be shared at the official introduction in March. The company is excited about this new product, which follows successful launches like Modelo Oro and Aguas Frescas.  **[STZ_3369800_17]** 

10. **On-Premise Opportunities**  
    **Q:** How do you view opportunities in the on-premise channel?  
    **A:** There is significant opportunity to grow in the on-premise, particularly in draft beer. Despite temporary keg issues earlier, brands like Modelo Especial and Pacifico were the top share gainers in draft and are expected to maintain this momentum.  **[STZ_3369800_19]** 

11. **Inflation and Cost Outlook**  
    **Q:** Is low inflation in packaging costs expected to continue?  
    **A:** Easing inflation benefits are being realized, with expectations of low single-digit inflation net of cost savings going forward. Logistics costs were also favorable in Q3.  **[STZ_3369800_23]** 

12. **Measured vs. Non-Measured Channels**  
    **Q:** Has there been pricing moderation in non-measured channels?  
    **A:** No significant variation between channels; trends are expected to be aligned. The moderation in pricing reflects lapping of prior year's higher pricing.  **[STZ_3369800_20]** 

13. **Shipments and Depletions Alignment**  
    **Q:** Will beer shipments and depletions be aligned for the year?  
    **A:** Yes, shipments and depletions are expected to be largely in line, both accounting for about **20%-21%** of the full year in Q4, consistent with normal operations.  **[STZ_3369800_21]** 

14. **Industry Outlook and Consumer Health**  
    **Q:** Thoughts on U.S. beer industry trends and consumer health for 2024?  
    **A:** The industry shows a bifurcation between declining low-end and growing high-end segments. The company leads in the high-end, which continues to perform well, with strong brand loyalty among Hispanic consumers supporting growth.  **[STZ_3369800_12]** 

15. **Impact of Comps on Beer Acceleration**  
    **Q:** Did favorable comps contribute to recent beer acceleration?  
    **A:** While factors like weather and early Thanksgiving played a role, the strong takeout around Thanksgiving and accelerated share gains reflect the underlying strength of the brands, despite natural variations over the year.  **[STZ_3369800_24]** 

16. **Wine and Spirits Medium-Term Targets**  
    **Q:** How will you achieve medium-term targets after guidance cut?  
    **A:** The focus is on execution and working closely with distribution partners to outperform in categories and channels. More specific plans will be shared after a deep dive into the business during the next earnings call  **[STZ_3369800_12]** ,.  **[STZ_3369800_14]** 

04af7e4892344243f642dbf434f1ae3f0173a8e372e55d1c5f232ea5013182a8

- **Constellation Brands' wine and spirits division is underperforming, with negative revisions to fiscal '24 guidance due to broader marketplace deceleration and category headwinds. The company now expects organic net sales to decline 7% to 9% and operating income to decline 6% to 8%.**  **[STZ_3369800_0]** **[STZ_3369800_3]** **[STZ_3369800_15]**
- **Management acknowledges longstanding challenges in the wine and spirits business, leading to years of disappointment. Analysts express concern over significant negative revisions shortly after the Investor Day, which may undermine management credibility.**  **[STZ_3369800_0]** **[STZ_3369800_15]**
- **The company faces increased competition and aggressive discounting in the wine and spirits market, impacting pricing and margins. These near-term headwinds and the need for strategic adjustments may affect future performance.**  **[STZ_3369800_0]** **[STZ_3369800_3]** **[STZ_3369800_15]**

4a5ae14f757f22ff6bd345a2ffd9f4e82e1f9c839c4294cc2b121a8e1b135160

1. **Beer Volume Growth**

   **Q:** How strong is beer momentum moving forward?

   **A:** Beer depletions grew nearly **7%** in the quarter, excluding the extra day.  **[STZ_3379765_11]**  March performance was strong and consistent with expectations, setting up a solid year ahead.  **[STZ_3379765_11]**  We achieved **low double-digit growth** in shelf space this spring, exceeding our growth algorithm.  **[STZ_3379765_11]** 

2. **Margin Expansion**

   **Q:** What's driving commodity inflation and margin outlook?

   **A:** Commodity prices, while down from peaks, remain above historical norms, with some not declining as hoped.  **[STZ_3379765_14]**  We face headwinds like a strong peso but are hedged at **80%**.  **[STZ_3379765_14]** **[STZ_3379765_18]**  We expect significant margin expansion in FY '25 as we progress toward our midterm margin goals.  **[STZ_3379765_14]** 

3. **Market Share Shifts**

   **Q:** How will cycling last year's Bud Light issue affect you?

   **A:** We weren't the biggest beneficiary of the Bud Light controversy.  **[STZ_3379765_19]**  Our strong brand loyalty and focus on the high end position us well.  **[STZ_3379765_19]**  We achieved unprecedented share gains of **2 points** in total beer and **2.6 points** in the high end—the largest in our history.  **[STZ_3379765_19]** 

4. **Wine and Spirits Reset**

   **Q:** Confidence in flat Wine and Spirits revenue amid past guide downs?

   **A:** We're enhancing execution with new leadership.  **[STZ_3379765_20]**  Priorities include strengthening distributor alignment and focusing on **11 critical brands**.  **[STZ_3379765_13]** **[STZ_3379765_20]**  We're also targeting efficiencies similar to successes in beer.  **[STZ_3379765_20]** 

5. **Shelf Space Gains**

   **Q:** How much new shelf space are you gaining?

   **A:** We are securing **low double-digit** increases in shelf space during spring resets, meeting our expectations.  **[STZ_3379765_15]**  This varies by location but is significant overall.  **[STZ_3379765_15]** 

6. **Consumer Health**

   **Q:** Any signs of consumer downtrading or behavior shifts?

   **A:** Our consumers remain healthy with superb brand loyalty.  **[STZ_3379765_16]**  The high end continues to see increased buy rates, indicating ongoing premiumization.  **[STZ_3379765_16]**  Our nonalcoholic Corona was the **#1 share gainer** in its segment, reflecting trends toward "betterment".  **[STZ_3379765_16]** 

7. **Pricing Strategy**

   **Q:** Why is price mix below the category, and timing of increases?

   **A:** We target **1% to 2%** price increases annually.  **[STZ_3379765_18]**  Variance in price realization is due to timing, as we adjust prices SKU by SKU and market by market.  **[STZ_3379765_18]** 

8. **Cost Savings**

   **Q:** Details on beer cost savings and future plans?

   **A:** Achieved approximately **$25 million** in beer cost savings in fiscal '24, ramping up through the year.  **[STZ_3379765_17]**  Initiatives included procurement and logistics improvements.  **[STZ_3379765_17]**  Similar efforts will continue in fiscal '25.  **[STZ_3379765_17]** 

9. **Currency Exposure**

   **Q:** What's your peso-denominated cost exposure?

   **A:** About **20% to 25%** of our beer costs are peso-denominated.  **[STZ_3379765_18]**  We're hedged at **80%** entering the year to mitigate currency risk.  **[STZ_3379765_18]** 

10. **Inventory Levels**

    **Q:** What's your view on inventory and destocking?

    **A:** We've seen inventory reductions, notably in Canada and some in the U.S..  **[STZ_3379765_13]**  We're focusing on our top **11 brands** and increasing promotional spend to address consumer dynamics.  **[STZ_3379765_13]** 

beb2f74b07f2d3143218fe3031914eb5463edd0d0910edd93fc49e45e3190482

Constellation Brands Inc (STZ)

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