Constellation Brands (STZ) 10-K risk factor changes: FY2024 vs FY2023

In addition, water purification and waste treatment infrastructure limitations could increase costs or constrain [removed: operation of] [added: operations at] our production facilities and vineyards.

Our production facilities also use electricity, natural gas, and diesel fuel in [added: addition to renewable energy sources in] their operations.

The supply, on-time availability, and price of raw, packaging, and other materials, energy, and other commodities have been and may continue to be affected by many factors beyond our control, including [added: economic factors,] supply chain disruptions, inflationary pressures, market demand, global geopolitical events and military conflicts, [removed: such as repercussions from the Russian invasion of Ukraine,] droughts, storms, weather events, or natural or man-made disasters, [removed: economic factors affecting growth decisions,] plant diseases, and theft.

[removed: We] [added: At times, we] have experienced glass bottle purchasing shortages, particularly for brown glass used for certain of our Mexican beer brands.

Currently, one producer supplies a majority of our glass container requirements for our U.S. wine and spirits [removed: operations while a different producer supplies the glass bottles for our craft beer] operations.

To the extent any of the foregoing factors [added: impact our business or operations, including by] (i) [removed: increases] [added: increasing] the costs of our products and we are unable or choose not to pass along such rising costs to consumers through increased selling [removed: prices or] [added: prices,] (ii) [removed: leads] [added: leading] to a shortage of our product supply or inventory levels, [added: or (iii) requiring unplanned diversions of funds, resources, and talent to address such factors,] we could experience a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

*Reliance upon complex information systems and third-party global networks; [removed: cyberattacks*][added: cybersecurity; AI*]

If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, including our global [removed: ERP,] [added: enterprise resource planning system,] we could be subject to transaction errors, processing inefficiencies, increased costs, loss of customers, business disruptions, loss of or damage to intellectual property through security breach, penalties associated with the failure to timely file governmental reports, and/or other difficulties.

As with all large IT systems, we have been a target of cyberattackers and other hacking activities and our systems could be penetrated by increasingly sophisticated parties [added: (including through the use of emerging AI technologies)] intent on extracting confidential or proprietary information, corrupting our information, disrupting our business processes, engaging in the unauthorized use of strategic information about us or our employees, customers, or consumers, or demanding monetary payment.

Such unauthorized access could disrupt our operations and [removed: could] result in various costs and adverse consequences, including the loss of assets or revenues, litigation, regulatory actions, remediation costs, increased cybersecurity protection costs, damage to our reputation, harm to our employees, or the failure by us to retain or attract customers following such an event.

To the extent any of the foregoing factors result in significant disruptions and costs to our [removed: operations] [added: operations, compromise confidential] or [added: sensitive information, imperil our intellectual property, result in harm to our reputation and the public perception of the effectiveness of our IT systems and cybersecurity measures, and/or] reduce the effectiveness of our internal control over financial reporting, it could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

The countries in which we operate impose duties, excise taxes, and/or other taxes on beverage alcohol products, and/or on certain raw materials used to produce [removed: our beverage alcohol products, in varying amounts.]

[removed: Escalating] [added: Meanwhile, escalating] geopolitical tensions, [removed: including from the military conflict in Ukraine,] have resulted and may continue to result in sanctions, tariffs, and import-export restrictions.

These activities, when combined with any retaliatory actions that may be taken by other [removed: countries, including Russia,] [added: countries] could cause further inflationary pressures and economic and supply chain disruptions (including impacts on prices and supply of certain commodities, such as aluminum, corn, crude oil, natural gas, and steel).

Significant increases in import and excise duties or other taxes [removed: on,] [added: on] or [removed: that impact,] [added: impacting] beverage alcohol products as well as any tariffs, particularly on imports from Mexico and any retaliatory tariffs imposed by the Mexican government, could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

In addition, governmental agencies extensively regulate the beverage alcohol products industry concerning such matters as licensing, warehousing, trade and pricing practices, permitted and required labeling, [added: advertising, and relations with wholesalers and retailers.]

Additionally, various jurisdictions may seek to adopt significant additional product labeling or warning [removed: requirements] [added: requirements, limitations,] or [removed: limitations] [added: guidelines] on the marketing or sale of our products because of what our products contain or allegations that our products cause adverse health effects.

If these types of requirements become applicable to one or more of our major products under current or future laws or regulations, they may inhibit sales of such [removed: products.][added: products or increase our costs.]

We may not be able to satisfy our product supply requirements for [removed: the] [added: our] Mexican beer brands in the event of (i) a significant disruption or the partial or total destruction of the current Mexican breweries or the Glass Plant, (ii) difficulty shipping raw materials and product [removed: into] [added: into, within,] or out of the [removed: U.S.,] [added: U.S.] or [added: Mexico, including in the event of rail shipping disruptions with our major provider in each country, or] (iii) a temporary inability to produce our product due to closure or lower production levels of one or more of our current Mexican breweries.

Also, if the contemplated expansion, optimization, and/or construction activities at our breweries in Mexico are abandoned or not otherwise completed by their targeted completion dates, we may not be able to produce sufficient quantities of our Mexican beer to satisfy our needs in [removed: the future.]

If any of these or other of our properties and production facilities were to experience a significant operational disruption or catastrophic loss, it could delay or disrupt production, shipments, and [removed: revenue,] [added: sales,] and result in potentially significant expenses to repair or replace these properties or find suitable alternative providers.

For example, the SEC and the European Commission have [removed: published proposed or] [added: promulgated] final rules that would require significantly increased disclosures related to climate [removed: change.][added: change, although the SEC has issued an order to stay the rules pending the completion of judicial review of multiple petitions challenging the rules.]

We may experience significant future increases in the costs associated with regulatory compliance for ESG matters, including fees, licenses, [added: personnel, consultants,] reporting, and the cost of capital improvements for our operating [removed: facilities to meet environmental regulatory requirements, as well as to address other regulations, standards, frameworks, and ratings from various governmental entities and other stakeholders or activist campaigns.]

We have disclosed [removed: targets related to] [added: various ESG-related targets, including on] restoration of water withdrawals, Scope 1 and Scope 2 GHG emissions, [removed: and] enhancing social equity within our industry and communities, [added: waste reduction,] and [added: circular packaging, and] we may disclose new or updated ESG-related targets in the future.

We may not allot sufficient resources to attain, [removed: and/or] may not ultimately achieve, [added: and/or may be subject to proceedings or litigation related to] our ESG targets, and our costs in relation to any of the foregoing matters may exceed our projections, which could have a material adverse effect upon our business, liquidity, financial condition, and/or results of operations.

We have an exclusive arrangement with one wholesaler that generates a large portion of our branded U.S. wine and spirits net sales, and we have one wholesaler for our beer portfolio which, through multiple entities, represents [removed: roughly one-fifth] [added: one-quarter] of our consolidated net sales.

Wholesalers and retailers of our products offer [removed: products which compete] directly [removed: with our] [added: competing] products [added: that vie] for retail shelf space, promotional [removed: support] [added: support,] and consumer purchases, and wholesalers or retailers may give higher priority to products of our competitors.

Various diseases, pests, fungi, viruses, drought, frosts, wildfires, and certain other weather conditions or the effects of climate conditions, such as smoke taint sustained during the 2020 U.S. [added: West Coast] wildfires or the late frost experienced in New Zealand in calendar 2021, could affect the quality and quantity of barley, hops, grapes, and other agricultural raw materials available and decrease the supply and quality of our products.

Similarly, power [removed: disruptions] [added: disruptions, such as the outage at our Nava Brewery due to severe winter weather events in early 2021,] could adversely impact our production processes and the quality of our products.

Communicable disease outbreaks, including the COVID-19 pandemic, and other widespread public health crises have resulted and [added: in the future] could [removed: continue to] result in disruptions and damage to our business caused by potential negative consumer purchasing behavior [added: and reduced consumption] as well as disruption to our supply chains, production processes, and operations.

[removed: Consumer] [added: This includes containment actions that restrict consumer] purchasing [removed: behavior may be impacted by reduced consumption if consumers are unable] [added: occasions, including from the inability] to leave home or otherwise shop in a normal [removed: manner as a result of containment actions or other] [added: manner,] cancellations of public [removed: events and other opportunities to purchase our products, from] [added: events,] venue [removed: closures] [added: closures,] or capacity restrictions, [removed: or from a reduction] [added: as well as reductions] in consumer discretionary income due to reduced or limited work and layoffs.

Supply disruption may result from restrictions on the ability of employees and others in the supply chain to travel and work, [removed: which may result] [added: including] from quarantines, individual illnesses, or border closures imposed by governments to deter the spread of communicable infections or diseases; determinations by us or our suppliers or distributors to temporarily [added: suspend operations in affected areas; or other actions which restrict or otherwise negatively impact our ability to produce, package, and ship our products, our distributors’ ability to distribute our products, or our suppliers’ ability to provide us with raw, packaging, and other materials.]

Channels of entry may be closed or operate at reduced capacity, or transportation of product within a region or country may be [removed: limited, including due to travel restrictions or personal illness of workers.][added: limited.]

A prolonged [removed: quarantine] [added: closure] or [added: restriction of the] border [removed: closure] [added: between the U.S. and Mexico, particularly at key product and supply crossing points,] could result in temporary or longer-term disruptions of [removed: sales patterns, consumption] [added: sales, consumption,] and trade patterns, supply chains, production processes, and/or operations.

Another widespread health crisis or [removed: the reemergence of severe COVID-19] pandemic conditions could negatively affect the economies and financial markets of many countries resulting in a global economic downturn which could negatively impact demand for our products and our ability to borrow money.

Consumer preferences, behaviors, [added: perception,] and sentiment may shift due to a variety of factors, including changes in taste preferences and leisure, dining, and beverage purchasing and consumption patterns, trends involving demographics and ESG matters, changing market [removed: dynamics] [added: dynamics,] including consumer-led premiumization and betterment trends, [removed: and] [added: pricing considerations,] perceived [removed: value.][added: value, branding and marketing, and reputational considerations.]

- [removed: a general decline in the] [added: reduced] consumption of beverage alcohol [removed: products in on-premise establishments,] [added: products,] including as a result of stricter laws relating to [added: consumption or] driving while under the influence of [removed: alcohol;][added: alcohol or resulting from weight loss regimens and pharmaceuticals, including GLP-1 drugs;]

- increased activity from [added: governmental entities,] anti-alcohol [removed: groups] [added: groups,] or other bodies, such as the World Health Organization, advocating measures [added: or guidelines] designed to reduce the consumption of beverage alcohol products or require more stringent labeling;

- increased regulation restricting the purchase or consumption of beverage alcohol products; [removed: and]

If these or any other factors cause a decline in the growth rate, amount, or profitability of our sales of the Mexican beer brands in the U.S. or any material shift in consumer preferences, behaviors, [added: perception,] and sentiment in our major markets away from our beer, wine, and spirits brands, and our Mexican beer brands in particular, or from the categories in which they compete, it could adversely affect our business, liquidity, financial condition, and/or results of operations.

Meanwhile, we have two aluminum can suppliers that provide all of our total annual requirements for our Mexican beer brands, with one of those suppliers providing a majority of such aluminum can requirements.

The recent proliferation and rapid evolution of AI technologies, including generative AI, has resulted in new challenges, including business, regulatory, and ethical considerations, and may intensify the risk of cyberattackers using such technologies to enhance their capabilities.

We have implemented a governance framework that includes policies and processes to address the use of AI technologies, primarily focused on generative AI, by our employees and third-party service providers.

Nevertheless, our employees and third-party service providers may not follow our governance framework, including if such providers incorporate AI technologies into their products or systems without disclosing this use to us.

This may create risks in our ability to address existing or rapidly developing regulatory or industry standards related to AI technologies.

our beverage alcohol products, in varying amounts.

the future.

We may be impacted by increases in global energy prices or reduced supply, particularly for crude oil and natural gas, including as a result of geopolitical events and military conflicts.

facilities to meet environmental regulatory requirements, as well as to address other regulations, standards, frameworks, and ratings from various governmental entities and other stakeholders or activist campaigns.

*Labor activities could increase our costs*

If our employees were to engage in a labor strike, other work stoppage, or other labor activities, we could experience an operational disruption, incur higher ongoing labor costs, and/or suffer reputational harm, which could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

- increased import and excise duties, other taxes, or tariffs on or impacting beverage alcohol products;

*•*the inability of our wine and spirits business to become a global, omni-channel competitor; and

An

v.

CB Brand Strategies, LLC, et al.*, Case No. 21 Civ.

01317-LAK (S.D.N.Y.).

The plaintiffs alleged, among other things, that our sub-license of the trademarks for our Mexican beer brands should not permit us to use the Corona brand name on our Corona Hard Seltzer or the Modelo brand name on our Modelo Ranch Water.

On May 12, 2023, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Second Circuit from the final judgment entered in the above-captioned case, rulings and orders incorporated in, antecedent to, or ancillary to that final judgment, and the district court’s order denying the plaintiffs’ motion for judgment as a matter of law or, in the alternative, for a new trial in that action.

The appeal is captioned *Cervecería Modelo de México, S. de R.L. de C.V., et al.

v.

CB Brand Strategies, LLC, et al.*, Case No. 23-810 (2d Cir.).

The plaintiffs’ principal brief was filed on August 22, 2023, which appealed the district court’s order denying the plaintiff’s motion for summary judgment, an evidentiary ruling, and the district court’s instructions to the jury.

Our response brief was filed on November 21, 2023, and the plaintiffs’ reply brief was filed on December 12, 2023.

Oral argument was conducted before the Second Circuit on March 12, 2024.

On March 25, 2024, the Second Circuit issued an order affirming the judgment of the district court, including affirming the denial of the plaintiffs’ motion for summary judgment, affirming the district court’s evidentiary ruling, and rejecting the plaintiffs’ challenges to the district court’s instructions to the jury.

If we are not successful, we may not be able to market Corona Hard Seltzer in its current formulation under the Corona brand name or Modelo

- perceptions toward, and our performance related to, our ESG and DEI strategies, initiatives, and targets as well as associated reporting regulations, standards, frameworks, and ratings;

- investors, activist groups, or other stakeholders seeking to influence our business, strategies, operations, and products;

- our investment in Canopy and our association with a cannabis business; or

- our inability to adopt or effectively deploy new and emerging technologies;

We could also be affected by nationalization of our international operations, unstable governments, unfamiliar or biased legal systems, intergovernmental disputes, or animus against the U.S. or products produced in Mexico.

With our international operations, we have been and may continue to be subject to risk of a wide variety of other legal claims and proceedings by external parties, employees, and stockholders.

Litigation is inherently unpredictable and subject to substantial uncertainties and unfavorable developments and resolutions could occur.

In addition, the amount of time and cost to defend ourselves could be substantial.

For example, if broader industry and market conditions decline and/or our expectations of future performance as reflected in our current strategic operating plans are not fully realized, a future impairment of Wine and Spirits goodwill is reasonably possible.

For example, the OECD has introduced a framework to implement a global minimum tax rate of 15%, referred to as Pillar Two.

Many jurisdictions in which we do business have started to enact laws implementing, or have draft legislation proposed for adoption to implement, Pillar Two.

These changes, when enacted by the various jurisdictions in which we do business, may significantly increase our taxes in these jurisdictions.

Governance Risks

For example, we have experienced a lack of availability and increased costs of ocean freight shipping containers and delays at sea and land ports which has impacted and could continue to impact our distribution and production capabilities.

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| PART I | | | ITEM 1A. RISK FACTORS | | | Table of Contents | | |

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| PART I | | | ITEM 1A. RISK FACTORS | | | Table of Contents | | |

advertising, and relations with wholesalers and retailers.

Geopolitical and economic responses to Russia’s invasion of Ukraine could continue to impact global energy prices and supply, particularly for crude oil and natural gas.

suspend operations in affected areas; or other actions which restrict or otherwise negatively impact our ability to produce, package, and ship our products, our distributors’ ability to distribute our products, or our suppliers’ ability to provide us with raw, packaging, and other materials.

*Cannabis is currently illegal under U.S. federal law and in other jurisdictions; we do not control Canopy’s business or operations*

The ability of Canopy to achieve its business objectives is contingent, in part, upon the legality of the cannabis industry, Canopy’s compliance with regulatory requirements enacted by various governmental authorities, and Canopy obtaining all regulatory approvals, where necessary, for the production and sale of its products.

The laws and regulations governing medicinal and adult-use cannabis are still developing, including in ways that we may not foresee.

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

There are also concerns about health issues associated with certain types of form factors for cannabis products, such as those used in inhalables.

These issues may result in a less robust consumer demand for certain form factors.

A robust cannabis consumer market may not develop consistent with our expectations, or consumers may choose not to purchase Canopy products.

Although the Agriculture Improvement Act of 2018 took hemp and hemp derived cannabinoids out of the most restrictive class of controlled substances, cannabis remains a Schedule I controlled substance that is illegal under U.S. federal law.

Even in those U.S. states in which the adult-use and/or medicinal use of cannabis has been legalized, its use remains a violation of U.S. federal law.

Continuation of U.S. federal law in its current state regarding cannabis could limit the expansion of Canopy’s business into the U.S. Similar issues of illegality apply in other countries.

Any amendment to or replacement of existing laws to make them more onerous, or delays in amending or replacing existing laws to liberalize the legal possession and use of cannabis, or delays in obtaining, or the failure to obtain, any necessary regulatory approvals may significantly delay or negatively impact Canopy’s markets, products, and sales.

Our investment in Canopy could affect consumer perception of our existing brands and our reputation with various constituencies.

We currently have the right to nominate four members of the Canopy board of directors.

While we do not control Canopy’s business or operations, we do rely on Canopy’s internal controls and procedures for operation of that business.

Nevertheless, our current financing arrangements require us to certify, among other things, that to our knowledge (i) Canopy is properly licensed and operating in accordance with Canadian laws in all material respects; (ii) Canopy does not knowingly or intentionally purchase, manufacture, distribute, import, and/or sell marijuana, or any other controlled substance in or from the U.S. or any other jurisdiction, in each case, where such purchase, manufacture, distribution, importation, or sale of marijuana or such other controlled substance is illegal, except in compliance with all applicable federal, state, local, or foreign laws, rules, and regulations; and (iii) Canopy does not knowingly or intentionally partner with, invest in, or distribute marijuana or any other controlled substance to any third-party that knowingly or intentionally purchases, sells, manufactures, or distributes marijuana or any other controlled substance in the U.S. or any other jurisdiction, in each case, where such purchase, sale, manufacture, or distribution of marijuana or such other controlled substance is illegal, except in compliance with all applicable federal, state, local, or foreign laws, rules, and regulations.

If Canopy were to knowingly or intentionally violate any of these applicable laws and we became aware of such violation, we would be unable to make the required certification under our current financing arrangements, which could lead to a default under those financing arrangements.

75% interest in Nelson’s Green Brier Distillery, LLC.

*The Canopy Transaction, which is designed to capitalize on U.S. cannabis market opportunities, may significantly alter our relationship with and investment in Canopy*

If the Canopy Transaction is completed and we exchange our Canopy common shares for Exchangeable Shares and terminate certain legacy agreements with Canopy, we and Canopy will no longer be able to derive benefits from our strategic relationship.

The Exchangeable Shares will not carry (i) voting rights which will limit our ability to exert influence over Canopy (as will the termination of our rights under the investor rights agreement and the resignations of our nominees to Canopy’s board of directors) or (ii) rights to receive dividends or other rights upon dissolution of Canopy which will limit our right to derive economic benefits from our investment in Canopy if it declares dividends or dissolves and we continue to hold Exchangeable Shares.

Furthermore, we expect to no longer apply the equity method of accounting to our investment in Canopy, which may subject our financial statements to additional volatility as we expect to account for the Exchangeable Shares at fair value.

In connection with exchanging our Canopy common shares for Exchangeable Shares, we will also surrender our November 2018 Canopy Warrants to Canopy for cancellation, and therefore, we will not realize an opportunity to increase our ownership in Canopy if its stock price were to recover prior to their expiration.

The perception of the Canopy Transaction by members of the investment community, whether or not it is completed, and the potential that Canopy may not remain listed on the stock exchanges it is currently listed on may result in a decrease in the value of Canopy’s common stock and further impair its liquidity and marketability.

If the Canopy Transaction is not completed for any reason, including if Canopy fails to receive the requisite shareholder approval for the Canopy Amendment, Canopy will have expended substantial time and resources that could otherwise have been spent on Canopy’s existing businesses and the pursuit of other opportunities that could have been beneficial to Canopy.

Canopy may not fully realize the anticipated benefits of the Canopy Transaction if it is completed.

Were that to occur, we may not be able to recover the remaining value of our investment in Canopy.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Liquidity and Capital Resources” located in our Form 10-K for the fiscal year ended February 28, [removed: 2022,] [added: 2023,] filed on April [removed: 21, 2022,] [added: 20, 2023,] for reference to discussion of the fiscal year ended February 28, [removed: 2021,] [added: 2022,] the earliest of the three fiscal years presented.

*Strategy.* This section provides a description of our strategy and a discussion of [added: a] recent [removed: developments, global supply chain and COVID-19 related impacts,] [added: development,] and significant divestitures, acquisitions, and investments.

Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our [removed: on-going] [added: ongoing] operations and future commitments, as well as a discussion of other financing arrangements.

[removed: Our] [added: Effective May 31, 2023, we changed our] internal management financial reporting [removed: consists] [added: to consist] of [removed: three] [added: two] business divisions: (i) [removed: Beer,] [added: Beer and] (ii) Wine and [removed: Spirits, and (iii) Canopy] [added: Spirits] and we [added: now] report our operating results in [removed: four] [added: three] segments: (i) Beer, (ii) Wine and Spirits, [added: and] (iii) Corporate Operations and [removed: Other, and (iv) Canopy.][added: Other following the removal of the Canopy operating segment.]

[removed: Our Canopy] [added: *Canopy] Equity Method Investment [removed: makes up the Canopy segment.][added: —*]

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

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

Amounts included in the Corporate Operations and Other segment consist of costs of [removed: executive management,] corporate development, corporate finance, corporate [removed: growth and] strategy, [added: executive management, growth,] human resources, internal audit, investor relations, IT, legal, and public relations, as well as our [added: Canopy investment and] investments made through our corporate venture capital function.

Our business strategy for the Beer segment focuses on [removed: strengthening] [added: upholding] our leadership position in the [removed: high-end segment of the] U.S. beer [removed: market] [added: market, including the high-end segment,] and continuing to grow our [added: high-end imported beer] brands through [removed: maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth.]

This includes continued focus on growing our beer portfolio in the U.S. through expanding distribution for key brands, including within the 3-tier eCommerce channel, as well as [removed: continued expansion, optimization, and/or construction activities at our breweries] [added: investing] in [removed: Mexico.][added: the next increment of modular capacity additions required to sustain our momentum.]

Expansion, optimization, and/or construction activities continue under our Mexico Beer Projects to align with our anticipated future growth expectations, and we expect to spend [removed: an additional $4.0 billion to $4.5] [added: approximately $3] billion over Fiscal [removed: 2024] [added: 2025] through Fiscal [removed: 2026] [added: 2028] on these activities.

Our business strategy for the Wine and Spirits segment [removed: focuses] [added: continues to focus] on higher-end brands, improving margins, and creating operating efficiencies.

We [removed: continue to refine] [added: have reshaped] our portfolio primarily through an enhanced focus on higher-margin, higher-growth wine and spirits brands.

Our business continues to progressively expand into DTC channels (including hospitality), 3-tier eCommerce, and international markets, while [removed: continuing to grow] [added: remaining a major supplier] in U.S. 3-tier brick-and-mortar distribution.

This [removed: U.S.] distributor currently represents about 70% of our branded wine and spirits volume in the U.S.

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

We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to achieve earnings per share growth as well as our target net leverage ratio and dividend payout ratio; [removed: invest] [added: investing] to support the growth of our business; and [removed: deliver] [added: delivering] additional returns to stockholders through periodic share repurchases.

Our results of operations and financial condition have been affected by inflation, changing prices, [removed: and] reductions in discretionary income of consumers available to purchase our products, [added: and shifting consumer behaviors,] as well as other unfavorable global and regional economic conditions, [removed: geopolitical events,] [added: global supply chain disruptions] and [removed: military conflicts, such as repercussions from the conflict in Ukraine.][added: constraints, and geopolitical events.]

We expect some or all of these impacts to continue into Fiscal [removed: 2024.][added: 2025 which could have a material impact on our results of operations.]

We intend to continue to monitor the inflationary environment and the impact on the consumer when we consider passing along rising costs through further selling price increases, subject to normal competitive [added: conditions.]

In addition, we [removed: continue to identify on-going cost savings initiatives, including] [added: are continuing] our commodity and foreign exchange hedging [removed: programs.][added: programs while also seeking to identify additional cost savings initiatives.]

Furthermore, to the extent climate-related severe weather events, such as droughts, floods, wildfires, [added: extreme heat,] and/or late frosts, continue to occur or accelerate in future periods, it could have a material impact on our results of operations and financial condition.

[removed: *2022 Wine] [added: *Wine] Divestiture*

We received cash proceeds of $96.7 million from the [removed: 2022] Wine Divestiture that were utilized primarily to reduce outstanding borrowings.

We recognized a [removed: net gain of] $15.0 million [added: net gain] on the sale of business for Fiscal 2023.

Our [removed: recent] [added: Wine and Spirits segment] divestiture and acquisitions support our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumers.

We [removed: have] evaluated the Canopy Equity Method Investment as of [removed: February 28,] [added: May 31,] 2023, and determined [removed: that] there was [removed: not] an other-than-temporary impairment.

We [removed: will continue to review] [added: evaluated] the Canopy Equity Method Investment [removed: for] [added: as of May 31, 2023, and determined there was] an other-than-temporary impairment.

Our conclusion was based on several contributing factors, including: (i) the period of time for which the fair value had been less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recording a significant impairment of goodwill related to its cannabis operations during its [removed: three months ended June 30, 2022,] [added: first quarter of fiscal 2023,] and (iii) the uncertainty of U.S. federal cannabis permissibility.

For additional information on [removed: recent developments, investments,] [added: these divestitures,] acquisitions, and [removed: divestitures,] [added: investments,] refer to Notes 2, [added: 5,] 7, [removed: 10,] and [removed: 22.][added: 10.]

References to organic throughout the following discussion exclude the impact of the [removed: 2022] Wine Divestiture, as appropriate.

*Fiscal [removed: 2023] [added: 2024] compared with* *Fiscal [removed: 2022*][added: 2023*]

- Net sales increased [removed: 7%] [added: 5%] largely due to an increase in Beer net sales driven primarily by shipment volume growth and favorable impact from [removed: pricing.][added: pricing, partially offset by a decline in Wine and Spirits net sales driven primarily by a decrease in branded shipment volume.]

- Net [removed: loss] [added: income] attributable to [removed: CBI increased due to an increase in loss from unconsolidated investments] [added: CBI] and [removed: higher provision for] [added: diluted net] income [removed: taxes as compared] [added: per common share attributable] to [removed: Fiscal 2022,] [added: CBI increased] largely [removed: offset by] [added: due to] the [removed: increase in operating income] items discussed above.

| | | | Fiscal [removed: 2023] [added: 2024] | | | | | | Fiscal [removed: 2022] [added: 2023] | | | | | | | | |

| Settlements of undesignated commodity derivative contracts | | | [removed: $] [added: 15.0] | [removed: (76.7)] | | | | | [removed: $] [added: (76.7)] | [removed: (35.9)] | | | | | | | |

| Net gain (loss) on undesignated commodity derivative contracts | | | [removed: (15.0)] [added: $] | [added: (44.2)] | | | | | [removed: 109.9] [added: $] | [added: (15.0)] | | | | | | | |

| Flow through of inventory step-up | | | [removed: (4.5)] [added: (3.6)] | | | | | | [removed: (0.1)] [added: (4.5)] | | | | | | | | |

| Strategic business development costs | | | [removed: (1.2)] [added: —] | | | | | | [removed: (2.6)] [added: (1.2)] | | | | | | | | |

| Net flow through of reserved inventory | | | [removed: 1.2] [added: —] | | | | | | [removed: 12.1] [added: 1.2] | | | | | | | | |

maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth.

We continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.

Recent Development

*Conversion of Canopy common stock ownership and exchange of investment into Exchangeable Shares*

In April 2024, the Canopy Amendment was approved by Canopy’s shareholders.

We subsequently elected to convert our 17.1 million Canopy common shares into Exchangeable Shares on a one-for-one basis.

Additionally,

we exchanged our 2023 Canopy Promissory Note for 9.1 million Exchangeable Shares and forgave all accrued but unpaid interest together with the remaining principal amount of the note.

Beer segment

*Craft Beer Divestitures*

In June 2023, we completed the Craft Beer Divestitures.

Accordingly, our consolidated results of operations include the results of operations of such craft beer brands through the dates of these divestitures.

The Craft Beer Divestitures are consistent with our strategic focus on continuing to grow our high-end imported beer brands through maintenance of leading margins and enhancements to our results of operations.

In May 2023, we sold the Daleville Facility in connection with our decision to exit the craft beer business.

*Corporate ventures*

As of August 31, 2023, we evaluated certain equity method investments, made through our corporate venture capital function, and determined there were other-than-temporary impairments due to business underperformance.

Investments with a carrying value of $14.9 million were written down to an estimated fair value of $2.6 million, resulting in an impairment of $12.3 million.

This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for Fiscal 2024.

In October 2023, we exited one of these equity method investments in exchange for a note receivable.

We have an investment in Canopy, a North American cannabis and CPG company providing medical and adult-use cannabis products, which expands our portfolio into adjacent categories.

Our conclusion was based primarily on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recorded significant costs in its fourth quarter of fiscal 2023 results designed to align its Canadian cannabis operations and resources in response to continued unfavorable market trends, (iii) the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, and (iv) Canopy’s identification of material misstatements in certain of its previously reported financial results related to sales in its BioSteel reporting unit that were accounted for incorrectly, including the recording of a goodwill impairment during its restated second quarter of fiscal 2023.

As a result, the Canopy Equity Method Investment with a carrying value of $266.2 million was written down to its estimated fair value of $142.7 million, resulting in an impairment of $123.5 million.

This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for Fiscal 2024.

*Other Canopy investments —*

The fair value of the Canopy Debt Securities was $69.6 million as of February 28, 2023.

As of May 31, 2023, we determined that the 2023 Canopy Promissory Note did not have future economic value and, accordingly, the fair value was reduced to zero.

Additionally, on November 1, 2023, the initial tranche of the November 2018 Canopy Warrants expired in accordance with its terms.

The remaining tranches of the November 2018 Canopy Warrants were conditioned on the exercise, in full, of the expired warrants.

As such, there are no longer any outstanding November 2018 Canopy Warrants.

*•*Our results of operations were primarily impacted by (i) lower impairment and other losses related to our investment in Canopy as compared with Fiscal 2023 and (ii) improvements within the Beer segment driven by 7.4% shipment volume growth and our successful execution of cost savings initiatives, partially offset by a decline in performance within the Wine and Spirits segment.

- Operating income increased 11% largely due to the improvements within (i) the Beer segment as shipment volume outpaced the growth of cost of product sold, driven by the successful execution of cost savings initiatives, (ii) the Wine and Spirits segment driven by lower transportation and warehousing costs, and (iii) the Corporate Operations and Other segment from lower Digital Business Acceleration investments as compared to Fiscal 2023, partially offset by the decline in branded wine and spirits shipment volume.

| Insurance recoveries | | | 55.1 | | | | | | 5.2 | | | | | | | | |

*Strategic business development costs*

We recognized costs in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure within the Wine and Spirits segment.

*Recovery of (loss on) inventory write-down*

We recognized a gain from a change in estimate on reserved bulk wine inventory and certain grapes as a result of smoke damage sustained during the 2020 U.S. West Coast wildfires.

*Transaction, integration, and other acquisition-related costs*

We recognized costs in connection with our investments, acquisitions, and divestitures.

*Insurance recoveries*

We recognized business interruption and other recoveries largely related to severe winter weather events.

If the Canopy Transaction is completed, including conversion of our Canopy common shares into Exchangeable Shares, we expect our internal management financial reporting to consist of two business divisions: (i) Beer and (ii) Wine and Spirits and we will report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other.

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

Additionally, in an effort to compete more fully in growing sectors of the high-end segment of the U.S. beer market, we have leveraged our innovation capabilities to create new line extensions behind celebrated, trusted brands and package formats that are intended to meet emerging needs.

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

Canopy is a leading cannabis and CPG company with operations in Canada, the U.S., Germany, and certain other global markets.

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

Our strategic relationship with Canopy is designed to help position it to be successful in cannabis production, branding, and intellectual property.

We expect this relationship to continue through the completion of the Canopy Transaction including the conversion of our Canopy common shares into Exchangeable Shares.

For further information on our plan to convert our Canopy common stock ownership, see “Canopy segment” below.

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

conditions.

Recent Developments

*2023 Canopy Promissory Note*

The 2023 Canopy Promissory Note bears interest at an annual rate of 4.25% and matures on December 31, 2024.

Canopy may prepay the 2023 Canopy Promissory Note in whole or in part at any time prior to the maturity date.

If the Canopy Amendment is authorized by Canopy’s shareholders, we maintain our intention to negotiate an exchange of the C$100.0 million principal amount of the 2023 Canopy Promissory Note for Exchangeable Shares, although neither we nor Canopy has any binding obligation to do so.

In March 2023, we entered into a definitive agreement to sell the Daleville Facility.

We expect the transaction to close during the three months ending May 31, 2023, subject to required regulatory approvals and customary closing conditions.

The net cash proceeds from the transaction are expected to be used primarily for general corporate purposes, including retirement of debt.

Global Supply Chain and COVID-19 Related Impacts

We believe the impact of COVID-19 on our business has largely diminished at this time; however, uncertainties continue, particularly around disruptions to the global supply chain and shifting consumer behaviors.

Fiscal 2023 was, and Fiscal 2024 is expected to continue to be, impacted by challenges with both global supply and transportation which have contributed to higher cost of product sold.

For example, wine produced in New Zealand and Italy and subsequently shipped to the U.S. for distribution continues to be affected by increased costs of ocean freight shipping.

In addition, during Fiscal 2022, we experienced a brown glass purchasing shortage, which impacted certain of our imported beer brands.

This supply returned to normal levels in early Fiscal 2023.

To the extent these or similar circumstances continue to occur or accelerate in future periods it could have a material impact on our results of operations.

We have seen consumers shift more of their total shopping spend to online channels since the COVID-19 outbreak, which has led to increased eCommerce sales, including DTC, for our business.

COVID-19 may continue to impact consumers’ purchasing and consumption patterns.

In response to COVID-19, we have ensured our on-going liquidity and financial flexibility through cash preservation initiatives, capital management adjustments, and cost control measures.

We used opportunities under the CARES Act afforded to us earlier in the pandemic to defer some payments including certain payroll taxes.

We believe we have sufficient liquidity available from operating cash flow, cash on hand, and availability under our revolving credit facility.

We expect to have continued access to capital markets and to be able to continue to return value to stockholders through dividends and periodic share repurchases.

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

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: 28, 2023,] [added: 29, 2024,] we had exposures to foreign currency risk primarily related to the Mexican peso, Canadian dollar, New Zealand dollar, and euro.

Approximately 100% of our balance sheet exposures and [removed: 73%] [added: 76%] of our forecasted transactional exposures for the year ending February [removed: 29, 2024,] [added: 28, 2025,] were hedged as of February [removed: 28, 2023.][added: 29, 2024.]

As of February [removed: 28, 2023,] [added: 29, 2024,] exposures to commodity price risk which we are currently hedging include aluminum, corn, diesel fuel, and natural gas prices.

Approximately [removed: 77%] [added: 79%] of our forecasted transactional exposures for the year ending February [removed: 29, 2024,] [added: 28, 2025,] were hedged as of February [removed: 28, 2023.][added: 29, 2024.]

| | | | February [removed: 28, 2023] [added: 29, 2024] | | | | | | February 28, [removed: 2022] [added: 2023] | | | | | | February [removed: 28, 2023] [added: 29, 2024] | | | | | | February 28, [removed: 2022] [added: 2023] | | | | | | February [removed: 28, 2023] [added: 29, 2024] | | | | | | February 28, [removed: 2022] [added: 2023] | | |

| Foreign currency contracts | | | $ | [removed: 2,801.2] [added: 2,781.5] | | | | | $ | [removed: 2,360.8] [added: 2,801.2] | | | | | $ | [removed: 232.3] [added: 305.8] | | | | | $ | [removed: 38.6] [added: 232.3] | | | | | $ | [removed: (175.8)] [added: (179.4)] | | | | | $ | [removed: (145.1)] [added: (175.8)] | |

| Commodity derivative contracts | | | $ | [removed: 416.5] [added: 397.5] | | | | | $ | [removed: 291.1] [added: 416.5] | | | | | $ | [removed: (2.0)] [added: (29.8)] | | | | | $ | [removed: 90.1] [added: (2.0)] | | | | | $ | [removed: 34.5] [added: 32.1] | | | | | $ | [removed: (35.1)] [added: 34.5] | |

[removed: We had] [added: There were] no [removed: other] outstanding cash flow designated or undesignated interest rate swap contracts or Pre-issuance hedge contracts outstanding as of February [removed: 28, 2023,] [added: 29, 2024,] or February 28, [removed: 2022.][added: 2023.]

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

| | | | February [removed: 28, 2023] [added: 29, 2024] | | | | | | February 28, [removed: 2022] [added: 2023] | | | | | | February [removed: 28, 2023] [added: 29, 2024] | | | | | | February 28, [removed: 2022] [added: 2023] | | | | | | February [removed: 28, 2023] [added: 29, 2024] | | | | | | February 28, [removed: 2022] [added: 2023] | | |

| Fixed interest rate debt | | | $ | [removed: 10,576.2] [added: 11,717.8] | | | | | $ | [removed: 9,869.9] [added: 10,576.2] | | | | | $ | [removed: (9,436.8)] [added: (10,775.8)] | | | | | $ | [removed: (10,045.3)] [added: (9,436.8)] | | | | | $ | [removed: (586.3)] [added: (604.8)] | | | | | $ | [removed: (709.7)] [added: (586.3)] | |

A 1% hypothetical change in the prevailing interest rates would have increased interest expense on our variable interest rate debt by [removed: $11.8] [added: $7.1] million and [removed: $4.6] [added: $11.8] million for the years ended February [removed: 28, 2023,] [added: 29, 2024,] and February 28, [removed: 2022,] [added: 2023,] respectively.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

As of February 28, 2022, we had a $100.0 million outstanding cash flow designated Pre-issuance hedge contract which fixed our 10-year interest rates to minimize interest rate volatility on the May 2022 Senior Notes.

| Pre-issuance hedge contracts | | | $ | — | | | | | $ | 100.0 | | | | | $ | — | | | | | $ | (0.4) | | | | | $ | — | | | | | $ | (8.6) | |

*Equity price risk*

The estimated fair value of our investment in the November 2018 Canopy Warrants and the Canopy Debt Securities are subject to equity price risk, interest rate risk, credit risk, and foreign currency risk.

This investment is recognized at fair value utilizing various option-pricing models and 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, performance, and outlook of Canopy.

As of February 28, 2023, the fair value of our investment in the November 2018 Canopy Warrants and the Canopy Debt Securities was $69.8 million, with an unrealized net gain (loss) on this investment of $(45.9) million recognized in our results of operations for the year ended February 28, 2023.

We have performed a sensitivity analysis to estimate our exposure to market risk of the equity price reflecting the impact of a hypothetical 10% adverse change in the quoted market price of the underlying equity security.

As of February 28, 2023, such a hypothetical 10% adverse change would have resulted in a decrease in fair value of $0.1 million.

We are an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy with powerful, consumer-connected, high-quality brands like Corona Extra, Modelo Especial, [removed: the] Robert Mondavi [removed: Brand Family,] [added: Winery,] Kim Crawford, Meiomi, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO.

We are the [removed: third-largest] [added: second-largest] beer company in the U.S. and continue to strengthen our leadership position as the #1 [added: share gainer in the] high-end beer [removed: supplier] [added: segment] and the [removed: #1 share gainer across the] [added: overall] U.S. beer market.

[removed: 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 in background and thought and aspire to foster an environment where everyone feels empowered to bring their true selves and different points of view to [added: the workplace to] drive us forward

[removed: Customers –] We [removed: relentlessly] work [added: relentlessly] to anticipate what consumers want today, tomorrow, and well into the future

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

[removed: Quality –] Our promise is to pursue quality in our processes and products by continuously seeking to enhance what we do and how we do it

[removed: Integrity –] It is about more than achieving goals.

Headquartered in Victor, New York, [added: through May 2024 and in Rochester, New York thereafter,] we are a Delaware corporation incorporated in 1972, as the successor to a business founded in 1945.

- deploy capital in line with disciplined and balanced priorities; [removed: and]

- deliver on impactful ESG initiatives that we believe are not only good business, but also good for the [removed: world.][added: world; and]

We place focus on positioning our portfolio on higher-margin, higher-growth categories of the beverage alcohol industry to align with consumer-led [removed: premiumization] [added: premiumization, product, and purchasing] trends, which we believe will continue to drive faster growth rates across beer, wine, and spirits.

To continue capitalizing on consumer-led premiumization trends, become more competitive, and grow our business, we have employed a strategy [added: dedicated to organic growth and supplemented by targeted investments and acquisitions.]

We also believe a key component to driving faster growth rates is to invest and strengthen our [removed: leadership] position within the DTC and 3-tier eCommerce channels.

In our beer business, we focus on [removed: strengthening] [added: upholding] our leadership position in the [removed: high-end segment of the] U.S. beer [removed: market] [added: market, including the high-end segment,] and continuing to grow our [added: high-end imported beer] brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth.

This includes continued focus on growing our beer portfolio in the U.S. through expanding distribution for key brands, including within the 3-tier eCommerce channel, as well as investing in the next increment of [added: modular] capacity additions required to sustain our momentum.

We continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package [removed: formats] [added: formats, as well as new to world brands,] that are intended to meet emerging needs.

We [removed: continue to refine] [added: have reshaped] our portfolio primarily through an enhanced focus on higher-margin, higher-growth wine and spirits brands.

Our business continues to progressively expand into DTC channels (including hospitality), 3-tier eCommerce, and international markets, while [removed: continuing to grow] [added: remaining a major supplier] in U.S. 3-tier brick-and-mortar distribution.

In connection with executing our strategy as outlined above, during Fiscal [removed: 2023] [added: 2024] we completed the following transactions:

| [removed: ] [added: ] | | | [removed: Austin Cocktails] [added: Domaine Curry] | | | | | | [removed: April 2022] [added: June 2023] | | | | | | Acquisition of a [removed: portfolio of small batch, RTD cocktails;] [added: luxury Napa Valley wine business;] supported our focus on [added: consumer-led premiumization trends and] meeting the evolving needs of consumers. | | |

For further information about our significant Fiscal [removed: 2023,] [added: 2024,] Fiscal [removed: 2022,] [added: 2023,] and Fiscal [removed: 2021] [added: 2022] transactions, refer to (i) “Overview” within MD&A and (ii) Note 2.

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

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

| | | | February [removed: 28, 2023] [added: 29, 2024] | | | | | | | | | | | | February 28, [removed: 2022] [added: 2023] | | | | | | | | | | | | | | | | | | | | |

| Beer | | | $ | [removed: 7,465.0] [added: 8,162.6] | | | | | | | | | | | $ | [removed: 6,751.6] [added: 7,465.0] | | | | | | | | | | | | | | | | | | | |

| Wine | | | [removed: 1,722.7] [added: 1,552.1] | | | | | | | | | | | | [removed: 1,819.3] [added: 1,722.7] | | | | | | | | | | | | | | | | | | | | |

| Spirits | | | [removed: 264.9] [added: 247.1] | | | | | | | | | | | | [removed: 249.8] [added: 264.9] | | | | | | | | | | | | | | | | | | | | |

| Total Wine and Spirits | | | [removed: 1,987.6] [added: 1,799.2] | | | | | | | | | | | | [removed: 2,069.1] [added: 1,987.6] | | | | | | | | | | | | | | | | | | | | |

| Consolidated Net Sales | | | $ | [removed: 9,452.6] [added: 9,961.8] | | | | | | | | | | | $ | [removed: 8,820.7] [added: 9,452.6] | | | | | | | | | | | | | | | | | | | |

[removed: ][added: ]

[removed: ][added: ]

][added: lineup.jpg](https://www.sec.gov/Archives/edgar/data/16918/000001691824000054/stz-20240229_g6.jpg)]

We are also the leader in the high-end segment of the U.S. beer market, which includes the [removed: imported, craft,] [added: imported] and ABA categories.

We have the exclusive right to import, market, and sell [removed: the following] [added: our] Mexican [added: beer] brands in all 50 states of the [removed: U.S.:][added: U.S., of which include the following:]

| Corona Extra | | | Corona [removed: Light] [added: Non-Alcoholic] | | | | | | Modelo Especial | | | | | | Victoria | | | | | | Pacifico | | |

| Corona [removed: Premier] [added: Familiar] | | | Corona [removed: Refresca] [added: Premier] | | | | | | Modelo [removed: Negra] [added: Chelada] | | | | | | Vicky Chamoy | | | | | | | | |

| Corona [removed: Familiar] [added: Hard Seltzer] | | | Corona [removed: Hard Seltzer] [added: Refresca] | | | | | | Modelo [removed: Chelada] [added: Negra] | | | | | | | | | | | | | | |

Notable achievements in the U.S. include the following: (i) we have [removed: nine] [added: 7] of the [added: top] 15 [removed: top-selling imported] [added: share gaining brands across the total] beer [removed: brands,] [added: category,] (ii) Modelo Especial is the best-selling [removed: imported] beer [removed: and second best-selling beer] overall, (iii) Corona Extra is the second largest imported beer and [removed: fourth] [added: fifth] best-selling beer overall, and (iv) Pacifico [removed: is] [added: and Corona Familiar are tied for] the fastest growing major [added: imported] beer brand.

[removed: In the past 10 years we have increased our production capacity in Mexico by fourfold allowing] [added: We believe these investments allow] us the opportunity to further expand our leadership position in the high-end segment of the U.S. beer market.

In Fiscal 2024, Modelo Especial became the #1 beer brand in the U.S. beer market in dollar sales.

Within wine and spirits, we have reshaped our brand portfolio to a higher-end focused business and continue to expand our supply channels through DTC and international markets.

People

Customers

Entrepreneurship

Quality

Integrity

- empower the whole enterprise to achieve best-in-class operational efficiency.

In Fiscal 2024, we continued to focus on procurement, end-to-end supply chain planning, as well as introducing a new focus area, logistics.

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

|  | | | Craft Beer Divestitures | | | | | | June 2023 | | | | | | Divestitures of the Four Corners and Funky Buddha craft beer businesses; supported our focus on continuing to grow our high-end imported beer brands. | | |

|  | | | Daleville Facility | | | | | | May 2023 | | | | | | Sale of the Daleville Facility in connection with our decision to exit the craft beer business; supported our focus on continuing to grow our high-end imported beer brands. | | |

| Corona Light | | | | | | | | | Modelo Oro | | | | | | | | | | | | | | |

During Fiscal 2024, we spent over $900 million on (i) the completion of planned expansions and execution of optimization initiatives, increasing total capacity in Mexico from approximately 42 million hectoliters to approximately 48 million hectoliters, and (ii) ongoing construction of the Veracruz Brewery.

We expect to spend approximately $3 billion over Fiscal 2025 through Fiscal 2028 on such activities.

In Fiscal 2024, we continued to build on our successful innovation platform with the launch of new products aligned with consumer-led premiumization, betterment, and flavor trends, including: (i) Modelo Oro, a light and lower-calorie Mexican beer, (ii) Modelo Chelada Sandía Picante, a watermelon and chile pepper michelada-style beer, (iii) Modelo Chelada Variety Pack, a 12 ounce, 12-pack format offering of certain of our chelada flavors, and (iv) Corona Non-Alcoholic.

Additionally, we announced the following products will be launched across select markets in Fiscal 2025: (i) Modelo Spiked Aguas Frescas, a blend of real fruit juice with a light spike inspired by the classic aguas frescas from Mexico, (ii) Corona Sunbrew, a beer brewed with real citrus peels and a splash of real citrus juice, and (iii) two new Modelo Chelada flavors, Fresa Picante and Negra con Chile.

In Fiscal 2024, the broader wine category experienced deceleration in both the U.S. wholesale and international markets, and, as a result, our largest mainstream and premium brands experienced a decline.

We believe this deceleration is temporary.

Despite this dynamic, our fine wine and craft spirits portfolio delivered

muted gains and we achieved growth in DTC channels.

Additionally, we have been actively working to address mainstream headwinds affecting our two largest volume brands, Woodbridge and SVEDKA, and anticipate these efforts to extend over the medium-term.

We continue to believe that over the medium-term our wine and spirits business will return to net sales growth supported by the transformation undertaken over the last few years to better align our portfolio with broader consumer-led premiumization trends, expand our omni-channel capabilities, and extend into select international markets.

Our innovation strategy has evolved to introducing fewer new items which we believe will have the most success for our business.

We focus our resources on brand line extensions aligned with consumer-led premiumization and betterment trends that have remained among the top new products in the wine category over the past couple of years, such as: Meiomi Red Blend, Meiomi Bright Pinot Noir, and Kim Crawford Prosecco.

As is the case with all other beverage alcohol companies,

We aim to reduce operational waste and enhance our use of returnable, recyclable, or renewable packaging.

In Fiscal 2024, we transitioned from hi-cone plastic rings to recyclable paperboard for all applicable 4-pack and 6-pack SKUs across our beer portfolio.

Additionally, our current Mexican breweries are in the process of being evaluated for TRUE Certification for Zero Waste.

We have implemented plans to enhance our use of circular packaging and reduce waste across our wine and spirits portfolio in connection with our commitments to (i) reduce our ratio of total packaging weight versus the product weight of wine or spirits liquid by 10% across our portfolio between the periods Fiscal 2022 to Fiscal 2025 and (ii) ensure that 80% of packaging from our portfolio is returnable, recyclable, or renewable.

In Fiscal 2024, we activated 40 wine and spirits sustainable packaging projects across more than 190 SKUs to optimize material consumption, decrease packaging weights, and enable reductions in consumer waste.

As of February 29, 2024, we are progressing towards our targets to:

- obtain a TRUE Certification for Zero Waste to Landfill in key operating facilities by Fiscal 2025; and

- significantly enhance our use of circular packaging across our beverage alcohol portfolio by Fiscal 2025.

- completed the transition from hi-cone plastic rings to recyclable paperboard for all applicable 4-pack and 6-pack SKUs across our beer portfolio

- collaborated on the Tecklenburg Groundwater Recharge project in California which will recharge groundwater, help to manage groundwater stress in the communities around our Woodbridge Winery and Lodi Distribution Center as well as in a region from which we source approximately 7% of our U.S. grape supply, and provide volumetric benefits toward our water restoration goal

- invested in a project in Nogales, Arizona, which we estimate will positively impact approximately 25,000 people, to address river borne trash to help improve the quality of water for communities near where we operate

- committed $100,000 to UnidosUS’ HOME initiative, a program whose goal is to transform the economic trajectory of Latinx families by advancing systemic change to create 4 million new homeowners by calendar 2030

- committed an additional $100,000 to support capacity building for Dress for Success Worldwide and its affiliates and expand direct support to five additional affiliates representing our major markets

- partnered with Uber to provide safe rides vouchers for U.S. employees celebrating during certain holidays and seasonal activities as part of our Safe Ride Home program

Within wine and spirits, we are making solid progress in refining our brand portfolio to shift to a higher-end focused business to deliver net sales growth and margin expansion.

dedicated to organic growth and supplemented by targeted investments and acquisitions.

In Fiscal 2023, we focused on procurement, end-to-end supply chain planning, and marketing optimization.

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

Canopy is a leading cannabis and CPG company with operations in Canada, the U.S., Germany, and certain other global markets.

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

Our strategic relationship with Canopy is designed to help position it to be successful in cannabis production, branding, and intellectual property.

We expect this relationship to continue through the completion of the Canopy Transaction including the conversion of our Canopy common shares into Exchangeable Shares.

For further information on our plan to convert our Canopy common stock ownership, see “Canopy segment” below.

|  | | | 2022 Wine Divestiture | | | | | | October 2022 | | | | | | Divestiture of certain of our mainstream and premium wine brands and related inventory; supported our focus on consumer-led premiumization trends. | | |

|  | | | Lingua Franca | | | | | | March 2022 | | | | | | Acquisition of a collection of Oregon-based luxury wines, a vineyard, and a production facility; supported our focus on consumer-led premiumization trends and meeting the evolving needs of consumers. | | |

Our ownership interest in Canopy allows us to exercise significant influence, but not control, and, therefore, we account for our investment in Canopy under the equity method.

Amounts included below for the Canopy segment represent 100% of Canopy’s reported results on a two-month lag, prepared in accordance with U.S. GAAP, and converted from Canadian dollars to U.S. dollars.

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

If the Canopy Transaction is completed, including conversion of our Canopy common shares into Exchangeable Shares, we expect our internal management financial reporting to consist of two business divisions: (i) Beer and (ii) Wine and Spirits and we will report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other.

| Canopy | | | 339.3 | | | | | | | | | | | | 444.3 | | | | | | | | | | | | | | | | | | | | |

| Consolidation and Eliminations | | | (339.3) | | | | | | | | | | | | (444.3) | | | | | | | | | | | | | | | | | | | | |

Since the 2013 acquisition of the imported beer business, we have invested approximately $6.4 billion in the Mexico Beer Projects, with over $750 million spent during Fiscal 2023.

During Fiscal 2023, our brewery optimization and productivity initiatives unlocked incremental capacity from our existing footprint, increasing total capacity from approximately 39 million hectoliters to approximately 42 million hectoliters.

We expect to spend an additional $4.0 billion to $4.5 billion over Fiscal 2024 through Fiscal 2026.

In Fiscal 2023, we continued to build on this successful innovation platform with the launch of a (i) multipack of Modelo Chelada Limón y Sal, (ii) Modelo Chelada variety pack, (iii) new Modelo Chelada flavor, Naranja Picosa, and (iv) Vicky Chamoy, Victoria’s first line extension.

Additionally, we announced the following two brand extensions that launched nationally in early Fiscal 2024: (i) Modelo Oro, a light and low-calorie Mexican beer, to capitalize on the robust growth of the high-end beer category, and (ii) Corona Non-Alcoholic, to adhere to consumer trends in the rapidly growing betterment space focused on no- and low-alcohol products.

In Fiscal 2023, our 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 our DTC channels (including hospitality) and international markets.

Our 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 our consumer-led premiumization strategy.

Our wine and spirits business delivered strong gains in 3-tier eCommerce and outperformed the broader market in this channel.

We have 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 in Fiscal 2023.

*Canopy segment*

The Canopy Equity Method Investment makes up the Canopy segment.

Canopy operates in the adult-use and medicinal cannabis markets and, in their largest market, they compete with numerous licensed producers and distributors as well as illegal growers and retailers of cannabis products.

In the adult-use market, Canopy competes on the basis of quality, price, brand recognition, consistency, and variety of cannabis products whereas these same competitive factors apply in the medicinal market as well as physician familiarity.

This includes the Veracruz Brewery where there is ample water and we will have a skilled workforce to meet our long-term needs, as well as continued expansion, optimization, and/or construction at our breweries in Mexico.

Our Daleville Facility supports our craft beer business in addition to our domestic innovation initiatives.

In March 2023, we entered into a definitive agreement to sell the Daleville Facility.

For further information on this transaction, refer to (i) “Overview” within MD&A and (ii) Note 5.

- held an interactive virtual presentation by The Nature Conservancy to recognize Earth Day, which is celebrated annually around the world on April 22.

Topics discussed included global water challenges, The Nature Conservancy’s water security strategies, how companies like ours can lead in the water space, and how each of us as individuals, families, and communities can preserve our planet.

Approximately 500 employees from around the globe attended the virtual presentation

- in support of a multi-year collaboration with The Nature Conservancy, we pledged an additional $500,000 over the next two years for their Dynamic Water Management program

- signed a separate two-year commitment of $400,000 in total contributions to The Nature Conservancy to help fund collaborative conservation projects focused on improving the quantity and quality of inflows to the Rio Grande, helping to provide adequate and safe water supply for downstream users, including in Piedras Negras, Coahuila – a local community near our operations in Mexico

- employees and community members came together to remove approximately 1,400 pounds of debris and recyclables from local beaches in support of the second year of Corona’s Protect Our Beaches initiative, in partnership with Oceanic Global and United by Blue

For the fiscal year ended February [removed: 28, 2023][added: 29, 2024]

[removed: ][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 Common Stock 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: $38.1] [added: $42.0] billion.

| The number of shares outstanding with respect to each of the classes of common stock of Constellation Brands, Inc., as of April [removed: 13, 2023,] [added: 16, 2024,] is set forth below: | | | | | |

| Class [removed: A] [added: 1] Common Stock, par value $.01 per share | | | [removed: 183,231,968] [added: 23,661] | | |

| Class [removed: 1] [added: A] Common Stock, par value $.01 per share | | | [removed: 22,705] [added: 182,952,680] | | |

Portions of the Proxy Statement of Constellation Brands, Inc. to be issued for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders are incorporated by reference in Part III to the extent described therein.

| FORWARD-LOOKING STATEMENTS | | | | | | [removed: [i](#ibeb176b194e84da3aad1ab74bd4b1efe_10)] [added: [i](#i91d8a4235c724235a9b7e744237b8e6f_10)] | | |

| DEFINED TERMS | | | | | | [removed: [iv](#ibeb176b194e84da3aad1ab74bd4b1efe_13)] [added: [iii](#i91d8a4235c724235a9b7e744237b8e6f_13)] | | |

| Item 1. | | | Business | | | [removed: [1](#ibeb176b194e84da3aad1ab74bd4b1efe_19)] [added: [1](#i91d8a4235c724235a9b7e744237b8e6f_19)] | | |

| Item 1A. | | | Risk Factors | | | [removed: [16](#ibeb176b194e84da3aad1ab74bd4b1efe_22)] [added: [17](#i91d8a4235c724235a9b7e744237b8e6f_22)] | | |

| Item 2. | | | Properties | | | [removed: [31](#ibeb176b194e84da3aad1ab74bd4b1efe_28)] [added: [32](#i91d8a4235c724235a9b7e744237b8e6f_31)] | | |

| Item 3. | | | Legal Proceedings | | | [removed: [31](#ibeb176b194e84da3aad1ab74bd4b1efe_31)] [added: [32](#i91d8a4235c724235a9b7e744237b8e6f_34)] | | |

| Item 1C. | | | Cybersecurity | | | [30](#i91d8a4235c724235a9b7e744237b8e6f_28) | | |

| Item 5. | | | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | | | [removed: [32](#ibeb176b194e84da3aad1ab74bd4b1efe_40)] [added: [33](#i91d8a4235c724235a9b7e744237b8e6f_43)] | | |

| Item 7. | | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | | [removed: [33](#ibeb176b194e84da3aad1ab74bd4b1efe_46)] [added: [34](#i91d8a4235c724235a9b7e744237b8e6f_49)] | | |

| Item 7A. | | | Quantitative and Qualitative Disclosures About Market Risk | | | [removed: [57](#ibeb176b194e84da3aad1ab74bd4b1efe_61)] [added: [54](#i91d8a4235c724235a9b7e744237b8e6f_67)] | | |

| Item 8. | | | Financial Statements and Supplementary Data | | | [removed: [59](#ibeb176b194e84da3aad1ab74bd4b1efe_64)] [added: [56](#i91d8a4235c724235a9b7e744237b8e6f_70)] | | |

| Item 9A. | | | Controls and Procedures | | | [removed: [120](#ibeb176b194e84da3aad1ab74bd4b1efe_181)] [added: [111](#i91d8a4235c724235a9b7e744237b8e6f_196)] | | |

| Item 9B. | | | Other Information | | | [111](#i91d8a4235c724235a9b7e744237b8e6f_199) | | |

| Item 10. | | | Directors, Executive Officers, and Corporate Governance | | | [removed: [121](#ibeb176b194e84da3aad1ab74bd4b1efe_190)] [added: [112](#i91d8a4235c724235a9b7e744237b8e6f_205)] | | |

| Item 11. | | | Executive Compensation | | | [removed: [121](#ibeb176b194e84da3aad1ab74bd4b1efe_193)] [added: [112](#i91d8a4235c724235a9b7e744237b8e6f_208)] | | |

| Item 12. | | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | | [removed: [121](#ibeb176b194e84da3aad1ab74bd4b1efe_196)] [added: [112](#i91d8a4235c724235a9b7e744237b8e6f_211)] | | |

| Item 13. | | | Certain Relationships and Related Transactions, and Director Independence | | | [removed: [122](#ibeb176b194e84da3aad1ab74bd4b1efe_199)] [added: [113](#i91d8a4235c724235a9b7e744237b8e6f_214)] | | |

| Item 14. | | | Principal Accountant Fees and Services | | | [removed: [122](#ibeb176b194e84da3aad1ab74bd4b1efe_202)] [added: [113](#i91d8a4235c724235a9b7e744237b8e6f_217)] | | |

| Item 15. | | | Exhibits and Financial Statement Schedules | | | [removed: [123](#ibeb176b194e84da3aad1ab74bd4b1efe_208)] [added: [114](#i91d8a4235c724235a9b7e744237b8e6f_223)] | | |

| Item 16. | | | Form 10-K Summary | | | [removed: [123](#ibeb176b194e84da3aad1ab74bd4b1efe_211)] [added: [114](#i91d8a4235c724235a9b7e744237b8e6f_226)] | | |

*◦our [added: mission, core values,] business strategy, [added: strategic vision,] growth plans, innovation and Digital Business Acceleration [removed: strategies,] [added: initiatives,] NPDs, future operations, financial position, net sales, expenses, [added: hedging programs,] cost savings initiatives, capital expenditures, effective tax rates and anticipated tax liabilities, expected volume, inventory, [added: supply] and demand [removed: levels] [added: levels, balance,] and trends, long-term financial model, access to capital markets, liquidity and capital resources, and prospects, plans, and objectives of management;*

*◦our ESG strategy, sustainability initiatives, environmental stewardship targets, and human capital and DEI objectives and [removed: goals;*][added: ambitions;*]

*◦anticipated inflationary pressures, changing prices, and reductions in consumer discretionary income as well as other unfavorable global and regional economic conditions, [added: and] geopolitical events, and [removed: military conflicts, and] our responses thereto;*

*◦the potential impact to supply, production levels, and costs due to global supply chain disruptions and constraints, [removed: transportation challenges,] [added: and] shifting consumer [removed: behaviors, and the COVID-19 pandemic;*][added: behaviors;*]

*◦the manner, timing, and duration of the share repurchase program and source of funds for share [removed: repurchases; and*][added: repurchases;*]

*◦the amount and timing of future [removed: dividends.*][added: dividends; and*]

*•The statements [removed: regarding:*][added: regarding the impacts of recent accounting pronouncements;*]

[removed: *◦the potential exchange] [added: *•The statements regarding our future accounting treatment for our investment in Canopy, including the expected gain related to the conversion] of our [added: Canopy common shares into Exchangeable Shares and exchange of the] 2023 Canopy Promissory Note for Exchangeable [removed: Shares;*][added: Shares; and*]

[removed: *◦the timing] [added: *•the amount, timing,] and source of funds for [removed: operating activities;*][added: any share repurchases;*]

[removed: *•The statements regarding our targeted] [added: *◦our target] net leverage ratio.*

| Constellation Brands, Inc. FY [removed: 2023] [added: 2024] Form 10-K | | | #WORTHREACHINGFOR I i | | |

*When used in this Form 10-K, the words “anticipate,” [removed: “intend,”] “expect,” [added: “intend,” “will,”] and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

[removed: In addition to the risks and uncertainties of ordinary business operations and conditions in the general economy and markets in which we compete,] [added: *compete,] our forward-looking statements contained in this Form 10-K are also subject to the risk, uncertainty, and possible variance from our current expectations regarding:*

*•the actual impact to supply, production levels, and costs from global supply chain disruptions and constraints, transportation challenges (including from labor strikes or other labor activities), shifting consumer behaviors, [removed: the COVID-19 pandemic,] wildfires, and severe weather [removed: events, due to, among other reasons, actual supply chain and transportation performance, actual consumer behaviors, and the actual severity and geographical reach of wildfires and severe weather] events;*

*•reliance on complex information systems and third‐party global [removed: networks;*][added: networks as well as risks associated with cybersecurity and AI;*]

*•the impact of the military [removed: conflict in Ukraine and associated] [added: conflicts,] geopolitical [removed: tensions] [added: tensions,] and responses, including on inflation, supply chains, commodities, energy, and cybersecurity;*

*•communicable disease outbreaks, pandemics, or other widespread public health [removed: crises, including duration and impact of the COVID-19 pandemic,] [added: crises] and associated governmental containment [removed: actions, which may include the closure of non-essential businesses (including our manufacturing facilities);*][added: actions;*]

| Constellation Brands, Inc. FY [removed: 2023] [added: 2024] Form 10-K | | | #WORTHREACHINGFOR I ii | | |

[removed: *Additional important factors] [added: *For additional information about risks and uncertainties] that could cause actual results to differ materially from those set forth in or implied by our forward-looking statements contained in this Form 10-K are those described in Item 1A.

*Market positions and industry data discussed in this Form 10-K are as of calendar [removed: 2022] [added: 2023] and have been obtained or derived from industry and government publications and our estimates.

The industry and government publications include: Beer Marketers Insights; Beverage Information Group; [removed: Growers Network;] Impact Databank Review and Forecast; International Wine and Spirits Research (IWSR); [removed: Circana (formerly IRI);] [added: Circana;] Beer Institute; and National Alcohol Beverage Control Association.

Unless otherwise noted, all references to market positions are based on [removed: equivalent unit volume.*][added: U.S. dollar sales.*]

| Constellation Brands, Inc. FY [removed: 2023] [added: 2024] Form 10-K | | | #WORTHREACHINGFOR I iii | | |

| 2018 Authorization | | | | | | [removed: authority] [added: authorization] to repurchase up to $3.0 billion of our publicly traded common stock, [removed: authorized in January 2018] [added: approved] by our Board of Directors [added: in January 2018] and fully utilized during Fiscal 2023 | | |

| [removed: 2020] [added: 2022] Restatement Agreement | | | | | | restatement agreement, dated as of [removed: March 26, 2020,] [added: April 14, 2022,] that amended and restated our [removed: eighth] [added: ninth] amended and restated credit agreement, dated as of [removed: September 14, 2018,] [added: March 26, 2020,] which was our then-existing senior credit facility [added: as of February 28, 2022] | | |

| [removed: 2020] [added: June 2021] Term Credit Agreement | | | | | | amended and restated term [added: loan] credit agreement, dated as of March 26, 2020, [removed: now repaid in full] [added: inclusive of amendment dated as of June 10, 2021] | | |

| 2021 Authorization | | | | | | [removed: authority] [added: authorization] to repurchase up to $2.0 billion of our publicly traded common stock, [removed: authorized in January 2021] [added: approved] by our Board of Directors [added: in January 2021] | | |

| [removed: 2022] Wine Divestiture | | | | | | sale of certain mainstream and premium wine brands and related inventory | | |

| 2023 Canopy Promissory Note | | | | | | C$100.0 million principal amount of 4.25% promissory note issued to us by Canopy in April [removed: 2023] [added: 2023, exchanged for Exchangeable Shares in April 2024] | | |

| Constellation Brands, Inc. FY [removed: 2023] [added: 2024] Form 10-K | | | #WORTHREACHINGFOR I iv | | |

| Administrative Agent | | | | | | Bank of America, N.A., as administrative agent for [removed: applicable] [added: the] senior credit [removed: facilities] [added: facility] and term loan credit agreements | | |

| Amended and Restated By-Laws | | | | | | our amended and restated by-laws [removed: which became effective at the Effective Time] | | |

| Amended and Restated Charter | | | | | | our amended and restated certificate of incorporation [removed: which effectuated the Reclassification at the Effective Time] | | |

| INDEX TO EXHIBITS | | | | | | [115](#i91d8a4235c724235a9b7e744237b8e6f_229) | | |

| SIGNATURES | | | | | | [120](#i91d8a4235c724235a9b7e744237b8e6f_232) | | |

Forward-Looking Statements

*◦unfavorable trends in the wine market and for certain of our wine and spirits brands, the expected timeframes for improvement of such trends, and our associated actions to improve marketing execution and sales performance;*

*◦the availability of a supply chain finance program;*

In addition to the risks and uncertainties of ordinary business operations and conditions in the general economy and markets in which we*

*•economic and other uncertainties associated with our international operations;*

*•dependence on limited facilities for production of our Mexican beer brands, including beer operations expansion, optimization, and/or construction activities, scope, capacity, supply, costs (including impairments), capital expenditures, and timing;*

*•operational disruptions or catastrophic loss to our breweries, wineries, other production facilities, or distribution systems;*

*•climate change, ESG regulatory compliance and failure to meet emissions, stewardship, and other ESG targets, objectives, or ambitions;*

*•reliance on wholesale distributors, major retailers, and government agencies;*

*•contamination and degradation of product quality from diseases, pests, weather, and other conditions;*

*•effects of employee labor activities that could increase our costs;*

*•a potential decline in the consumption of products we sell and our dependence on sales of our Mexican beer brands;*

*•impacts of our acquisition, divestiture, investment, and NPD strategies and activities;*

*•dependence upon our trademarks and proprietary rights, including the failure to protect our intellectual property rights;*

*•potential damage to our reputation;*

*•competition in our industry and for talent;*

*•our indebtedness and interest rate fluctuations;*

*•our international operations, worldwide and regional economic trends and financial market conditions, geopolitical uncertainty, or other governmental rules and regulations;*

*•class action or other litigation we may face;*

*•potential write-downs of our intangible assets, such as goodwill and trademarks;*

*•changes to tax laws, fluctuations in our effective tax rate, accounting for tax positions, the resolution of tax disputes, changes to accounting standards, elections, assertions, or policies, and the impact of a global minimum tax rate;*

*•the amount and timing of future dividends; and*

*•ownership of our Class A Stock by the Sands Family Stockholders and their Board of Director nomination rights as well as the choice-of-forum provision in our Amended and Restated By-laws.*

| 2023 Authorization | | | | | | authorization to repurchase up to $2.0 billion of our publicly traded common stock, approved by our Board of Directors in November 2023 | | |

| AI | | | | | | artificial intelligence | | |

| BioSteel | | | | | | BioSteel Sports Nutrition Inc., formerly a subsidiary of Canopy | | |

| California | | | | | | the state of California (U.S.) unless otherwise specified | | |

| Canopy Debt Securities | | | | | | debt securities issued by Canopy in June 2018, no longer outstanding | | |

| Canopy Equity Method Investment | | | | | | an investment in Canopy common shares, no longer applicable following conversion of Canopy common shares into Exchangeable Shares in April 2024 | | |

| CDIO | | | | | | Chief Data and Information Officer | | |

| CISO | | | | | | Chief Information Security Officer | | |

| CMP | | | | | | crisis management plan | | |

| Craft Beer Divestitures | | | | | | the Four Corners Divestiture and the Funky Buddha Divestiture, collectively | | |

| Domaine Curry | | | | | | Domaine Curry wine business, acquired by us | | |

| ERM | | | | | | enterprise risk management | | |

| Four Corners Divestiture | | | | | | sale of the Four Corners craft beer business | | |

| Funky Buddha Divestiture | | | | | | sale of the Funky Buddha craft beer business | | |

| IRP | | | | | | IT incident response plan | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| INDEX TO EXHIBITS | | | | | | [124](#ibeb176b194e84da3aad1ab74bd4b1efe_214) | | |

| | | | | | | | | |

| SIGNATURES | | | | | | [130](#ibeb176b194e84da3aad1ab74bd4b1efe_217) | | |

*◦the definitive agreement to sell the Daleville Facility, including expected form and amount of consideration and use of expected proceeds;*

*◦the continued refinement of our wine and spirits portfolio;*

*◦the potential completion of the Canopy Transaction, including the Canopy Amendment, and the transactions contemplated by the Consent Agreement, including conversion of our Canopy common shares for Exchangeable Shares, and related results and impacts of such transactions;*

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

*◦our activities surrounding our investment in Canopy;*

*◦Canopy’s expectations and the transaction with Acreage;*

*◦a potential future impairment of our Canopy Equity Method Investment; and*

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

*•The statements regarding the expected impact of the Reclassification.*

| | | | | | |

| --- | --- | --- | --- | --- | --- |

*•the actual balance of supply and demand for our products, the actual performance of our distributors, and the actual demand, net sales, channel proportions, and volume trends for our products due to, among other reasons, actual shipments to and performance by distributors and actual consumer demand;*

*•beer operations expansion, optimization, and/or construction activities, scope, capacity, costs (including impairments), capital expenditures, and timing due to, among other reasons, market conditions, our cash and debt position, receipt of required regulatory approvals by the expected dates and on the expected terms, and other factors as determined by management;*

*•the amount, timing, and source of funds for any share repurchases, if any, which may vary due to market conditions; our cash and debt position; the impact of the beer operations expansion, optimization, and/or construction activities; and other factors as determined by management from time to time;*

*•the amount and timing of future dividends which are subject to the determination and discretion of our Board of Directors and may be impacted if our ability to use cash flow to fund dividends is affected by unanticipated increases in total net debt, we are unable to generate cash flow at anticipated levels, or we fail to generate expected earnings;*

*•the impact and fair value of our investment in Canopy, including recording our proportional share of Canopy’s estimated pre-tax losses, due to, among other reasons, market and economic conditions in Canopy’s markets and business locations;*

*•the accuracy of management’s projections relating to the Canopy investment due to Canopy’s actual results and market and economic conditions;*

*•the timeframe and amount of any potential future impairment of our Canopy Equity Method Investment if Canopy’s stock price does not recover above our carrying value in the near-term;*

*•Canopy’s failure to receive the requisite approval of its shareholders necessary to approve the Canopy Transaction, any other delays with respect to, or the failure to complete, the Canopy Transaction, the ability to recognize the anticipated benefits of the Canopy Transaction and the impact of the Canopy Transaction on the market price of Canopy’s common stock;*

| | | | | | |

| --- | --- | --- | --- | --- | --- |

*•completion of the Canopy Transaction, the exchange of our 2023 Canopy Promissory Note for Exchangeable Shares, and the impact from converting our Canopy common shares for Exchangeable Shares on our relationship with and investment in Canopy;*

*•any impact of U.S. federal laws on Canopy Strategic Transactions or upon the implementation of such Canopy Strategic Transactions, or the impact of any Canopy Strategic Transaction upon our future ownership level in Canopy or our future share of Canopy’s reported earnings and losses;*

*•the expected impacts of the definitive agreement to sell the Daleville Facility;*

*•the expected impacts of wine and spirits portfolio refinement activities;*

*•purchase accounting with respect to any transaction, or the assumptions used regarding the assets purchased and liabilities assumed to determine their fair value;*

*•general economic, geopolitical, domestic, international, and regulatory conditions, world financial market and banking sector, including economic slowdown or recession;*

*•the ability to recognize anticipated benefits of the Reclassification and the impact of the Reclassification on the market price of our common stock; and*

*•our targeted net leverage ratio due to market conditions, our ability to generate cash flow at expected levels, and our ability to generate expected earnings.*

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

Cybersecurity risk management and strategy

We have developed and implemented an enterprise-wide cybersecurity program designed to provide structured and thorough cybersecurity risk management and governance.

Our cybersecurity program prioritizes, among other things, prevention of unauthorized access; protection of sensitive information; detection, assessment, and response to cyber threats; and continuous improvement of our cybersecurity measures.

We seek to achieve our cybersecurity program priorities through a multi-pronged approach to address cyber threats and incidents that includes implementation of various industry best practices, proactive monitoring of our IT systems, ongoing employee training, and regular risk assessments.

We also maintain cyber insurance coverage to help mitigate a portion of the potential costs in the event of covered events.

Our cybersecurity program is aligned with various frameworks for managing cybersecurity risks, such as the National Institute of Standards and Technology Cyber Security Framework for IT systems and International Electrotechnical Commission 62443 which governs cybersecurity for Industrial Control Systems.

This program is a component of our ERM function.

Our ERM function manages enterprise-wide risk and has established a governance structure in charge of continuous risk management.

It has defined risk management processes related specifically to cybersecurity, which include targeted cyber risk reviews and annual cyber risk assessments over our IT and operations.

We also have a Cyber and Privacy Risk Committee, led by our CISO, which provides strategic and actionable recommendations on cybersecurity topics, issues, and controls to our executive management team, and a Crisis Management Committee, led by our head of ERM, which manages significant cybersecurity events.

We rely upon both internal and external resources for evaluating and enhancing our cyber posture.

At least annually, our information security and internal audit teams conduct comprehensive internal and external penetration testing, supplemented by more frequent Purple-team Tests that are designed to identify critical areas of our technical environment and potential vulnerabilities that may need to be addressed.

Our information security team also retains external cybersecurity firms to review and provide feedback on improving our cybersecurity program, including in the areas of data protection, threat and vulnerability management, and end-point protection.

We conduct tabletop exercises to prepare for potential cyber incidents and assess our cybersecurity preparedness and processes.

We also require annual cybersecurity training by our employees, conduct regular exercises to help our employees recognize phishing emails and other social engineering tactics, and provide various methods for employees to report suspicious activity that may give rise to a cyber incident or threat.

Significant results of such testing and reviews are communicated to our executive management team and our Audit Committee, as applicable, and are utilized in our cybersecurity program’s continuous improvement process.

In response to the growing risks associated with third-party service providers, we have established review processes for assessing the technological and information security controls of our third-party suppliers to attempt to identify material cybersecurity risks associated with such providers, their IT systems, and their access to our IT systems that could significantly disrupt our operations.

These processes encompass a range of measures, such as pre-engagement cybersecurity due diligence for providers who access our IT systems or information before their engagement, ongoing monitoring and evaluation of our providers, detailed examination of available System and Organization Controls attestation reports, and inclusion of relevant contractual provisions in our agreements with third-party service providers with respect to areas including cyber protections, notifications, auditing, and risk allocation.

We maintain an IRP, which provides a set of core practices and procedures when responding to certain high-risk information security threats and incidents, and a CMP, which is designed to ensure appropriate resources are utilized to provide an effective, timely, and coordinated response in managing crises, including significant cyber threats and incidents.

Among other things, the IRP sets forth roles and responsibilities in connection with detecting, assessing, and mitigating cybersecurity incidents and outlines applicable communication and escalation protocols.

Under the CMP, our Crisis Management Committee will assume overall responsibility in an effort to

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| PART I | | | OTHER KEY INFORMATION | | | Table of Contents | | |

ensure that the appropriate functions and work streams are mobilized and coordinated to effectively manage any significant cyber events.

As with all large IT systems, we have been a target of cyberattackers and other hacking activities, as have certain of our third-party service providers.

While our cybersecurity program is designed to prevent unauthorized access and protect sensitive information, including through continuous improvement of our cybersecurity measures, and we have not experienced any material cyber threats or incidents to date, we can give no assurance that we will be able to prevent, identify, respond to, or mitigate the impact of all cyber threats or incidents.

To the extent future cyber threats or incidents result in significant disruptions and costs to our operations, reduce the effectiveness of our internal control over financial reporting, or otherwise substantially impact our business, it could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

For additional discussion on our cybersecurity risks, refer to Item 1A.

“Risk Factors” of this Form 10-K.

Cybersecurity governance

Our Board of Directors oversees the management of risks inherent in the operation of our business, with a focus on the most significant risks that we face, including those related to cybersecurity.

The Board of Directors has delegated oversight of cybersecurity, including privacy and information security, as well as enterprise risk management to the Audit Committee.

In connection with that oversight responsibility, our CDIO and CISO meet with the Audit Committee on a quarterly basis and provide information and updates on a range of cybersecurity topics which may include our cybersecurity program and governance processes; cyber risk monitoring and management; the status of projects to strengthen our cybersecurity and privacy capabilities; recent significant incidents or threats impacting our operations, industry, or third-party suppliers; and the emerging threat landscape.

Our head of ERM also meets with our executive management team and the Audit Committee on a quarterly basis and with the Board of Directors on an annual basis and reports on applicable cyber risk management processes and activities pertinent to the ERM function.

Our enterprise-wide cybersecurity program is managed by a dedicated information security team, including our Cyber and Privacy Risk Committee described above, led by our CISO.

Our CISO has more than 25 years of technology experience across various disciplines, including nearly 15 years of experience as a CISO in the financial, manufacturing, and CPG industries.

He has led our global information security organization for almost four years.

We plan to relocate our corporate headquarters to a leased office in Rochester, New York in [removed: calendar] [added: June] 2024.

As of February [removed: 28, 2023,] [added: 29, 2024,] our principal physical properties by segment, [removed: excluding Canopy,] all of which are owned, consist of:

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

| Breweries •Nava Brewery in [removed: Nava, Coahuila, Mexico] [added: Nava] •Obregon Brewery in [removed: Obregon, Sonora, Mexico] [added: Obregon] Production facility •Glass Plant in [removed: Nava, Coahuila, Mexico] [added: Nava] | | | | | | | | | Wineries •Gonzales Winery in Gonzales, [removed: California, U.S.] [added: California] •Mission Bell Winery in Madera, [removed: California, U.S.] [added: California] •Woodbridge Winery in Acampo, [removed: California, U.S.] [added: California] •Kim Crawford Winery in Marlborough, [removed: South Island,] New Zealand Warehouse, distribution, and other production facilities •Lodi Distribution Center in Lodi, [removed: California, U.S.] [added: California] •Pontassieve Winery in Florence, Italy | | | | | |

Within our Wine and Spirits segment, as of February [removed: 28, 2023,] [added: 29, 2024,] we owned, leased, or had interests in approximately 10,100 acres of vineyards in the U.S., 6,700 acres of vineyards in New Zealand, and 1,400 acres of vineyards in Italy.

At April [removed: 13, 2023,] [added: 16, 2024,] the number of holders of record of our Class A Stock and Class 1 Stock were [removed: 495] [added: 483] and 17, respectively.

Issuer Purchases of Equity Securities

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | | | | | | Total Number of Shares Purchased | | | | | | Average Price Paid Per Share | | | | | | Total Number of Shares Purchased as Part of a Publicly Announced Program | | | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) | | |

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

| December 1 – 31, 2022 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 1,163.1 | |

| January 1 – 31, 2023 | | | | | | 1,326,692 | | | | | | $ | 218.68 | | | | | 1,326,692 | | | | | | $ | 872.9 | |

| February 1 – 28, 2023 | | | | | | 41,801 | | | | | | $ | 227.27 | | | | | 41,801 | | | | | | $ | 863.4 | |

| Total | | | | | | 1,368,493 | | | | | | $ | 218.94 | | | | | 1,368,493 | | | | | | | | |

(1)In January 2021, we announced that our Board of Directors authorized the repurchase of up to $2.0 billion of our publicly traded common stock.

The Board of Directors did not specify a date upon which the 2021 Authorization would expire.

Share repurchases for the periods included herein were effected through open market transactions and exclude the impact of Federal excise tax owed pursuant to the IRA.

[removed: FEBRUARY] [added: | | | | February 29, 2024 | | | | | | February] 28, [removed: 2023][added: 2023 | | |]

| Management’s Annual Report on Internal Control Over Financial Reporting | | | | | | | | | [removed: [60](#ibeb176b194e84da3aad1ab74bd4b1efe_67)] [added: [57](#i91d8a4235c724235a9b7e744237b8e6f_73)] | | |

| Reports of Independent Registered Public Accounting Firm (PCAOB ID 185) | | | | | | | | | [removed: [61](#ibeb176b194e84da3aad1ab74bd4b1efe_70)] [added: [58](#i91d8a4235c724235a9b7e744237b8e6f_76)] | | |

| Consolidated Balance Sheets | | | | | | | | | [removed: [65](#ibeb176b194e84da3aad1ab74bd4b1efe_76)] [added: [62](#i91d8a4235c724235a9b7e744237b8e6f_82)] | | |

| Consolidated Statements of Comprehensive Income (Loss) | | | | | | | | | [removed: [66](#ibeb176b194e84da3aad1ab74bd4b1efe_79)] [added: [63](#i91d8a4235c724235a9b7e744237b8e6f_85)] | | |

| Consolidated Statements of Changes in Stockholders’ Equity | | | | | | | | | [removed: [67](#ibeb176b194e84da3aad1ab74bd4b1efe_82)] [added: [64](#i91d8a4235c724235a9b7e744237b8e6f_88)] | | |

| Consolidated Statements of Cash Flows | | | | | | | | | [removed: [68](#ibeb176b194e84da3aad1ab74bd4b1efe_85)] [added: [65](#i91d8a4235c724235a9b7e744237b8e6f_91)] | | |

| | | | 1. | | | Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies | | | [removed: [70](#ibeb176b194e84da3aad1ab74bd4b1efe_91)] [added: [67](#i91d8a4235c724235a9b7e744237b8e6f_97)] | | |

| | | | 2. | | | Acquisitions and Divestitures | | | [removed: [75](#ibeb176b194e84da3aad1ab74bd4b1efe_94)] [added: [72](#i91d8a4235c724235a9b7e744237b8e6f_100)] | | |

| | | | 4. | | | Prepaid Expenses and Other | | | [removed: [78](#ibeb176b194e84da3aad1ab74bd4b1efe_100)] [added: [74](#i91d8a4235c724235a9b7e744237b8e6f_106)] | | |

| | | | 5. | | | Property, Plant, and Equipment | | | [removed: [78](#ibeb176b194e84da3aad1ab74bd4b1efe_103)] [added: [75](#i91d8a4235c724235a9b7e744237b8e6f_109)] | | |

| | | | 7. | | | Fair Value of Financial Instruments | | | [removed: [82](#ibeb176b194e84da3aad1ab74bd4b1efe_109)] [added: [79](#i91d8a4235c724235a9b7e744237b8e6f_118)] | | |

| | | | 10. | | | Equity Method Investments | | | [removed: [89](#ibeb176b194e84da3aad1ab74bd4b1efe_121)] [added: [83](#i91d8a4235c724235a9b7e744237b8e6f_130)] | | |

| | | | 11. | | | Other Accrued Expenses and Liabilities | | | [removed: [92](#ibeb176b194e84da3aad1ab74bd4b1efe_124)] [added: [85](#i91d8a4235c724235a9b7e744237b8e6f_133)] | | |

| | | | 13. | | | Income Taxes | | | [removed: [98](#ibeb176b194e84da3aad1ab74bd4b1efe_133)] [added: [90](#i91d8a4235c724235a9b7e744237b8e6f_142)] | | |

| | | | 14. | | | Deferred Income Taxes and Other Liabilities | | | [removed: [102](#ibeb176b194e84da3aad1ab74bd4b1efe_136)] [added: [93](#i91d8a4235c724235a9b7e744237b8e6f_145)] | | |

| | | | 16. | | | Commitments and Contingencies | | | [removed: [104](#ibeb176b194e84da3aad1ab74bd4b1efe_142)] [added: [96](#i91d8a4235c724235a9b7e744237b8e6f_151)] | | |

| | | | 18. | | | Stock-Based Employee Compensation | | | [removed: [108](#ibeb176b194e84da3aad1ab74bd4b1efe_151)] [added: [100](#i91d8a4235c724235a9b7e744237b8e6f_160)] | | |

| [added: Net income (loss) per common share attributable to CBI (1):] | | | [removed: 19.] | | | [removed: Net Income (Loss) Per Common Share Attributable to CBI] | | | [removed: [111](#ibeb176b194e84da3aad1ab74bd4b1efe_154)] | | |

| | | | 20. | | | Accumulated Other Comprehensive Income (Loss) | | | [removed: [112](#ibeb176b194e84da3aad1ab74bd4b1efe_157)] [added: [104](#i91d8a4235c724235a9b7e744237b8e6f_166)] | | |

| | | | 21. | | | Significant Customers and Concentration of Credit Risk | | | [removed: [114](#ibeb176b194e84da3aad1ab74bd4b1efe_160)] [added: [106](#i91d8a4235c724235a9b7e744237b8e6f_169)] | | |

| | | | 22. | | | Business Segment Information | | | [removed: [115](#ibeb176b194e84da3aad1ab74bd4b1efe_166)] [added: [106](#i91d8a4235c724235a9b7e744237b8e6f_175)] | | |

| | | | 23. | | | Selected Quarterly Financial Information (unaudited) | | | [removed: [119](#ibeb176b194e84da3aad1ab74bd4b1efe_169)] [added: [110](#i91d8a4235c724235a9b7e744237b8e6f_178)] | | |

Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of February [removed: 28, 2023.][added: 29, 2024.]

We have audited Constellation Brands, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of February [removed: 28, 2023,] [added: 29, 2024,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February [removed: 28, 2023,] [added: 29, 2024,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February [removed: 28, 2023] [added: 29, 2024] and February 28, [removed: 2022,] [added: 2023,] the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February [removed: 28, 2023,] [added: 29, 2024,] and the related notes (collectively, the consolidated financial statements), and our report dated April [removed: 20, 2023] [added: 23, 2024] expressed an unqualified opinion on those consolidated financial statements.

We have audited the accompanying consolidated balance sheets of Constellation Brands, Inc. and subsidiaries (the Company) as of February [removed: 28, 2023] [added: 29, 2024] and February 28, [removed: 2022,] [added: 2023,] the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February [removed: 28, 2023,] [added: 29, 2024,] and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February [removed: 28, 2023] [added: 29, 2024] and February 28, [removed: 2022,] [added: 2023,] and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February [removed: 28, 2023,] [added: 29, 2024,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February [removed: 28, 2023,] [added: 29, 2024,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April [removed: 20, 2023] [added: 23, 2024] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting*.*

*Critical Audit [removed: Matter*][added: Matters*]

The critical audit [removed: matter] [added: matters] communicated below [removed: is a matter] [added: are matters] arising from the current period audit of the consolidated financial statements that [removed: was] [added: were] communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of [removed: a] critical audit [removed: matter] [added: matters] does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matter] [added: matters] below, providing [removed: a] separate [removed: opinion] [added: opinions] on the critical audit [removed: matter] [added: matters] or on the accounts or disclosures to which [removed: it relates.][added: they relate.]

The Company has recorded unrecognized tax benefits of [removed: $344.3] [added: $416.1] million as of February [removed: 28, 2023.][added: 29, 2024.]

| | | | [removed: February] [added: | | | | | | February] 28, [removed: 2023] [added: 2023] | | | | | | [added: | | | | | |] February 28, 2022 | | | [added: | | | | | |]

| Cash and cash equivalents | | | $ | [removed: 133.5] [added: 152.4] | | | | | $ | [removed: 199.4] [added: 133.5] | |

| Accounts receivable | | | [removed: 901.6] [added: 832.8] | | | | | | [removed: 899.0] [added: 901.6] | | |

| Inventories | | | [removed: 1,898.7] [added: 2,078.3] | | | | | | [removed: 1,573.2] [added: 1,898.7] | | |

| Prepaid expenses and other | | | [removed: 562.3] [added: 666.0] | | | | | | [removed: 658.1] [added: 562.3] | | |

| Total current assets | | | [removed: 3,496.1] [added: 3,729.5] | | | | | | [removed: 3,329.7] [added: 3,496.1] | | |

FEBRUARY 29, 2024

| | | | 3. | | | Inventories | | | [74](#i91d8a4235c724235a9b7e744237b8e6f_103) | | |

| | | | 6. | | | Derivative Instruments | | | [75](#i91d8a4235c724235a9b7e744237b8e6f_115) | | |

| | | | 8. | | | Goodwill | | | [82](#i91d8a4235c724235a9b7e744237b8e6f_124) | | |

| | | | 9. | | | Intangible Assets | | | [83](#i91d8a4235c724235a9b7e744237b8e6f_127) | | |

| | | | 12. | | | Borrowings | | | [85](#i91d8a4235c724235a9b7e744237b8e6f_136) | | |

| | | | 15. | | | Leases | | | [94](#i91d8a4235c724235a9b7e744237b8e6f_148) | | |

| | | | 17. | | | Stockholders' Equity | | | [97](#i91d8a4235c724235a9b7e744237b8e6f_154) | | |

April 23, 2024

*Fair value of the Wine and Spirits reporting unit*

As discussed in Notes 1 and 8 to the consolidated financial statements, the Company’s goodwill balance for the Wine and Spirits reporting unit as of February 29, 2024 was $2,742.1 million.

The Company performs goodwill impairment testing on an annual basis, or sooner, if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In connection with the impairment testing, the Company estimated the fair value of its reporting units using a discounted cash flow model.

We identified the evaluation of the fair value of the Wine and Spirits reporting unit as a critical audit matter due to the sensitivity of key assumptions used in the discounted cash flow model.

A high degree of subjective auditor judgment was required to evaluate the key assumptions, including the discount rate, revenue growth rates, and long-term growth rate.

Changes to these assumptions could have a significant impact on the fair value of the reporting unit.

Additionally, specialized skills and knowledge were required to assess certain of these assumptions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s goodwill impairment assessment process, including controls related to the determination of the key assumptions.

We evaluated the Company’s revenue growth rates by comparing them to the Company’s historical performance and to relevant market data.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

- evaluating the Company’s long-term growth rate by comparing it to market data for long-term industry and economic growth expectations

- evaluating the Company’s discount rate by comparing it to a range of discount rates that were independently developed using publicly available market data for comparable companies.

April 23, 2024

| Other assets | | | 969.4 | | | | | | 790.9 | | |

| | | | 15,843.4 | | | | | | 14,277.5 | | |

| Net income (loss) | | | — | | | | | | — | | | | | | — | | | | | | 1,727.4 | | | | | | — | | | | | | — | | | | | | 37.8 | | | | | | 1,765.2 | | |

| Repurchase of shares | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (249.7) | | | | | | — | | | | | | (249.7) | | |

| Balance at February 29, 2024 | | | $ | 2.1 | | | | | $ | — | | | | | $ | 2,047.3 | | | | | $ | 13,417.2 | | | | | $ | 376.8 | | | | | $ | (6,100.3) | | | | | $ | 321.5 | | | | | $ | 10,064.6 | |

| Payment of contingent consideration | | | (14.9) | | | | | | — | | | | | | — | | |

FEBRUARY 29, 2024

All financial information for the years ended February 28, 2023, and February 28, 2022, has been restated to conform to the new segment presentation.

For purposes of measuring segment operating performance, the net gain (loss) from the changes in

secured incremental borrowing rate.

For additional information on net income (loss) per common share, see Note 19.

Recent accounting pronouncements

*Segment reporting*

In November 2023, the FASB issued a standard requiring disclosures, on an annual and interim basis, of significant segment expenses and other segment items that are regularly provided to the CODM as well as the title and position of the CODM.

We are required to adopt these disclosures for our annual period ending February 28, 2025, and interim periods beginning March 1, 2025, with early adoption permitted.

The amendments in this standard will be applied retrospectively to all prior periods presented in the financial statements.

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| | | | 3. | | | Inventories | | | [77](#ibeb176b194e84da3aad1ab74bd4b1efe_97) | | |

| | | | 6. | | | Derivative Instruments | | | [79](#ibeb176b194e84da3aad1ab74bd4b1efe_106) | | |

| | | | 8. | | | Goodwill | | | [88](#ibeb176b194e84da3aad1ab74bd4b1efe_115) | | |

| | | | 9. | | | Intangible Assets | | | [88](#ibeb176b194e84da3aad1ab74bd4b1efe_118) | | |

| | | | 12. | | | Borrowings | | | [93](#ibeb176b194e84da3aad1ab74bd4b1efe_127) | | |

| | | | 15. | | | Leases | | | [102](#ibeb176b194e84da3aad1ab74bd4b1efe_139) | | |

| | | | 17. | | | Stockholders' Equity | | | [106](#ibeb176b194e84da3aad1ab74bd4b1efe_145) | | |

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