Constellation Brands (STZ) 10-K risk factor changes: FY2021 vs FY2020

*In addition to information discussed elsewhere in this report, you should carefully consider the following [added: factors, as well as additional] factors [added: not presently known to us or that we currently deem to be immaterial,] which could materially affect our business, liquidity, financial condition, and/or results of [removed: operations.][added: operations in present and/or future periods.*]

[removed: | • |] [added: -] changes in local political, economic, social, and labor conditions; [removed: |]

[removed: | • |] [added: -] potential disruption from socio-economic violence, including terrorism and drug-related violence; [removed: |]

[removed: | • |] [added: -] restrictions on foreign ownership and investments or on repatriation of cash earned in countries outside the U.S.; [removed: |]

[removed: | • |] [added: -] import and export requirements and border accessibility; [removed: |]

[removed: | • |] [added: -] currency exchange rate fluctuations; [removed: |]

| PART I | [added: | |] ITEM 1A. RISK FACTORS | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

[removed: | • |] [added: -] 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 [removed: |]

[removed: | • |] [added: -] inadequate levels of compliance with applicable anti-bribery laws, including the Foreign Corrupt Practices Act. [removed: |]

Unfavorable global or regional economic conditions, including economic slowdown and the disruption, [removed: volatility] [added: volatility,] and tightening of credit and capital markets, as well as unemployment, tax increases, governmental spending cuts, or a return of high levels of inflation, could affect consumer spending patterns and purchases of our products.

[added: 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.] Any determination that our operations or activities did not comply with applicable U.S. or foreign laws or regulations could result in the imposition of fines and penalties, interruptions of business, terminations of necessary licenses and permits, and other legal and equitable sanctions.

The [removed: U.S. and other] 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.

[removed: The U.S. federal government or other governmental] [added: Governmental] bodies may propose changes to international trade agreements, [added: treaties,] tariffs, taxes, and other government rules and [added: regulations including but not limited to environmental treaties and] regulations.

In addition, [removed: federal, state, provincial, local, and foreign] 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 [removed: federal, state, or local] regulations also require warning labels and signage.

New or revised regulations or increased licensing fees, requirements, or taxes could have a material [removed: adverse effect on our business, liquidity, financial condition, and/or results of operations.]

These [removed: international, economic, and political] uncertainties and [removed: regulatory changes could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations, especially to the extent these matters, or] [added: changes, as well as] the decisions, [removed: policies or] [added: policies, and] economic strength of our suppliers and distributors, [removed: affect] [added: could have a material adverse effect on] our business, liquidity, financial condition, and/or results of operations.

We are dependent on our Nava and Obregon breweries as our sole sources of supply to fulfill our Mexican beer brands product requirements, both now as well as for the [removed: near term.][added: near-term.]

| PART I | [added: | |] ITEM 1A. RISK FACTORS | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

These are multi-million-dollar [removed: expansion] activities, [removed: which could have the] [added: with a] potential risk of completion delays and cost overruns.

[removed: Recently, in] [added: In] a public consultation process in Mexicali, Baja California, Mexico, voters voiced opposition to the construction of our Mexicali [removed: Brewery.][added: Brewery, and we have suspended construction of that brewery.]

We are currently working with local authorities, [added: Mexican] government [removed: officials] [added: officials,] and members of the community in Mexicali on next steps related to that brewery construction project and options elsewhere in [removed: Mexico.][added: Mexico for our long-term production requirements.]

We may not be able to satisfy our product supply requirements for the Mexican beer brands in the event of a significant disruption, partial destruction, or total destruction of the Nava or Obregon breweries or the glass plant, or difficulty shipping raw materials and product into or out of the [removed: United States,] [added: U.S.,] or temporary inability to produce our product due to closure or lower production levels of one or more of our Mexican breweries as a result of COVID-19.

Also, if the contemplated expansions of the [removed: Obregon Brewery] [added: Nava] and [removed: the glass plant] [added: Obregon breweries] and construction of additional brewery capacity in Mexico are [added: abandoned or are] not [added: otherwise] completed by their targeted completion dates, we may not be able to produce sufficient quantities of our Mexican beer to satisfy our needs.

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 [added: product supply,] business, liquidity, financial condition, and/or results of operations.

Several of our vineyards and production and distribution facilities, including certain California [removed: wineries and our planned Mexicali Brewery,] [added: wineries,] are in areas prone to seismic activity.

[removed: Additionally, we] have various vineyards and wineries in the state of California which has recently experienced wildfires and landslides.

As our operations are concentrated in a limited number of production and distribution facilities, we are more likely to experience a significant operational disruption or catastrophic loss in any one location from acts of war or terrorism, fires, floods, earthquakes, [added: severe winter storms,] hurricanes, pandemics, labor strike, or other labor activities, cyber-attacks, and other attempts to penetrate our information technology systems or the information technology used by our employees who work from home during the COVID-19 pandemic, unavailability of raw or packaging materials, or other natural or man-made [added: events.]

| PART I | [added: | |] ITEM 1A. RISK FACTORS | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

We are dependent on sufficient amounts of quality water for operation of our breweries, [removed: our] wineries, and [removed: our] distilleries, as well as to irrigate our vineyards and conduct our other operations.

A substantial reduction in water supplies could result in material losses of grape crops and vines or other crops, such as [added: corn,] barley or hops, which could lead to a shortage of our product supply.

We have substantial brewery operations in the country of Mexico, brewery operations in the states of Texas, Virginia, and [removed: Florida] [added: Florida,] and we currently have substantial wine operations in the state of California as well.

In the past, California had endured an extended period of drought and instituted restrictions on water [removed: usage.][added: usage, and a recurrence of such conditions could have an adverse effect upon those operations.]

The [removed: supply] [added: supply, on-time availability] and price of raw materials, packaging materials, and energy can be affected by many factors beyond our control, including market demand, global geopolitical events (especially as to their impact on crude oil prices), droughts, [added: storms,] and other weather conditions or natural or man-made events, economic factors affecting growth decisions, inflation, plant diseases, and theft.

| PART I | [added: | |] ITEM 1A. RISK FACTORS | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

[added: Currently, one producer supplies most of our glass container] requirements for our U.S. wine and spirits operations and two producers supply our glass bottles for our craft [removed: beer.][added: beer operations.]

Within our primary market in the U.S., we offer a range of beverage alcohol products [removed: across the beer, wine, and spirits categories,] 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 [removed: agencies, and we have entered into exclusive arrangements with certain wholesalers that generate a large portion of our U.S. wine and spirits net sales.][added: agencies.]

*Reliance upon complex information systems and [removed: third party] [added: third-party] global networks, cyber-attacks, and design and ongoing implementation of our new global [removed: enterprise resource planning system (“ERP”)*][added: ERP*]

We depend on information technology to enable us to operate efficiently and interface with customers and suppliers, [removed: as well as] maintain financial accuracy and efficiency, and effect accurate and timely governmental reporting.

The water supply for our Nava Brewery is sourced from a single water supply.

We may incur additional expenses for improving water delivery and securing additional water sources.

Disruptions in our supply chains could impact our ability to continue production.

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*Economic and political uncertainties associated with our international operations*

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adverse effect on our business, liquidity, financial condition, and/or results of operations.

We are expanding our Nava and Obregon breweries.

Many of the workers at these breweries are covered by collective bargaining agreements, and the Mexican government is also evaluating labor reform proposals which could increase our costs.

Additionally, we

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Severe weather events, such as drought or flooding in California or an unexpected severe winter

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We have an exclusive arrangement with one wholesaler that will generate a large portion of our U.S. wine and spirits net sales.

Similarly, power disruptions due to weather conditions could adversely impact our production processes and the quality of our products.

A widespread product

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Canopy’s success will depend on, among other things, the ability of Canopy to operate successfully in the cannabis market space and the presence of sufficient retail outlets.

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patterns.

The entities in which we have an interest may be subject to litigation which may have an adverse impact on their ability to do business or under which they may incur costs and expenses which could have a material adverse impact on their operations or financial condition which, in turn, could negatively impact the value of our investment.

While we will not develop, distribute, manufacture, or sell cannabis products in the U.S., or anywhere else in the world, unless legally permissible to do so at all

The risks described below are not the only risks we face.

Additional factors not presently known to us or that we currently deem to be immaterial may also have a material adverse effect on our business, liquidity, financial condition, and/or results of operations in future periods.*

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We could also be affected by nationalization of our international operations, unstable governments, unfamiliar or biased legal systems, intergovernmental disputes or animus against the United States.

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We are expanding our Obregon Brewery and our joint venture with Owens-Illinois expanded its glass plant with an additional furnace having become operational in February 2020.

Abandonment of our expansion and construction activities could have a material adverse effect on our financial condition.

Many of the workers at these breweries are covered by collective bargaining agreements.

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events.

If one or more significant uninsured or under-insured events occur, we could suffer a major financial loss.

We have elected to omit discussion on the earliest of the three years covered by the consolidated financial [removed: statement] [added: statements] presented.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and [removed: “Financial Liquidity] [added: “Liquidity] and Capital Resources” located in our Form 10-K for the fiscal year ended February [removed: 28, 2019,] [added: 29, 2020,] filed on April [removed: 23, 2019,] [added: 21, 2020,] for reference to discussion of the fiscal year ended February 28, [removed: 2018,] [added: 2019,] the earliest of the three fiscal years presented.

[removed: | *•* |] *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. [removed: |]

[removed: | • |] *Strategy.* This section provides a description of our strategy and a discussion of recent developments, significant investments, acquisitions, and divestitures. [removed: |]

[removed: | • | *Results of operations.* This section provides an analysis of our results of operations presented on a business segment basis.] In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided. [removed: |]

[removed: | • | *Financial liquidity and capital resources.* This section provides an analysis of our cash flows, outstanding debt, and commitments.] Included in the analysis of outstanding debt is a discussion of the [removed: amount of financial] capacity available to fund our ongoing operations and future commitments, as well as a discussion of other financing arrangements. [removed: |]

[removed: | • |] *Critical accounting [removed: estimates] [added: policies] and [removed: policies.*] [added: estimates.*] This section identifies [removed: those] accounting policies that are considered important to our results of operations and financial condition, require significant judgment and involve significant management estimates. [removed: Our significant accounting policies, including those considered to be critical accounting policies, are summarized in Note 1 of the Notes to the Financial Statements. |]

[removed: Beginning March 1, 2019, as a result of our November 2018 Canopy Investment and a change in our CODM on March 1, 2019, we have changed our] [added: Our] internal management financial reporting [removed: to consist] [added: consists] of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) [added: Canopy and we report our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv)] Canopy.

In the Beer segment, our portfolio consists of high-end imported [removed: and] [added: beer,] craft [removed: beer] [added: beer,] and [removed: alternative beverage alcohol] [added: ABA] brands.

| PART II | [added: | |] ITEM 7. MD&A | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

[added: We have an exclusive perpetual brand license to import, market, and sell our] Mexican beer portfolio in the U.S. In the Wine and Spirits segment, our portfolio includes higher-margin, higher-growth wine brands complemented by certain higher-end spirits brands.

All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and [removed: are therefore] [added: are, therefore,] not allocated to the other reportable segments.

The [removed: new] 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.

[removed: Our business strategy for the Beer segment focuses on leading the high-end segment of the U.S. beer market and] [added: This] includes continued focus on growing our beer portfolio in the U.S. through expanding distribution for key brands, as well as [removed: new product development] [added: NPD] and innovation within the existing portfolio of brands, and continued [removed: expansion, construction,] [added: expansion] and [removed: optimization] [added: construction] activities for our Mexico beer operations.

[removed: In connection with our business strategy for the Beer segment, we] [added: We] have more than tripled the production capacity of [removed: our brewery located in Nava, Coahuila, Mexico] [added: the Nava Brewery] since its [removed: June] 2013 acquisition.

| PART II | [added: | |] ITEM 7. MD&A | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

[removed: Expansion, construction, and optimization] [added: Expansion] efforts continue under our [removed: previously-announced] Mexico Beer [removed: Expansion] Projects [removed: (as defined below in “Capital Expenditures”)] to align with our anticipated future growth [removed: expectations (see “Capital Expenditures” below).][added: expectations.]

Our [removed: business] strategy for the Wine and Spirits segment is to build an industry-leading portfolio of higher-end wine and spirits brands.

We are investing to meet the evolving needs of [removed: consumers;] [added: consumers, including launching direct-to-consumer and eCommerce platforms;] building brands through consumer insights, sensory expertise, and innovation; and refreshing existing brands, as we continue to focus on moving our branded wine and spirits portfolio towards a higher-margin, higher-growth portfolio of brands.

We focus our innovation and investment dollars on [removed: those] brands within our portfolio which position us to benefit from the consumer-led trend towards premiumization.

Additionally, in connection with the [removed: New Wine and Spirits Transactions, Other Wine and Spirits Transactions, and the Black Velvet Divestiture,] [added: recent divestitures,] we expect to optimize the value of our wine and spirits portfolio by driving increased focus on our higher-end [removed: Power Brands] [added: brands] to accelerate growth and improve overall operating margins.

[removed: This consolidated U.S. distribution network currently represents about 70% of our branded wine and spirits volume in the U.S.] Throughout the terms of these contracts, we generally expect shipments on an annual basis to these distributors to essentially equal the distributors’ shipments to retailers.

Marketing, sales, and distribution of our products are managed on a geographic basis [removed: in order] [added: allowing us] to [removed: fully] leverage leading market positions.

Within our primary market in the U.S., we offer a range of beverage alcohol products across the imported beer, craft beer, [added: ABA,] branded wine, and spirits categories, with generally separate distribution networks utilized for (i) our beer portfolio and (ii) our wine and spirits portfolio.

[removed: These investments are consistent with our long-term strategy to identify, meet, and stay ahead of evolving consumer trends and market dynamics, and they represent a significant expansion of] [added: We expanded] our strategic relationship [added: with Canopy] to [added: help] position [removed: Canopy] [added: it] as a global leader in cannabis production, branding, intellectual property, and retailing.

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, maintain our targeted leverage ratio, and deliver returns to shareholders through the payment of [removed: quarterly cash] dividends and periodic share repurchases.

[removed: *COVID-19*][added: COVID-19]

| PART II | [added: | |] ITEM 7. MD&A | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

In [removed: most of] [added: the key markets where we sell] our [removed: locations,] [added: products,] the beverage alcohol industry has been classified as an essential [removed: business and as such we are still able to produce and sell our products.][added: business.]

COVID-19 [removed: has] [added: containment measures] affected us [added: earlier in the fiscal year] primarily in the reduction of [added: (i)] depletion volume on our products in the on-premise business due to [removed: shelter in place mandates and] bar and restaurant [removed: closures.][added: closures and (ii) shipment volume related to the reduced production activity at our major breweries in Mexico.]

[removed: However, our] [added: Our] supply chains and distribution channels [removed: have] [added: were] not [removed: been] materially impacted and we [removed: have adequate] [added: worked throughout the fiscal year to rebuild our] supply of products to meet forecasted demand.

[removed: At this time, we] [added: We] are not able to estimate the long-term impact of COVID-19 on our business, financial condition, results of operations, and/or cash flow.

We expect to have continued access to capital markets and to [added: be able to] continue to return value to [removed: shareholders.][added: shareholders through dividends and periodic share repurchases.]

[removed: *New] [added: |] Wine and [removed: Spirits Transactions*][added: Spirits: | | | | | | | | | | | | | | | | | | | | | | | |]

[removed: Gallo Winery (“Gallo”) to sell] [added: In January 2021, we sold] a portion of our wine and spirits business, including [removed: approximately 30] lower-margin, lower-growth wine and spirits brands, [added: related inventory, interests in certain contracts,] wineries, vineyards, offices, and facilities.

[removed: Roget American Champagne, Paul Masson Grande Amber Brandy, and our concentrate business will be excluded from the transaction with Gallo resulting in an adjusted transaction price of approximately $843 million, with] [added: In addition, we have] the potential to earn an incremental $250 million of contingent consideration if certain brand performance [removed: provisions] [added: targets] are met over a two-year period after closing.

| PART II | [added: | |] ITEM 7. MD&A | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

[removed: *Other Wine] [added: *Wine] and Spirits [removed: Transactions*][added: Divestitures*]

[removed: Selected] [added: The following presents selected] financial information included in our [removed: results of operations for the portion of the business] [added: historical consolidated financial statements] that [removed: we expect will] [added: are] no longer [removed: be] part of our consolidated results [removed: after the closing] of [added: operations following] the [removed: New] [added: Paul Masson Divestiture,] Wine and Spirits [removed: Transactions and Other Wine] [added: Divestitures,] and [removed: Spirits Transactions is as follows:][added: Concentrate Business Divestiture:]

| (in millions) | | | | | | | | | | | | [added: | | | | | |]

This MD&A, which should be read in conjunction with our Financial Statements, is organized as follows:

*Results of operations.* This section provides an analysis of our results of operations presented on a business segment basis.

*Liquidity and capital resources.* This section provides an analysis of our cash flows, outstanding debt, liquidity position, and commitments.

Our significant accounting policies, including those considered to be critical accounting policies, are summarized in Note 1.

Our business strategy for the Beer segment focuses on leading the high-end segment of the U.S. beer market.

In early Fiscal 2022, we completed part of a planned expansion of our Obregon Brewery.

However, at this time, we have suspended all Mexicali Brewery construction activities, following a negative result from a public consultation held in Mexico.

See “Capital expenditures” below.

This consolidated U.S. distribution network currently represents about 70% of our branded wine and spirits volume in the U.S. Effective April 1, 2021, we have modified our U.S. wine and spirits distribution network to a single distributor which we expect to continue to represent approximately 70% of that volume.

We complement our strategy with our investment in Canopy, by expanding our portfolio into adjacent categories.

Canopy is a leading cannabis company with operations in countries across the world.

This investment is consistent with our long-term strategy to identify, address, and stay ahead of evolving consumer trends and market dynamics.

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Recent Development

*Mexicali Brewery*

In April 2021, our Board of Directors authorized management to sell or abandon the Mexicali Brewery.

Subsequently, management determined that we will be unable to use or repurpose certain assets at the Mexicali Brewery.

Accordingly, in the first quarter of fiscal 2022, we expect to recognize a long-lived asset impairment of approximately $650 million to $680 million which will be included within our consolidated results of operations.

The fair value will be determined based on the expected salvage value of the abandoned assets as of April 2021.

We are continuing to work with government officials in Mexico to (i) determine next steps for our suspended Mexicali Brewery construction project and (ii) pursue various forms of recovery for capitalized costs and additional expenses incurred in establishing the brewery, however, there can be no assurance of any recoveries.

To align with our anticipated future growth expectations we are also working with the Mexican government to explore options to add further capacity at another location in Southeastern Mexico where there is ample water and a skilled workforce to meet our long-term needs.

The Fiscal 2021 decrease in the on-premise business has been more than offset by an increase in off-premise.

We expect our on-premise depletion volumes to return to more normal levels as Federal Drug Administration approved COVID-19 vaccines are administered across the U.S. and states begin the process of fully reopening their economies, including bars and restaurants.

Currently, our breweries, wineries, and bottling facilities are open and operational.

However, certain facilities may experience occasional temporary closures due to applicable local conditions.

In June 2020, beer production at our major breweries in Mexico returned to normal levels following a slow down earlier in the fiscal year.

Distributor product inventories returned to normal levels at the end of Fiscal 2021.

In response to COVID-19, we have ensured our ongoing liquidity and financial flexibility through cash preservation initiatives, capital expense reductions, and cost control measures.

*Ballast Point Divestiture*

Accordingly, our consolidated results of operations include the results of operations of our Ballast Point craft beer business through the date of divestiture.

*Paul Masson Divestiture*

In January 2021, we sold the Paul Masson Grande Amber Brandy brand, related inventory, and interests in certain contracts.

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net cash proceeds were used for general corporate purposes.

For the year ended February 28, 2021, we recognized a net gain of $58.9 million on the sale of the business.

We received net cash proceeds of $538.4 million, subject to certain post-closing adjustments.

In January 2021, we also sold the New Zealand-based Nobilo Wine brand and certain related assets.

This MD&A, which should be read in conjunction with our Financial Statements, provides additional information on our businesses, current developments, financial condition, cash flows, and results of operations.

It is organized as follows:

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We are an international beverage alcohol company with a broad portfolio of consumer-preferred high-end imported beer brands, and higher-end wine and spirits brands.

Many of our products are recognized as leaders in their respective categories.

We are one of the leading U.S. growth drivers at retail among beverage alcohol suppliers.

In the U.S. market, we are the third-largest beer company and a leading higher-end wine company.

Through February 28, 2019, our internal management financial reporting consisted of two business divisions: (i) Beer and (ii) Wine and Spirits.

Consequently, beginning with the first quarter of fiscal 2020, we report our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy.

We have an exclusive perpetual brand license to import, market, and sell our

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Our overall strategy is to drive industry-leading growth, build unrivaled shareholder value, and shape the future of our industry by building brands that people love.

We believe sharing a toast, unwinding after a day, celebrating milestones, and helping people connect, is Worth Reaching For.

We position our portfolio to benefit from the consumer-led trend towards premiumization, which we believe will continue to result in faster growth rates in the higher-end of the beer, wine, and spirits categories.

We focus on developing our expertise in consumer insights and category management, as well as our strong distributor network, which provides an effective route-to-market.

Additionally, we leverage our scale across the total beverage alcohol market and our level of diversification hedges our portfolio risk.

In addition to growing our existing business, we focus on targeted acquisitions of, and investments in, businesses that are higher-margin, higher-growth, consumer-led, have a low integration risk, and/or fill a gap in our portfolio.

We also strive to identify, meet, and stay ahead of evolving consumer trends and market dynamics (see “Investments, Acquisitions, and Divestitures – Canopy Investments” below).

We strive to strengthen our portfolio of higher-end beer, wine, and spirits brands and differentiate ourselves through:

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| • | leveraging our leading position in total beverage alcohol and our scale with wholesalers and retailers to expand distribution of our product portfolio; |

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| • | strengthening relationships with wholesalers and retailers by providing consumer and beverage alcohol insights; |

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As a result of our global operating, investment, [removed: acquisition] [added: acquisition,] and financing activities, we are exposed to market risk associated with changes in foreign currency exchange rates, commodity prices, interest rates, and equity prices.

To manage the volatility relating to these risks, we periodically purchase and/or sell derivative instruments including foreign currency forward and option contracts, commodity swap contracts, interest rate swap [removed: contracts] [added: contracts,] and treasury lock contracts.

Foreign currency derivative instruments are or may be used to hedge existing foreign currency denominated assets and liabilities, forecasted foreign currency denominated sales/purchases to/from third parties as well as intercompany sales/purchases, intercompany principal and interest payments, and in connection with investments, acquisitions, or divestitures outside the U.S. As of February [removed: 29, 2020,] [added: 28, 2021,] we had exposures to foreign currency risk primarily related to the Mexican peso, euro, [removed: Canadian dollar, and] New Zealand [added: dollar, and Canadian] dollar.

Approximately [removed: 84%] [added: 100%] of our balance sheet exposures and [added: 82% of our] forecasted transactional exposures for the year ending February 28, [removed: 2021,] [added: 2022,] were hedged as of February [removed: 29, 2020.][added: 28, 2021.]

As of February [removed: 29, 2020,] [added: 28, 2021,] exposures to commodity price risk which we are currently hedging include aluminum, corn, diesel fuel, natural gas, and wheat prices.

Approximately [removed: 83%] [added: 67%] of our forecasted transactional exposures for the year ending February 28, [removed: 2021,] [added: 2022,] were hedged as of February [removed: 29, 2020.][added: 28, 2021.]

[removed: Losses] [added: Gains] or [removed: gains] [added: losses] from the revaluation or settlement of the related underlying positions would substantially offset such [removed: losses or] gains [added: or losses] on the derivative instruments.

| | [added: | |] Aggregate Notional Value | | | | | | | | [added: | | | |] Fair Value, Net Asset (Liability) | | | | | | | | [added: | | | |] Increase (Decrease) in Fair Value – Hypothetical 10% Adverse Change | | | | | | | [added: | |]

| | [removed: February 29, 2020] | | [removed: | |] February 28, [removed: 2019] [added: 2021] | | | | [added: | |] February 29, 2020 | | | | [added: | |] February 28, [removed: 2019] [added: 2021] | | | | [added: | |] February 29, 2020 | | | | [added: | |] February 28, [removed: 2019] [added: 2021] | | | [added: | | | February 29, 2020 | | |]

| (in millions) | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Foreign currency contracts | [added: | |] $ | [removed: 3,011.2] [added: 2,262.7] | | | [added: | |] $ | [removed: 2,039.6] [added: 3,011.2] | | | [added: | |] $ | [removed: 61.9] [added: 66.9] | | | [added: | |] $ | [removed: 22.5] [added: 61.9] | | | [added: | |] $ | [removed: (193.3] [added: (129.7)] | [removed: )] | | [added: | |] $ | [removed: (166.5] [added: (193.3)] | [removed: )] |

| Commodity derivative contracts | [added: | |] $ | [removed: 282.8] [added: 221.6] | | | [added: | |] $ | [removed: 284.7] [added: 282.8] | | | [added: | |] $ | [removed: (40.3] [added: 15.9] | [removed: )] | | [added: | |] $ | [removed: (2.9] [added: (40.3)] | [removed: )] | | [added: | |] $ | [removed: 21.7] [added: (22.5)] | | | [added: | |] $ | [removed: 24.4] [added: 21.7] | |

There were no cash flow designated interest rate swap contracts outstanding as of February 28, [removed: 2019.][added: 2021.]

As of February [removed: 29, 2020,] [added: 28, 2021,] and February [removed: 28, 2019,] [added: 29, 2020,] there were no undesignated interest rate swap contracts outstanding.

| PART II | [added: | |] ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

There were no cash flow designated treasury lock contracts outstanding as of February 28, [removed: 2019.][added: 2021.]

As of February [removed: 29, 2020,] [added: 28, 2021,] and February [removed: 28, 2019,] [added: 29, 2020,] there were no undesignated treasury lock contracts outstanding.

The aggregate notional value, estimated fair value, and sensitivity analysis for our outstanding [removed: fixed and variable interest rate] [added: fixed-rate] debt, including current maturities and open interest rate derivative instruments, are summarized as follows:

| | [added: | |] Aggregate Notional Value | | | | | | | | [added: | | | |] Fair Value Net Asset (Liability) | | | | | | | | [added: | | | |] Increase (Decrease) in Fair Value – Hypothetical 1% Rate Increase | | | | | | | [added: | |]

| | [removed: February 29, 2020] | | [removed: | |] February 28, [removed: 2019] [added: 2021] | | | | [added: | |] February 29, 2020 | | | | [added: | |] February 28, [removed: 2019] [added: 2021] | | | | [added: | |] February 29, 2020 | | | | [added: | |] February 28, [removed: 2019] [added: 2021] | | | [added: | | | February 29, 2020 | | |]

| (in millions) | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Fixed interest rate debt | [added: | |] $ | [removed: 10,075.3] [added: 10,065.5] | | | [added: | |] $ | [removed: 10,278.9] [added: 10,075.3] | | | [added: | |] $ | [removed: (10,942.8] [added: (11,126.5)] | [removed: )] | | [added: | |] $ | [removed: (10,098.5] [added: (10,942.8)] | [removed: )] | | [added: | |] $ | [removed: (708.4] [added: (805.3)] | [removed: )] | | [added: | |] $ | [removed: (591.0] [added: (708.4)] | [removed: )] |

| Interest rate swap contracts | [removed: $] | [removed: 375.0] | [removed: | |] $ | — | | | [added: | |] $ | [removed: (0.8] [added: 375.0] | [removed: )] | | [added: | |] $ | — | | | [added: | |] $ | [removed: (0.3] [added: (0.8)] | [removed: )] | | [added: | |] $ | — | | [added: | | | $ | (0.3) | |]

| Treasury lock contracts | [removed: $] | [removed: 300.0] | [removed: | |] $ | — | | | [added: | |] $ | [removed: (7.6] [added: 300.0] | [removed: )] | | [added: | |] $ | — | | | [added: | |] $ | [removed: (9.7] [added: (7.6)] | [removed: )] | | [added: | |] $ | — | | [added: | | | $ | (9.7) | |]

The estimated fair value of our [removed: investments] [added: investment] in the Canopy warrants and the Canopy convertible debt securities are subject to equity price risk, interest rate risk, credit risk, and foreign currency risk.

[removed: These investments are] [added: This investment is] recognized at fair value utilizing various option-pricing models and [removed: have] [added: has] the potential to fluctuate from, among other items, changes in the quoted market price of the underlying equity security.

We manage our equity price risk exposure by closely monitoring the financial condition, [removed: performance] [added: performance,] and outlook of [removed: Canopy Growth Corporation.][added: Canopy.]

As of February [removed: 29, 2020,] [added: 28, 2021,] the fair value of our [removed: investments] [added: investment] in the Canopy warrants and the Canopy convertible debt securities was [removed: $1,117.1] [added: $1,816.0] million, with an unrealized net gain (loss) on [removed: these investments] [added: this investment] of [removed: $(2,126.4)] [added: $802.0] million recognized in our results of operations for the year ended February [removed: 29, 2020.][added: 28, 2021.]

As of February [removed: 29, 2020,] [added: 28, 2021,] such a hypothetical 10% adverse change would have resulted in a decrease in fair value of [removed: $172.0] [added: $282.7] million.

For additional discussion on our market risk, refer to Notes 6 and [removed: 7 of the Notes to the Financial Statements.][added: 7.]

| PART II | [added: | |] ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

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A 1% hypothetical change in the prevailing interest rates would have increased interest expense on our variable interest rate debt by $12.4 million and $26.7 million for the for the years ending February 28, 2021, and February 29, 2020, respectively.

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| Variable interest rate debt | $ | 2,185.4 | | | $ | 3,422.7 | | | $ | (2,232.0 | ) | | $ | (3,461.9 | ) | | $ | (46.6 | ) | | $ | (88.0 | ) |

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In the [removed: U.S. market,] [added: U.S.,] we are one of the top growth contributors at retail among beverage alcohol suppliers.

[removed: In the U.S. beer market, we] [added: We] are the third-largest beer company and [added: a] leader in the [removed: high-end.][added: high-end of the U.S. beer market and a higher-end wine and spirits company with many of our products as leaders in their respective categories.]

[removed: This, combined with our] [added: Our] strong market [removed: positions, makes] [added: positions make] us a supplier of choice to many of our [added: consumers and our] customers, who include wholesale distributors, retailers, and on-premise locations.

Our mission is to build brands that people [removed: love because they are Worth Reaching For.][added: love.]

It’s worth our dedication, hard work, and the bold calculated risks we take to deliver more for our [added: employees,] consumers, trade partners, shareholders, and communities in which we live and work.

[removed: The Company is] [added: Headquartered in Victor, New York, we are] a Delaware corporation incorporated [removed: on December 4,] [added: in] 1972, as the successor to a business founded in 1945.

Our overall strategy is to drive [removed: industry-leading growth, build unrivaled shareholder value,] [added: growth] and shape the future of our industry by building brands that people [removed: love.][added: love and delivering unrivaled value to our shareholders.]

We [added: endeavor to] position our portfolio to benefit from the consumer-led [removed: trend toward premiumization,] [added: premiumization trend,] which we believe will continue to [removed: result in] [added: drive] faster growth rates in the higher-end of the beer, wine, and spirits categories.

To capitalize on [added: consumer-led] premiumization trends, become more competitive, and grow our business, we have employed a strategy dedicated to a combination of organic growth and acquisitions, with a focus on the higher-margin, higher-growth categories of the beverage alcohol industry.

[removed: | • | leveraging] [added: - leverage] our leading position in total beverage alcohol and [removed: our] scale with wholesalers and retailers to expand distribution of our product portfolio; [removed: |]

[removed: | • | strengthening] [added: - strengthen] relationships with wholesalers and retailers by providing consumer and beverage alcohol insights; [removed: |]

[removed: | • | investing] [added: - invest] in brand building and innovation activities; [removed: |]

[removed: | • | positioning] [added: - position] ourselves for success with consumer-led products that identify, meet, and stay ahead of evolving consumer trends and market dynamics; [removed: |]

[removed: | • | realizing] [added: - realize] operating efficiencies [removed: through] [added: by] expanding and enhancing production capabilities and maximizing asset utilization; and [removed: |]

[removed: | • | developing] [added: - develop] employees to enhance performance in the marketplace. [removed: |]

In [removed: the] [added: our] beer business, we have solidified our position in the high-end of the U.S. beer market; enhanced our margins, results of operations, and operating cash flow; and provided new avenues for growth.

We [removed: have] made capital investments [removed: and acquisitions] to increase beer production capacity to support the growth of the business.

| PART I | [added: | |] ITEM 1. BUSINESS | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

In our wine and spirits business, [removed: as part of our efforts] [added: we continue] to focus on higher-end brands, improve margins, and create operating [removed: efficiencies, we have acquired higher-margin, higher-growth wine brands and portfolios of brands, including Meiomi and Prisoner.][added: efficiencies.]

We have strategically optimized the value of this business through the [removed: divestiture of the Canadian wine business and the anticipated completion] [added: recent divestitures] of [removed: the transactions to divest] a portion of our wine and spirits business, which [removed: include] [added: included] lower-margin, lower-growth [removed: products.][added: brands, wineries, vineyards, offices, and facilities.]

[removed: In addition, we have added higher-end] [added: Higher-end spirits] brands [added: were added] to our spirits portfolio through the acquisitions of Casa Noble [removed: tequila] [added: tequila,] and High West craft [removed: whiskeys.][added: whiskeys, and we recently introduced SVEDKA and High West pre-mixed cocktails to capitalize on the growth in the ready-to-drink space.]

[removed: These investments are consistent with our long-term strategy to identify, meet, and stay ahead of evolving consumer trends and market dynamics, and they represent a significant expansion of] [added: We expanded] our strategic relationship [added: with Canopy] to [added: help] position [removed: Canopy] [added: it] as a global leader in cannabis production, branding, intellectual property, and retailing.

In connection with [added: executing] our strategy [added: as] outlined above, during Fiscal [removed: 2020] [added: 2021] we completed the [removed: following:][added: following transactions:]

| [removed: Transaction] | | [added: | | | | | | |] Date | | [added: | | | |] Strategic Contribution | [added: | |]

| *Wine and Spirits [removed: Segment*] [added: segment*] | | | | | [added: | | | | | | | | | | | | |]

For further information about our significant Fiscal [removed: 2020,] [added: 2021,] Fiscal [removed: 2019,] [added: 2020,] and Fiscal [removed: 2018] [added: 2019] transactions, refer to (i) MD&A and (ii) Notes 2 and [removed: 10 of the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K (“Notes to the Financial Statements”).][added: 10.]

We [removed: report our operating results in] [added: have] four [added: reportable] segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy.

The business segments reflect how our operations are managed, [removed: how] resources are allocated, [removed: how] operating performance is evaluated by senior management, and the structure of our internal financial reporting.

Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included in the information below and subsequently eliminated [removed: in order] to reconcile to our consolidated financial statements.

| PART I | [added: | |] ITEM 1. BUSINESS | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

We report net sales in [removed: three] [added: two] reportable segments, as [added: Canopy is eliminated in consolidation, as] follows:

| | [added: | |] For the Years Ended | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]

| | [added: | |] February [added: 28, 2021 | | | | | | | | | | | | February] 29, 2020 | | | | [removed: February 28, 2019] | | | [added: | | | | | | | | | | | | | |]

| (in millions) | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Beer | [added: | |] $ | [removed: 5,615.9] [added: 6,074.6] | | | [added: | | | | | | | |] $ | [removed: 5,202.1] [added: 5,615.9] | | [added: | | | | | | | | | | | | | | | | | |]

| Wine and Spirits: | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Wine | [added: | | 2,208.4 | | | | | | | | | | | |] 2,367.5 | | | | [removed: 2,532.5] | | | [added: | | | | | | | | | | | | | |]

| Spirits | [added: | | 331.9 | | | | | | | | | | | |] 360.1 | | | | [removed: 381.4] | | | [added: | | | | | | | | | | | | | |]

| Total Wine and Spirits | [added: | | 2,540.3 | | | | | | | | | | | |] 2,727.6 | | | | [removed: 2,913.9] | | | [added: | | | | | | | | | | | | | |]

| Canopy | [added: | | 378.6 | | | | | | | | | | | |] 290.2 | | | | [removed: 48.6] | | | [added: | | | | | | | | | | | | | |]

We are in the business of creating new experiences that bring people together and elevate their lives.

People – True strength is achieved when everyone has a voice.

That is why we build our culture on a foundation that encourages inclusion and diversity of thought, where everyone feels empowered to bring their true selves and different points of views to drive us forward;

Customers – We are relentless to anticipate what consumers want today, tomorrow, and well into the future;

Entrepreneurship – As an industry leader, we act with a bold calculated approach to realize our vision and unlock new growth opportunities;

Quality – Our promise is to pursue quality in our process and products by continuously enhancing what we do and how we do it; and

Integrity – It is about more than achieving goals.

How we achieve them is just as important.

We act with high moral and ethical standards and always do the right thing, even when it is the hard thing.

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We have remained committed to executing this strategy, and as a result have realized its impact on each segment of our business.

We continue to focus on consumer-led innovation by creating new products that meet emerging needs.

We continue to drive our strategy by acquiring higher-margin, higher-growth wine and spirits brands, including the addition of Meiomi and Prisoner to the portfolio we refined over the past several years.

In addition, we have strengthened our position in the accelerating direct-to-consumer and 3-tier eCommerce channel with the acquisition of Empathy Wines and investment in Booker Vineyard.

We complement our strategy with our investment in Canopy by expanding our portfolio into adjacent categories.

Canopy is a leading cannabis company with operations in countries across the world.

This investment is consistent with our long-term strategy to identify, address, and stay ahead of evolving consumer trends and market dynamics.

For further information on our strategy, see MD&A.

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| *Beer segment* | | | | | | | | | | | | | | | | | |

|  | | | Ballast Point Divestiture | | | | | | March 2020 | | | | | | Divestiture of the Ballast Point craft beer business, including a number of its production facilities and brewpubs; consistent with our strategic focus on our high-performing import portfolio. | | |

|  | | | Paul Masson Divestiture | | | | | | January 2021 | | | | | | Divestiture of Paul Masson Grande Amber Brandy brand and related inventory; consistent with our increased focus on consumer-led premiumization trends. | | |

|  | | | Wine and Spirits Divestitures | | | | | | January 2021 | | | | | | Divestiture of lower-margin, lower-growth wine and spirits brands, wineries, vineyards, offices, and facilities; consistent with our focus on consumer-led premiumization trends. | | |

|  | | | Concentrate Business Divestiture | | | | | | December 2020 | | | | | | Divestiture of certain brands used in our concentrates and high-color concentrates business; consistent with our focus on consumer-led premiumization trends. | | |

|  | | | Copper & Kings | | | | | | September 2020 | | | | | | Acquisition of a collection of traditional and craft-batch distilled American brandies and other select spirits; supported our strategic focus to build an industry-leading portfolio of higher-end spirits brands. | | |

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| | | | | | | | | | Date | | | | | | Strategic Contribution | | |

|  | | | Empathy Wines | | | | | | June 2020 | | | | | | Acquisition of a digitally-native wine brand, strengthened our position in the direct-to-consumer and eCommerce markets; supported our focus on meeting the evolving needs of our consumers. | | |

|  | | | Booker Vineyard | | | | | | April 2020 | | | | | | Investment in super-luxury, direct-to-consumer focused wine business; supported our focus on consumer-led premiumization trends and meeting the evolving needs of our consumers. | | |

| *Canopy segment* | | | | | | | | | | | | | | | | | |

|  | | | May 2020 Canopy Investment | | | | | | May 2020 | | | | | | Incremental investment in Canopy; expanded our strategic relationship. | | |

We are a leading, higher-end wine and spirits company in the U.S. market.

Many of our products are recognized as leaders in their respective categories.

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| • | people; |

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| • | customer focus; |

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| • | entrepreneurship; |

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| • | quality; and |

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| • | integrity. |

We have approximately 9,000 employees located primarily in the U.S. and Mexico, with our corporate headquarters located in Victor, New York.

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Additionally, in an effort to more fully compete in growing sectors of

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the high-end segment of the U.S. beer market, we have leveraged our innovation capabilities to introduce new brands that align with consumer trends.

We complemented our total beverage alcohol strategy in an adjacent category by making investments in Canopy, a world-leading, diversified cannabis company.

For further information on our strategy, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7.

| PART [removed: I] [added: II] | [added: | |] OTHER KEY INFORMATION | [removed: [Table] [added: | | Table] of [removed: Contents](#sCD87E31BD1B550908BABB6F659206986)] [added: Contents] | [added: | |]

For information regarding Legal Proceedings, see Risk Factors and Note 16.

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In the ordinary course of their business, the Company and its subsidiaries are subject to lawsuits, arbitrations, claims, and other legal proceedings in connection with their business.

Some of the legal actions include claims for substantial or unspecified compensatory and/or punitive damages.

A substantial adverse judgment or other unfavorable resolution of these matters could have a material adverse effect on the Company’s financial condition, results of operations, and cash flows.

Management believes that the Company has adequate legal defenses with respect to the legal proceedings to which it is a defendant or respondent and that the outcome of these pending proceedings is not likely to have a

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material adverse effect on the financial condition, results of operations, or cash flows of the Company.

However, the Company is unable to predict the outcome of these matters.

Regulatory Matters – The Company and its subsidiaries are in discussions with various governmental agencies concerning matters raised during regulatory examinations or otherwise subject to such agencies’ inquiry.

These matters could result in censures, fines, or other sanctions.

Management believes the outcome of any pending regulatory matters will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

However, the Company is unable to predict the outcome of these matters.

As previously reported in the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 2019 and November 30, 2019, on August 21, 2019, Industria Vidriera de Coahuila, S. de R.L. de C.V. (“IVC”), the Mexican subsidiary of a consolidated joint venture of the Company, received from the Procuraduria de Protección al Ambiente de Coahuila (“PROPAEC”) notification of an enforcement action for violations of certain laws in the Mexican state of Coahuila de Zaragoza regulating the discharge of wastewater into the environment.

The notification was based on PROPAEC’s evaluation of IVC’s May 22, 2019 response to allegations arising from an inspection of IVC’s facility originally conducted by PROPAEC on April 12, 2018.

The allegations against IVC consisted of the discharge of wastewater from evaporators without PROPAEC’s authorization and associated recordkeeping violations under relevant state environmental regulations.

On September 19, 2019, IVC paid a penalty of MXN$2,196,740 (approximately $113,000) and related tax of MXN$494,267 (approximately $25,000).

The Company believes this matter is fully settled.

[removed: FORM 10-K][added: FORM 10-K]

| (Mark One) | | [added: | | | |]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended February 29, 2020][added: ended February 28, 2021]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission file [removed: number 001-08495][added: number 001-08495]

| Delaware | [added: | |] 16-0716709 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | [added: | |] (I.R.S. Employer Identification No.) | [added: | |]

207 High Point [removed: Drive, Building 100, Victor, New York 14564][added: Drive, Building 100, Victor, New York 14564]

Registrant’s telephone number, including area code [removed: (585) 678-7100][added: (585) 678-7100]

| Title of Each Class | [added: | |] Trading Symbol(s) | [added: | |] Name of Each Exchange on Which Registered | [added: | |]

| Class A Common Stock | [added: | |] STZ | [added: | |] New York Stock Exchange | [added: | |]

| Class B Common Stock | [added: | |] STZ.B | [added: | |] New York Stock Exchange | [added: | |]

| Large Accelerated Filer | [added: | |] ☒ | [added: | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | [added: | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | [added: | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based upon the closing sales prices of the registrant’s Class A and Class B Common Stock as reported on the New York Stock Exchange as of the last business day of the registrant’s most recently completed second fiscal quarter was [removed: $32,806,810,830.][added: $29,984,320,148.]

| The number of shares outstanding with respect to each of the classes of common stock of Constellation Brands, Inc., as of April [removed: 15, 2020,] [added: 14, 2021,] is set forth below: | | [added: | | | |]

| Class | [added: | |] Number of Shares Outstanding | [added: | |]

| Class [removed: A] [added: B] Common Stock, par value $.01 per share | [removed: 167,852,917] | [added: | 23,261,188 | | |]

| Class [removed: B] [added: 1] Common Stock, par value $.01 per share | [removed: 23,293,136] | [added: | 613,717 | | |]

| Class [removed: 1] [added: A] Common Stock, par value $.01 per share | [removed: 1,694,803] | [added: | 170,152,810 | | |]

The Proxy Statement of Constellation Brands, Inc. to be issued for the Annual Meeting of Stockholders which is expected to be held July [removed: 21, 2020] [added: 20, 2021] is incorporated by reference in Part III to the extent described therein.

| | | [added: | | | |] Page | [added: | |]

| PART I | | | [added: | | | | | |]

| Item 1. | [added: | |] Business | [removed: [1](#s4EC30A6BE64F5325BAC31E0587F2515F)] | [added: | [vi](#i7884bde53e41447186bf7678bcba49fd_13) | | |]

| Item 1A. | [added: | |] Risk Factors | [removed: [13](#sA9F69F3851D75147BECEB4E8F9172E6A)] | [added: | [15](#i7884bde53e41447186bf7678bcba49fd_22) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| FORWARD-LOOKING STATEMENTS | | | | | | [i](#i7884bde53e41447186bf7678bcba49fd_2094) | | |

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| DEFINED TERMS | | | | | | [iii](#i7884bde53e41447186bf7678bcba49fd_2061) | | |

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| Item 1B. | Unresolved Staff Comments | NA |

| Item 2. | Properties | [27](#sD8E48216739A532DA25CF154EEA8D137) |

| Item 3. | Legal Proceedings | [27](#s69BA7215DA825F54BE630BC83045A3D6) |

| Item 4. | Mine Safety Disclosures | NA |

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| PART II | | |

| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | [28](#sF2F61104E8E55D30A5C9D7AB395D2550) |

| Item 6. | Selected Financial Data | [29](#sD9D583B93D74523BB09A9692023DBC82) |

| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | [31](#sE37480D73DBD5D2B81DAD8B0239FEAAE) |

| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | [56](#sF3C0CAE2A52452618D88A845F83A044A) |

| Item 8. | Financial Statements and Supplementary Data | [58](#sA9A683E4C9EF51AE8AC09A7228A09F71) |

| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | NA |

| Item 9A. | Controls and Procedures | [122](#s21F7E6B969E0517297A0E95BB0F04FDD) |

| Item 9B. | Other Information | NA |

| | | |

| PART III | | |

| Item 10. | Directors, Executive Officers, and Corporate Governance | [122](#s01D3EA3594935D0091B9847BCF0575FB) |

| Item 11. | Executive Compensation | [123](#s32849D070A255353A08598EFDD44C8D9) |

| Item 2. | | | Properties | | | [28](#i7884bde53e41447186bf7678bcba49fd_31) | | |

| Item 3. | | | Legal Proceedings | | | [28](#i7884bde53e41447186bf7678bcba49fd_34) | | |

| | | | | | | | | |

| PART II | | | | | | | | |

| Item 5. | | | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | | | [29](#i7884bde53e41447186bf7678bcba49fd_43) | | |

| Item 7. | | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | | [30](#i7884bde53e41447186bf7678bcba49fd_49) | | |

| Item 7A. | | | Quantitative and Qualitative Disclosures About Market Risk | | | [52](#i7884bde53e41447186bf7678bcba49fd_61) | | |

| Item 8. | | | Financial Statements and Supplementary Data | | | [54](#i7884bde53e41447186bf7678bcba49fd_64) | | |

The following selected financial data should be read in conjunction with MD&A and our consolidated financial statements and notes thereto under Item 8 of this Annual Report on Form 10-K (the “Financial Statements”).

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| | For the Years Ended | | | | | | | | | | | | | | | | | | |

| | February 29, 2020 (1) | | | | February 28, 2019 | | | | February 28, 2018 | | | | February 28, 2017 (2) | | | | February 29, 2016 | | |

| (in millions, except per share data) | | | | | | | | | | | | | | | | | | | |

| Sales | $ | 9,113.0 | | | $ | 8,884.3 | | | $ | 8,322.1 | | | $ | 8,051.2 | | | $ | 7,223.8 | |

| Excise taxes | (769.5 | | ) | | (768.3 | | ) | | (741.8 | | ) | | (730.1 | | ) | | (675.4 | | ) |

| Net sales | 8,343.5 | | | | 8,116.0 | | | | 7,580.3 | | | | 7,321.1 | | | | 6,548.4 | | |

| Cost of product sold (3) | (4,191.6 | | ) | | (4,035.7 | | ) | | (3,767.8 | | ) | | (3,802.1 | | ) | | (3,606.1 | | ) |

| Gross profit | 4,151.9 | | | | 4,080.3 | | | | 3,812.5 | | | | 3,519.0 | | | | 2,942.3 | | |

| Selling, general, and administrative expenses (4) | (1,621.8 | | ) | | (1,668.1 | | ) | | (1,532.7 | | ) | | (1,392.4 | | ) | | (1,177.2 | | ) |

| Impairment of assets held for sale | (449.7 | | ) | | — | | | | — | | | | — | | | | — | | |

| Gain (loss) on sale of business | 74.1 | | | | — | | | | — | | | | 262.4 | | | | — | | |

| Operating income (loss) | 2,154.5 | | | | 2,412.2 | | | | 2,279.8 | | | | 2,389.0 | | | | 1,765.1 | | |

| Income (loss) from unconsolidated investments (5) (6) (7) | (2,668.6 | | ) | | 2,101.6 | | | | 487.2 | | | | 27.3 | | | | 51.1 | | |

| Interest expense | (428.7 | | ) | | (367.1 | | ) | | (332.0 | | ) | | (333.3 | | ) | | (313.9 | | ) |

| Loss on extinguishment of debt (8) | (2.4 | | ) | | (1.7 | | ) | | (97.0 | | ) | | — | | | | (1.1 | | ) |

| Income (loss) before income taxes | (945.2 | | ) | | 4,145.0 | | | | 2,338.0 | | | | 2,083.0 | | | | 1,501.2 | | |

| (Provision for) benefit from income taxes (9) | 966.6 | | | | (685.9 | | ) | | (22.7 | | ) | | (550.3 | | ) | | (440.6 | | ) |

| Net income (loss) | 21.4 | | | | 3,459.1 | | | | 2,315.3 | | | | 1,532.7 | | | | 1,060.6 | | |

| Net (income) loss attributable to noncontrolling interests | (33.2 | | ) | | (23.2 | | ) | | (11.9 | | ) | | (4.1 | | ) | | (5.7 | | ) |

| Net income (loss) attributable to CBI | $ | (11.8 | ) | | $ | 3,435.9 | | | $ | 2,303.4 | | | $ | 1,528.6 | | | $ | 1,054.9 | |

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| Net income (loss) per common share attributable to CBI: | | | | | | | | | | | | | | | | | | | |

| Basic – Class A Common Stock | $ | (0.07 | ) | | $ | 18.24 | | | $ | 11.96 | | | $ | 7.76 | | | $ | 5.42 | |

| Basic – Class B Convertible Common Stock | $ | (0.07 | ) | | $ | 16.57 | | | $ | 10.86 | | | $ | 7.04 | | | $ | 4.92 | |

| Diluted – Class A Common Stock | $ | (0.07 | ) | | $ | 17.57 | | | $ | 11.47 | | | $ | 7.49 | | | $ | 5.18 | |

| Diluted – Class B Convertible Common Stock | $ | (0.07 | ) | | $ | 16.21 | | | $ | 10.59 | | | $ | 6.90 | | | $ | 4.79 | |

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| Cash dividends declared per common share: | | | | | | | | | | | | | | | | | | | |

| Class A Common Stock | $ | 3.00 | | | $ | 2.96 | | | $ | 2.08 | | | $ | 1.60 | | | $ | 1.24 | |

| Class B Convertible Common Stock | $ | 2.72 | | | $ | 2.68 | | | $ | 1.88 | | | $ | 1.44 | | | $ | 1.12 | |

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| Total assets | $ | 27,323.2 | | | $ | 29,231.5 | | | $ | 20,538.7 | | | $ | 18,602.4 | | | $ | 16,695.0 | |

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| Long-term debt, including current maturities | $ | 11,945.7 | | | $ | 12,825.0 | | | $ | 9,439.9 | | | $ | 8,631.6 | | | $ | 7,672.9 | |

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| Item 9A. | | | Controls and Procedures | | | [115](#i7884bde53e41447186bf7678bcba49fd_190) | | |

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| PART III | | | | | | | | |

| Item 10. | | | Directors, Executive Officers, and Corporate Governance | | | [116](#i7884bde53e41447186bf7678bcba49fd_199) | | |

| Item 11. | | | Executive Compensation | | | [116](#i7884bde53e41447186bf7678bcba49fd_202) | | |

| Item 12. | | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | | [116](#i7884bde53e41447186bf7678bcba49fd_205) | | |

| Item 13. | | | Certain Relationships and Related Transactions, and Director Independence | | | [117](#i7884bde53e41447186bf7678bcba49fd_208) | | |

| Item 14. | | | Principal Accounting Fees and Services | | | [117](#i7884bde53e41447186bf7678bcba49fd_211) | | |

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| PART IV | | | | | | | | |

| Item 15. | | | Exhibits, Financial Statement Schedules | | | [117](#i7884bde53e41447186bf7678bcba49fd_217) | | |

| Item 16. | | | Form 10-K Summary | | | [118](#i7884bde53e41447186bf7678bcba49fd_220) | | |

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| SIGNATURES | | | | | | [126](#i7884bde53e41447186bf7678bcba49fd_1962) | | |

*This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements.

All statements other than statements of historical fact included in this Annual Report on Form 10-K are forward-looking statements, including without limitation:*

*•The statements regarding the current global COVID-19 pandemic.*

*•The statements regarding the potential impact to supply, production levels, and costs due to wildfires.*

*•The statements under Item 1.

“Business” and Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding:*

*◦our business strategy, future operations, future financial position, future net sales and expected volume trends, future marketing spend, expected effective tax rates and anticipated tax liabilities, prospects, plans, and objectives of management;*

*◦information concerning expected or potential actions of third parties, including potential changes to international trade agreements, tariffs, taxes, and other governmental rules and regulations;*

*◦information concerning the future expected balance of supply and demand for our products;*

*◦timing and source of funds for operating activities and November 2018 Canopy warrant exercises, if any;*

*◦the manner, timing, and duration of the share repurchase program and source of funds for share repurchases; and*

*◦the amount and timing of future dividends.*

*•The statements regarding our beer expansion, construction, and optimization activities, including anticipated costs and timeframes for completion, discussions with government officials in Mexico, and expected impairment of non-recoverable brewery construction assets.*

*•The statements regarding:*

*◦the volatility of the fair value of our investment in Canopy measured at fair value;*

*◦our activities surrounding our investment in Canopy;*

*◦our targeted leverage ratio;*

*◦the November 2018 Canopy Warrants; and*

*◦our future ownership level in Canopy and our future share of Canopy’s reported earnings and losses.*

*•The statements regarding the Wine and Spirits Divestitures, including potential amount of contingent consideration, amount and use of proceeds, and any future restructuring charge.*

*•The statements regarding Canopy’s expectations and the transaction with Acreage.*

*When used in this Annual Report on Form 10-K, the words “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

All forward-looking statements speak only as of the date of this Annual Report on Form 10-K.

As of February [removed: 29, 2020,] [added: 28, 2021,] our material properties by segment, all of which are owned, unless otherwise noted, consist of:

| Breweries ● Compañía Cervecera de Coahuila in Nava, Coahuila, Mexico ● Compañía Cervecera de Obregón in Obregon, Sonora, Mexico Glass production plant ● Industria Vidriera de Coahuila in Nava, Coahuila, Mexico (1) | [added: | | | | | | | |] Wineries ● [removed: Canandaigua Winery in Canandaigua, New York, U.S. (2) ●] Gonzales Winery in Gonzales, California, U.S. ● Mission Bell Winery in Madera, California, U.S. [removed: (2)] ● Woodbridge Winery in Acampo, California, U.S. ● Drylands Winery in Marlborough, South Island, New Zealand Warehouse, distribution, and other production facilities ● Lodi Distribution Center in Lodi, California, U.S. [removed: (3)] [added: (2)] ● Pontassieve Winery in Florence, Italy | [added: | | | | |]

[removed: | (1) | The] [added: (1)The] glass production plant in Nava, Coahuila, Mexico is owned and operated by an equally-owned joint venture with Owens-Illinois and is located adjacent to our Nava Brewery. [removed: |]

[removed: | (3) | The] [added: (2)The] distribution center in Lodi, California is a leased facility. [removed: |]

Within our Wine and Spirits segment, as of February [removed: 29, 2020,] [added: 28, 2021,] we owned, leased, or had interests in approximately [removed: 11,600] [added: 10,100] acres of vineyards in California (U.S.), 6,800 acres of vineyards in New Zealand, and 1,300 acres of vineyards in Italy.

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|  | | | Beer | | | | | |  | | | Wine and Spirits | | |

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| Beer | Wine and Spirits |

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| (2) | In April 2019, we entered into a definitive agreement to sell a portion of our wine and spirits business, including approximately 30 lower-margin, lower-growth wine and spirits brands, wineries, vineyards, offices, and facilities. The transaction will include two of our material Wine and Spirits segment properties: the Canandaigua Winery and the Mission Bell Winery. For further information about this transaction, refer to “Recent Developments” in MD&A and Note 2 of the Notes to the Financial Statements. |

| | |

| --- | --- |

Our Class A Common Stock and Class B Common Stock trade on the [removed: New York Stock Exchange® (“NYSE”)] [added: NYSE] under the symbols STZ and STZ.B, respectively.

At April [removed: 15, 2020,] [added: 14, 2021,] the number of holders of record of our Class A Common Stock, Class B Common Stock, and Class 1 Common Stock were [removed: 517, 97,] [added: 502, 95,] and 13, respectively.

of this [removed: Annual Report on] Form 10-K.

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| PART II | | | ITEM 7. MD&A | | | Table of Contents | | |

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| PART II | OTHER KEY INFORMATION | [Table of Contents](#sCD87E31BD1B550908BABB6F659206986) |

[removed: FEBRUARY] [added: | | | | February] 29, [removed: 2020][added: 2020 | | | | | | | | | | | | | | |]

| | | | | [added: | | | | |] Page | [added: | |]

| Management’s Annual Report on Internal Control Over Financial Reporting | | | | [removed: [59](#sC4DE856E01B25BDA87736A57CE85F67C)] | [added: | | | | [55](#i7884bde53e41447186bf7678bcba49fd_67) | | |]

| Reports of Independent Registered Public Accounting Firm – KPMG LLP | | | | [removed: [60](#s564855A573435D47BF3090F48E0F4ED9)] | [added: | | | | [56](#i7884bde53e41447186bf7678bcba49fd_70) | | |]

[removed: | Consolidated Balance Sheets | | | | [65](#s8DC9DAD622D95CD8916A8F97D75D338D) |][added: CONSOLIDATED BALANCE SHEETS]

[removed: | Consolidated Statements of Comprehensive Income (Loss) | | | | [66](#sB6C706F522E15B88873B20902F819F19) |][added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)]

[removed: | Consolidated Statements of Changes in Stockholders’ Equity | | | | [67](#s6DBB41877837531E8EE87B23ED26B81E) |][added: CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY]

| Consolidated Statements of Cash Flows | | | | [removed: [68](#s5DBADCB2151C58569AF6F068499A0B93)] | [added: | | | | [63](#i7884bde53e41447186bf7678bcba49fd_88) | | |]

| Notes to Consolidated Financial Statements | | | | | [added: | | | | | | |]

[removed: | | 1 | . | Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies | [70](#sC362137871E751059C9D2EA6199948F3) |][added: DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES]

| | [removed: 2] | [removed: .] | [added: 2. | | |] Acquisitions, Divestitures, and Business Transformation | [removed: [75](#s770753E6699A57E6A71CF4847497735A)] | [added: | [70](#i7884bde53e41447186bf7678bcba49fd_100) | | |]

| | [removed: 4] | [removed: .] | [added: 4. | | |] Prepaid Expenses and Other | [removed: [78](#sE9F2EAC6686758F3A601ED891D547063)] | [added: | [74](#i7884bde53e41447186bf7678bcba49fd_106) | | |]

| | [removed: 5] | [removed: .] | [added: 5. | | |] Property, Plant, and Equipment | [removed: [78](#s94441B95FF6E596FB0FDDEA5C63AD936)] | [added: | [74](#i7884bde53e41447186bf7678bcba49fd_109) | | |]

| | [removed: 6] | [removed: .] | [added: 6. | | |] Derivative Instruments | [removed: [79](#s02EB24E81D4D59C6A0C2BB4AF11A1CF5)] | [added: | [75](#i7884bde53e41447186bf7678bcba49fd_112) | | |]

| | [removed: 7] | [removed: .] | [added: 7. | | |] Fair Value of Financial Instruments | [removed: [82](#s2415935D72E5502F80545C5D3F63D7F4)] | [added: | [78](#i7884bde53e41447186bf7678bcba49fd_115) | | |]

| [added: Amortizable intangible assets] | [removed: 9] | [removed: .] | [removed: Intangible Assets] | [removed: [89](#s9FA1FC65144A5D29BD1581AA210BA7B0)] | [added: | | | | | | | | | | | | | | | | | | |]

| [added: Equity method investments] | [removed: 10] | [removed: .] | [removed: Equity Method Investments] [added: —] | [removed: [89](#sCACD1FFCBFEF59ACBBB56677B753F948)] | [added: | | | | 1.0 | | | | | | 1.0 | | |]

| [added: Other assets] | [removed: 11] | [removed: .] | [removed: Other Assets] [added: 614.1] | [removed: [93](#sa985a7069334474284bd5af508204d3f)] | [added: | | | | 610.7 | | |]

| [added: Other accrued expenses and liabilities] | [removed: 12] | [removed: .] | [removed: Other Accrued Expenses and Liabilities] [added: 779.9] | [removed: [93](#s92FD065C4A235D5B84055AB48A5CA89C)] | [added: | | | | 780.4 | | |]

| [added: Deferred income taxes and other liabilities] | [removed: 15] | [removed: .] | [removed: Deferred Income Taxes and Other Liabilities] [added: 33.3] | [removed: [103](#sFC9D340174EB5C6FA6646B128D729378)] | [added: | | | | — | | | | | | 33.3 | | |]