About Constellation Brands Inc

Constellation Brands, Inc. operates as an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy with brands like Corona Extra, Modelo Especial, the Robert Mondavi Brand Family, Kim Crawford, Meiomi, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO. In the U.S., the company is one of the top growth contributors at retail among beverage alcohol suppliers. The company is the third-largest beer company in the U.S. The company conducts its business through entities it wholly owns, as well as through a variety of joint ventures and other entities. Strategy The key elements of the company’s strategy are to continue building strong brands people love with advantaged routes to market; build a culture that is consumer-obsessed and leverages robust innovation capabilities to stay on the forefront of consumer trends; and deliver on impactful environmental, social, and governance (ESG) initiatives. Segments The company operates through Beer, Wine and Spirits, and Canopy segments. Beer This segment operates as a brewer and seller of imported beer in the U.S. market. The company is also the leader in the high-end segment of the U.S. beer market, which includes the imported, craft, and alternative beverage alcohol (ABA) categories. The company has the exclusive right to import, market, and sell the following Mexican brands in all 50 states of the U.S. Corona Brand Family: Corona Extra, Corona Light, Corona Premier, Corona Refresca, Corona Familiar, and Corona Hard Seltzer. Modelo Brand Family: Modelo Especial, Modelo Negra, and Modelo Chelada. Victoria Brand Family: Victoria and Vicky Chamoy. Other Import Brands: Pacifico. The company has nine of the 15 top-selling imported beer brands. Modelo Especial is the best-selling imported beer and second best-selling beer overall. Corona Extra is the second largest imported beer and fourth best-selling beer overall. Pacifico is the fastest growing major beer brand. The company’s Modelo Chelada brands have become an important growth contributor to its portfolio as the leading chelada in the U.S. beer market. For the year ended February 28, 2023, the company continued to build on this successful innovation platform with the launch of a multipack of Modelo Chelada Limón y Sal, Modelo Chelada variety pack, new Modelo Chelada flavor, Naranja Picosa, and Vicky Chamoy, Victoria’s first line extension. Additionally, the company announced the following two brand extensions that launched nationally in early Fiscal 2024 (fiscal year ending February 29, 2024), such as Modelo Oro, a light and low-calorie Mexican beer, to capitalize on the robust growth of the high-end beer category; and Corona Non-Alcoholic, to adhere to consumer trends in the rapidly growing betterment space focused on no- and low-alcohol products. Wine and Spirits This segment is a leading, higher-end wine and spirits company in the U.S. market, with a portfolio that includes higher-margin, higher-growth wine and spirits brands. The company’s 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. The company’s 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., the company has seven of the 100 top-selling higher-end wine brands, with Meiomi and Kim Crawford achieving the fourth and eighth spots, respectively. Some of the company’s well-known wine and spirits brands and portfolio of brands include: Wine Brands: Cook’s California Champagne, Mount Veeder, Kim Crawford, Ruffino, Meiomi, and SIMI. Wine Portfolio of Brands: My Favorite Neighbor, Robert Mondavi Winery, Schrader, and The Prisoner Wine Company. Spirits Brands: Casa Noble, Mi CAMPO, Copper & Kings (Copper & Kings American Brandy Company), Mi CAMPO, Nelson’s Green Brier, High West, and SVEDKA. For the year ended February 28, 2023, the company’s fine wine and craft spirits brands delivered solid shipment growth, driven primarily by The Prisoner Wine Company brands and High West, as well as by strong performance in its DTC (direct-to-consumer inclusive of a digital commerce experience for consumers to purchase directly from brand websites with inventory coming straight from the supplier and consumer purchases at hospitality locations (tasting rooms and tap rooms) from the supplier) channels (including hospitality) and international markets. The company’s mainstream and premium brands have maintained market share, while continuing to deliver growth through premium wine brands, such as Meiomi and Kim Crawford, consistent with its consumer-led premiumization strategy. The company’s wine and spirits business delivered strong gains in 3-tier eCommerce and outperformed the broader market in this channel. The company has been increasing its development of on-trend product innovation as this is one of the key drivers of overall beverage alcohol category growth. The company has launched several innovations that are creating momentum and driving growth for the business, including varietal line extensions, such as Kim Crawford Sparkling Prosecco and Meiomi Red Blend, both of which were leaders among new brands for the year ended February 28, 2023. Divestitures In October 2022, the company sold certain of its mainstream and premium wine brands and related inventory. Acquisitions In March 2022, the company acquired the Lingua Franca business, including a collection of Oregon-based luxury wines, a vineyard, and a production facility. In April 2022, the company acquired the remaining 73% ownership interest in Austin Cocktails, which included a portfolio of small batch, ready-to-drink (RTD) cocktails. Canopy The Canopy Equity Method Investment makes up the Canopy(Canopy Growth Corporation) segment. Marketing and Distribution To focus on their respective product categories, build brand equity, and increase sales, the company employs full-time, in-house marketing, sales, and customer service functions for its Beer and Wine and Spirits segments. These functions engage in a range of marketing activities and strategies, including market research, consumer and trade advertising, price promotions, point-of-sale materials, event sponsorship, on-premise activations, and public relations. In the U.S., the company’s products are primarily distributed by wholesale distributors, which generally have separate distribution networks for its beer portfolio and its wine and spirits portfolio. In addition, in states where the government acts as the distributor, the company distributes its products through state alcohol beverage control agencies, which set the retail prices of its products. As is the case with all other beverage alcohol companies, products sold through these agencies are subject to obtaining and maintaining listings to sell the company’s products in that agency’s state. State governments can also affect prices paid by consumers for the company’s products through the imposition of taxes. Trademarks and Distribution Agreements Within the Beer segment, the company has an exclusive sub-license to use trademarks related to its Mexican beer brands in the U.S. This sub-license agreement is perpetual. Competition The company’s principal competitors include: Beer: Anheuser-Busch InBev, The Boston Beer Company, Heineken, Mark Anthony, and Molson Coors. Wine: Deutsch Family Wine & Spirits, Duckhorn Portfolio, E. & J. Gallo Winery, Ste. Michelle Wine Estates, Treasury Wine Estates, Trinchero Family Estates, and The Wine Group. Spirits: Bacardi USA, Beam Suntory, Brown-Forman, Diageo, Fifth Generation, Pernod Ricard, and Sazerac Company. Production As of February 28, 2023, the company’s production capacity at its Mexican breweries was approximately 42 million hectoliters. By the end of Fiscal 2026 (for the year ending February 28, 2026), the company expects to increase its capacity in Mexico to approximately 67 to 72 million hectoliters to support the growth of its Mexican beer brands. In the U.S., the company operates 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. The company also operates two wineries in New Zealand and five wineries in Italy. Grapes are normally 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 the company’s brand names or sold in bulk. 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 company operates five distilleries in the U.S. for the production of its spirits: two facilities for High West whiskey and one facility each for Copper & Kings American brandies, Nelson’s Green Brier bourbon and whiskey products, and Austin Cocktails RTDs. The requirements for grains and bulk spirits used in the production of the company’s spirits are purchased from various suppliers. Certain of the company’s wines and spirits must be aged for multiple years. Therefore, the company’s inventories of wines and spirits may be larger in relation to sales and total assets than in many other businesses. Seasonality In response to wholesaler and retailer demand which precedes consumer purchases, the company’s beer sales are typically highest during the first and second quarters of its fiscal year (year ended February 28, 2023), which correspond to the Spring and Summer periods in the U.S. The company’s wine and spirits sales are typically highest during the third quarter of its fiscal year, primarily due to seasonal holiday buying. History Constellation Brands, Inc. was founded in 1945. The company, a Delaware corporation, was incorporated in 1972.