Constellation Brands, Inc.
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INTRODUCTION
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 Modelo Especial, Corona Extra, Pacifico, Victoria, Kim Crawford, Ruffino, The Prisoner Wine Company, Robert Mondavi Winery, Mi CAMPO, and High West. In the U.S., we are one of the top dollar share gainers among beverage alcohol suppliers. We are also the second-largest beer company and have the #1 beer brand, Modelo Especial, in dollar sales in the U.S. We continued to strengthen our leadership position in the U.S. beer market as the #1 dollar share gainer in the overall U.S. beer market, and the #2 dollar share gainer in the high-end. Within wine and spirits, we have implemented a multi-year strategy that repositioned this business to a portfolio of exclusively higher-end brands that we believe is positioned for long-term growth, aligned to our focus on consumer-led premiumization trends, and we continue to progressively expand our supply channels through DTC and international markets. The strength of our brands makes us a supplier of choice to many of our consumers and our Customers, which include wholesale distributors and retailers. We conduct our business through entities we wholly own as well as through a variety of joint ventures and other entities.
Our mission is to build brands that people love because we believe elevating human connections is Worth Reaching For. It is worth our dedication, hard work, and calculated risks to anticipate market trends and deliver more for our consumers, stockholders, employees, and industry.
Headquartered in Rochester, New York, we are a Delaware corporation incorporated in 1972, as the successor to a business founded in 1945.
STRATEGY
Our overall strategic vision is to consistently deliver industry-leading total stockholder returns over the long-term through a focus on these key pillars:
•continue to build strong brands that people love with advantaged routes to market;
•build a culture that is consumer-obsessed and leverages robust innovation capabilities to stay on the forefront of consumer trends;
•deploy capital in line with disciplined and balanced priorities;
•empower the whole enterprise to achieve best-in-class operational efficiency; and
•deliver on impactful ESG initiatives that we believe are not only good business, but also good for the world.
We will continue to strive for success by ensuring consumer-led decision making drives all aspects of our business; building a strong talent pipeline with best-in-class people development; investing in infrastructure that supports and enables our business, including data systems and architecture; and exemplifying intentional and proactive fiscal management. We place focus on positioning our portfolio on higher-margin, higher-growth categories of the beverage alcohol industry to align with our strategy to address consumer-led premiumization, product, and purchasing trends, which we anticipate will continue to drive stronger growth rates relative to the industry. To continue capitalizing on consumer-led premiumization trends, become more competitive, and aim to grow our business, we have employed a strategy dedicated to organic growth and supplemented by targeted investments and acquisitions. Our ongoing digital acceleration initiatives are aimed at driving results by enhancing our technology capabilities in key areas. Additionally, we believe our continued focus on maintaining a strong balance sheet provides a solid financial foundation to support our broader strategic initiatives. As a result of this strategy, we have realized impacts on each segment of our business.
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 1 |
| PART I | ITEM 1. BUSINESS |
In our beer business, we focus on upholding our leadership position in the U.S. beer market, including as a leader in the high-end segment, and continuing to seek to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth. In Fiscal 2027, we intend to continue to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization as well as invest in the next phase of modular capacity additions necessary to support our anticipated future growth. We remain focused on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.
In our wine and spirits business, we have repositioned the portfolio to exclusively higher-end brands that we believe are better positioned for long-term growth. With this portfolio and our continued focus on operational efficiencies, we remain committed to improving margins and driving growth. We intend to expand our brands across U.S. wholesale, international markets, and DTC channels (including hospitality) to maximize our total addressable market opportunity by leveraging our global, omni-channel capabilities.
For further information on our strategy, including factors that could impact our future results of operations and/or financial condition, see “Overview” within MD&A.
DIVESTITURES, ACQUISITIONS, AND INVESTMENTS
In connection with executing our strategy as outlined above, during Fiscal 2026 we completed the following transaction:
| Date | Description | ||||||||||||||
| Wine and Spirits segment | |||||||||||||||
2025 Wine Divestitures | June 2025 | Sold and, in certain instances, exclusively licensed the trademarks of a portion of our wine and spirits business, primarily centered around our then-owned mainstream wine brands and associated inventory, wineries, vineyards, offices; supported our focus on consumer-led premiumization trends and meeting the evolving needs of consumers. | |||||||||||||
For further information about our significant Fiscal 2026, Fiscal 2025, and Fiscal 2024 transactions, refer to (i) “Overview” within MD&A and (ii) Note 2.
BUSINESS SEGMENTS
We report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 2 |
| PART I | ITEM 1. BUSINESS |
We report net sales in two reportable segments, as follows:
| For the Years Ended | |||||||||||
| February 28, 2026 | February 28, 2025 | ||||||||||
| (in millions) | |||||||||||
| Beer | $ | 8,315.2 | $ | 8,539.8 | |||||||
| Wine and Spirits: | |||||||||||
| Wine | 700.4 | 1,450.1 | |||||||||
| Spirits | 123.4 | 218.8 | |||||||||
| Total Wine and Spirits | 823.8 | 1,668.9 | |||||||||
Consolidated net sales | $ | 9,139.0 | $ | 10,208.7 | |||||||
Beer segment
We are the #1 brewer and seller of imported beer in the U.S. market. We are also a leader in the high-end segment of the U.S. beer market, which includes the imported and ABA categories. We have the exclusive right to import, market, and sell our beer brands in all 50 states of the U.S., which include the following:
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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| Period ending |
| PART II | ITEM 7. MD&A |
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
We have elected to omit discussion on the earliest of the three years covered by the consolidated financial statements presented. Refer to Item 7. “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, 2025, filed on April 23, 2025, for reference to discussion of the fiscal year ended February 29, 2024, the earliest of the three fiscal years presented. This MD&A, which should be read in conjunction with our Financial Statements, is organized as follows:
Overview
This section provides a general description of our business and brief descriptions of Fiscal 2025 goodwill and trademarks impairments, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.
Strategy
This section provides a description of our strategy, including our 2025 Restructuring Initiative, and significant divestitures, acquisitions, and investments.
Results of operations
This section provides an analysis of our results of operations presented on a business segment basis. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.
Liquidity and capital resources
This section provides an analysis of our cash flows, outstanding debt, liquidity position, and commitments. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our on-going operations and future commitments, as well as a discussion of other financing arrangements.
Critical accounting policies and estimates
This section identifies accounting policies that are considered important to our results of operations and financial condition, require significant judgment, and involve significant management estimates. Our significant accounting policies, including those considered to be critical accounting policies, are summarized in Note 1.
OVERVIEW
Our internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits and we report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio comprised of exclusively higher-end wine and spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate communications, corporate development, corporate finance, corporate strategy, executive management, human resources, internal audit, investor relations, IT, legal, and public affairs, as well as our investments such as those made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 34 |
| PART II | ITEM 7. MD&A |
Goodwill impairment
In connection with continued negative trends within our Wine and Spirits business primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our then-owned mainstream and premium wine brands, management updated its Fiscal 2025 outlook and latest financial projections for this reporting unit. Based on the aforementioned factors, we performed an interim quantitative assessment, as of August 31, 2024, and a Fiscal 2025 annual quantitative assessment for goodwill impairment which resulted in a $2,740.7 million total goodwill impairment and the carrying value being written down to zero. This loss was included in goodwill and intangible assets impairment within our consolidated results for Fiscal 2025. See Notes 8, 9, and 14 for further discussion.
Trademarks impairment
In connection with the assessment of the same events and circumstances that resulted in the wine and spirits goodwill carrying value being written down to zero, we completed a quantitative assessment of our wine trademarks. As a result, we recognized a $57.0 million trademark impairment on certain then-existing held for sale wine brands. This loss was included in goodwill and intangible assets impairment within our consolidated results of operations for Fiscal 2025. See Note 8 for further discussion.
STRATEGY
Our business strategy for the Beer segment focuses on upholding our leadership position in the U.S. beer market, including as a leader in the high-end segment, and continuing to seek to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth. In Fiscal 2027, we intend to continue to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization as well as invest in the next phase of modular capacity additions necessary to support our anticipated future growth. Modular capacity addition activities continue under our Brewery Projects to align with our anticipated future growth. See “Capital Expenditures” below. Additionally, we continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.
Our business strategy for the Wine and Spirits segment continues to focus on delivering long-term growth. With our portfolio of exclusively higher-end brands and our continued focus on operational efficiencies, we remain committed to improving margins and driving growth. We intend to expand our brands across U.S. wholesale, international markets, and DTC channels (including hospitality) to maximize our total addressable market opportunity by leveraging our global, omni-channel capabilities. We have a contractual arrangement with Southern Glazer’s Wine and Spirits which consolidated our U.S. distribution and currently represents nearly 70% of our U.S. branded wine and spirits volume.
Marketing, sales, and distribution of our products are primarily managed on a geographic basis allowing us to leverage leading market positions. In addition, market dynamics and consumer trends vary across each of our markets. Within our primary market in the U.S., we offer a range of beverage alcohol products across the imported beer, ABA, and branded wine and spirits categories, with generally separate distribution networks utilized for (i) our beer portfolio and (ii) our wine and spirits portfolio. The environment for our products is competitive in each of our markets.
We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to continue to achieve comparable earnings per share growth as well as our target ratios for (i) comparable net leverage and (ii) dividend payout; investing to support the growth of our business; and delivering additional returns to stockholders through periodic share repurchases. Our results of operations and financial condition have been and may continue to be affected by the dynamic and evolving consumer environment largely driven by ongoing economic uncertainty and additional headwinds from other socioeconomic factors. These factors
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 35 |
| PART II | ITEM 7. MD&A |
may include subdued spend, depressed sentiment, value-seeking behaviors, and reductions in the discretionary income available to purchase our products among consumers, elevated unemployment, changing prices, inflation, other unfavorable global and regional economic conditions, demographic trends in the U.S., global supply chain disruptions and constraints, geopolitical events and tensions, wars, and military conflicts, including the conflict in the Middle East.
Developments in international trade relations, including significant additional changes in U.S. trade policy and actions which may include threatened, new, and increased tariffs imposed by the U.S. government on other countries, retaliatory tariffs and actions imposed on certain U.S. goods, and subsequent modifications and delays to or invalidation of various tariffs as well as associated litigation and developments have produced heightened uncertainty with respect to trade and tariff policies and regulations affecting trade between the U.S. and other countries, which could continue to alter the global trade environment. For example, the U.S. government has imposed tariffs on certain product imports, including on aluminum and aluminum derivatives, and certain other countries have implemented tariffs and other actions on U.S. goods, such as boycotts and tariffs on certain product imports originating from the U.S. imposed by the Canadian federal and some provincial governments and retaliatory tariffs in other international markets, although some of these tariffs were subsequently modified, delayed, suspended, or invalidated. Various tariffs and other actions negatively impacted our Fiscal 2026 results of operations. In April 2026, the U.S. government removed beer made from malt, which includes our beer products, from the scope of the Section 232 aluminum and aluminum derivative tariffs that had been in place at various rates since February 2025.
We expect some or all of these market conditions and their impacts to continue into Fiscal 2027 which could have a material impact on our results of operations and financial condition. We intend to continue to monitor the dynamic and evolving consumer and socioeconomic environments and their impacts on our business. In addition, we have executed the majority of the work associated the 2025 Restructuring Initiative, which is an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of our business, including through enhanced organizational efficiency and optimized expenditures across our organization. We also intend to continue our commodity and foreign exchange hedging programs. However, there can be no assurance that we will be able to adequately respond to softer consumer demand trends or fully mitigate rising costs, including as a result of new or increased tariffs, through increased selling prices, cost, productivity, efficiency, and inventory management initiatives, optimized marketing plans, and/or our commodity and foreign exchange hedging programs. Furthermore, to the extent severe weather events that impact our business, such as wildfires, droughts, floods, extreme heat, and/or late frosts, or other weather conditions that constrain purchasing occasions for our consumers, continue to occur or accelerate in future periods, it could have a material impact on our results of operations and financial condition.
2025 Restructuring Initiative
We have implemented the 2025 Restructuring Initiative which is expected to yield over $200 million in net annualized cost savings by Fiscal 2028. The majority of the work associated with the 2025 Restructuring Initiative was executed within Fiscal 2026. The 2025 Restructuring Initiative is now estimated to result in nearly $130 million of cumulative pre-tax costs once all phases are fully implemented. In connection with the 2025 Restructuring Initiative, we recognized $72.2 million of pre-tax restructuring costs in Fiscal 2026 and $121.9 million of cumulative pre-tax costs since the inception of this initiative. These costs were included in selling, general, and administrative costs within our consolidated results. For additional information on the 2025 Restructuring Initiative, see Note 3.
Divestitures, Acquisitions, and Investments
Beer segment
Mexicali Brewery sale
In July 2024, we sold the remaining assets classified as held for sale at the canceled Mexicali Brewery.
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 36 |
| PART II | ITEM 7. MD&A |
Wine and Spirits segment
2025 Wine Divestitures
On June 2, 2025, we sold and, in certain instances, exclusively licensed the trademarks of a portion of our wine and spirits business, primarily centered around our then-owned mainstream wine brands and associated inventory, wineries, vineyards, offices, and facilities. We received $845.9 million of cash proceeds, which were used for the repayment of debt.
SVEDKA Divestiture
On January 6, 2025, we sold the SVEDKA brand and related assets, primarily including inventory and equipment. We received $409.2 million of cash proceeds, which were used for general corporate purposes, including funding share repurchases, capital expenditures, and repayment of debt.
Nelson’s Green Brier investment
In October 2024, we purchased the remaining 25% noncontrolling interest in Nelson’s Green Brier, a portfolio of Tennessee-based craft bourbon and whiskey products.
Sea Smoke acquisition
In June 2024, we acquired the Sea Smoke business, including a California-based luxury wine brand, vineyards, and a production facility. This transaction also included the acquisition of goodwill, inventory, and a trademark.
These Wine and Spirits segment activities support our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumers.
Corporate Operations and Other segment
Corporate ventures investments
As of August 31, 2025, February 28, 2025, and August 31, 2024, we evaluated certain equity method investments and other securities measured at fair value, made through our corporate venture capital function, and determined there were other-than-temporary impairments due to business underperformance, for the respective periods.
Exchangeable Shares
We own 26.3 million Exchangeable Shares. As of November 30, 2024, we evaluated our Exchangeable Shares for impairment primarily due to the business and industry factors that led to the decline in Canopy’s common share price since the April 2024 conversion of our then-existing Canopy common shares and exchange of a portion of the principal amount of a then-existing promissory note issued to us by Canopy for Exchangeable Shares. Following the April 2024 conversion and exchange, we recognized an initial $83.3 million net gain based on the fair value of our Exchangeable Shares. Due to the continued decline in Canopy’s common share price, as of February 28, 2025, we evaluated our Exchangeable Shares for an additional impairment. We concluded that an impairment did exist, and accordingly, our Exchangeable Shares were written down to their estimated fair value of $21.2 million, resulting in a $76.1 million impairment for Fiscal 2025.
The total $7.2 million net gain in connection with our Exchangeable Shares was included in income (loss) from unconsolidated investments within our consolidated results for Fiscal 2025.
For additional information on these divestitures, acquisitions, and investments, refer to Notes 2, 6, 8, and 11.
RESULTS OF OPERATIONS
Financial Highlights
References to organic throughout the following discussion exclude the impacts of the 2025 Wine Divestitures and the SVEDKA Divestiture, collectively referred to as the “Wine and Spirits Divestitures,” where appropriate.
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 37 |
| PART II | ITEM 7. MD&A |
Fiscal 2026 compared to Fiscal 2025
Net sales decreased 10% largely due to (i) the loss of net sales as a result of the Wine and Spirits Divestitures, (ii) a decrease in Beer net sales driven primarily by a shipment volume decline; partially offset by a favorable impact from pricing, and (iii) a decline in organic Wine and Spirits net sales led by a shipment volume decline.
Operating income increased largely due to (i) Fiscal 2025 Wine and Spirits-related impairments, including goodwill, trademarks, and then-existing assets held for sale, and (ii) continued successful execution of efficiency and cost optimization initiatives within the Beer segment, partially offset by (i) net sales declines in both the Wine and Spirits and Beer segments, (ii) the Fiscal 2025 net gain related to the SVEDKA Divestiture, and (iii) Fiscal 2026 losses associated with asset impairment and related expenses.
Net income (loss) attributable to CBI and diluted net income (loss) per common share attributable to CBI each increased largely due to the items discussed above and a decrease in interest expense, partially offset by a Fiscal 2026 provision for income taxes as compared to a Fiscal 2025 benefit from income taxes.
Comparable Adjustments
Management excludes items that affect comparability from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating income (loss) which does not include the impact of these Comparable Adjustments.
As more fully described herein and in the related Notes, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows:
| Fiscal 2026 | Fiscal 2025 | |||||||||||||
| (in millions) | ||||||||||||||
| Cost of product sold | ||||||||||||||
| Net gain (loss) on undesignated commodity derivative contracts | $ | 23.6 | $ | (0.3) | ||||||||||
| Settlements of undesignated commodity derivative contracts | 3.4 | 26.8 | ||||||||||||
| Strategic business reconfiguration costs | (4.8) | (10.7) | ||||||||||||
| Flow through of inventory step-up | (4.1) | (10.2) | ||||||||||||
| Other gains (losses) | — | 0.6 | ||||||||||||
| Comparable Adjustments, Cost of product sold | 18.1 | 6.2 | ||||||||||||
| Selling, general, and administrative expenses | ||||||||||||||
2025 Restructuring Initiative | (72.2) | (49.7) | ||||||||||||
| Transition services agreements activity | (35.7) | (22.6) | ||||||||||||
Strategic business reconfiguration costs | (10.4) | (29.6) | ||||||||||||
Chief Executive Officer severance and transitions benefits | (7.8) | — | ||||||||||||
| Other gains (losses) | 27.9 | (14.6) | ||||||||||||
| Comparable Adjustments, Selling, general, and administrative expenses | (98.2) | (116.5) | ||||||||||||
| Goodwill and intangible assets impairment | — | (2,797.7) | ||||||||||||
Asset impairment and related expenses | (109.8) | (478.0) | ||||||||||||
| Gain (loss) on sale of business | (31.9) | 266.0 | ||||||||||||
| Comparable Adjustments, Operating income (loss) | $ | (221.8) | $ | (3,120.0) | ||||||||||
Comparable Adjustments, Income (loss) from unconsolidated investments | $ | (10.1) | $ | (49.3) | ||||||||||
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 38 |
| PART II | ITEM 7. MD&A |
Cost of product sold
Undesignated commodity derivative contracts
Net gain (loss) on undesignated commodity derivative contracts represents a net gain (loss) from the changes in fair value of undesignated commodity derivative contracts. The net gain (loss) is reported outside of segment operating results until such time that the underlying exposure is recognized in the segment operating results. At settlement, the net gain (loss) from the changes in fair value of the undesignated commodity derivative contracts is reported in the appropriate operating segment, allowing the results of our operating segments to reflect the economic effects of the commodity derivative contracts without the resulting unrealized mark to fair value volatility.
Strategic business reconfiguration costs
We recognized costs primarily in connection with losses on write-downs of excess inventory resulting from our initiatives to streamline, increase efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment.
Flow through of inventory step-up
In connection with acquisitions, the allocation of purchase price in excess of book value for certain inventories on hand at the date of acquisition is referred to as inventory step-up. Inventory step-up represents an assumed manufacturing profit attributable to the acquired business prior to acquisition.
Selling, general, and administrative expenses
2025 Restructuring Initiative
We recognized costs in connection with an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of our business.
Transition services agreements activity
We recognized costs in connection with transition services agreements related to the previous sales of portions of our wine and spirits business.
Strategic business reconfiguration costs
We recognized costs in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure.
Chief Executive Officer severance and transition benefits
We recognized costs primarily in connection with severance benefits in accordance with the terms of a pre-existing employment agreement.
Other gains (losses)
We recognized other gains (losses) primarily from (i) net decreases in estimated fair values of contingent liabilities associated with prior period acquisitions, (ii) a net gain from the sale of assets (Fiscal 2026), and (iii) a net loss on foreign currency as a result of the resolution of various tax examinations and assessments (Fiscal 2025).
Goodwill and intangible assets impairment
We recognized goodwill and intangible assets impairments in connection with continued negative trends within our Wine and Spirits business primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our then-owned mainstream and premium wine brands. For additional information, refer to Notes 8, 9, and 14.
Asset impairment and related expenses
Largely in connection with (i) the commitment to dismantling and abandonment of certain aged long-lived assets at the Obregón Brewery (Fiscal 2026), (ii) the 2025 Wine Divestitures we recognized contract liabilities and inventory obsolescence expenses, partially offset by changes in then-existing net assets held for sale (Fiscal 2026), and
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 39 |
| PART II | ITEM 7. MD&A |
(iii) certain then-existing wine and spirits assets that met held for sale criteria (Fiscal 2025). For additional information, refer to Notes 2, 6, and 8.
Gain (loss) on sale of business
We recognized a net gain (loss) largely from the (i) 2025 Wine Divestitures (Fiscal 2026) and (ii) SVEDKA Divestiture (Fiscal 2025). For additional information, refer to Note 2.
Income (loss) from unconsolidated investments
We recognized income (loss) primarily from (i) unrealized net losses from the changes in fair value of our securities measured at fair value, (ii) impairments of certain other equity method investments, and (iii) a net gain in connection with our Exchangeable Shares (Fiscal 2025). For additional information, refer to Notes 8 and 11.
Business Segments
Net sales
| Fiscal 2026 | Fiscal 2025 | Dollar Change | Percent Change | |||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Beer | $ | 8,315.2 | $ | 8,539.8 | $ | (224.6) | (3 | %) | ||||||||||||
| Wine and Spirits: | ||||||||||||||||||||
| Wine | 700.4 | 1,450.1 | (749.7) | (52 | %) | |||||||||||||||
| Spirits | 123.4 | 218.8 | (95.4) | (44 | %) | |||||||||||||||
| Total Wine and Spirits | 823.8 | 1,668.9 | (845.1) | (51 | %) | |||||||||||||||
| Consolidated net sales | $ | 9,139.0 | $ | 10,208.7 | $ | (1,069.7) | (10 | %) | ||||||||||||
| Beer segment | Fiscal 2026 | Fiscal 2025 | Dollar Change | Percent Change | |||||||||||||||||||
| (in millions, branded product, 24-pack, 12-ounce case equivalents) | |||||||||||||||||||||||
| Net sales | $ | 8,315.2 | $ | 8,539.8 | $ | (224.6) | (3 | %) | |||||||||||||||
| Shipments | 415.4 | 431.8 | (3.8 | %) | |||||||||||||||||||
Depletions | (2.1 | %) | |||||||||||||||||||||
The decrease in Beer net sales is due to a (i) $323.0 million decline in shipment volume and (ii) $29.8 million of unfavorable product mix primarily from a shift in package types, partially offset by $128.2 million of favorable impact from pricing in select markets. We believe our net sales were impacted by the economic uncertainty and socioeconomic factors discussed above. We expect shipment volume to generally align with depletion volume for Fiscal 2027.
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 40 |
| PART II | ITEM 7. MD&A |
| Wine and Spirits segment | Fiscal 2026 | Fiscal 2025 | Dollar Change | Percent Change | |||||||||||||||||||
| (in millions, branded product, 9-liter case equivalents) | |||||||||||||||||||||||
| Net sales | $ | 823.8 | $ | 1,668.9 | $ | (845.1) | (51 | %) | |||||||||||||||
| Shipments | |||||||||||||||||||||||
| Total | 8.3 | 22.1 | (62.4 | %) | |||||||||||||||||||
Organic (1) (2) | 8.3 | 8.9 | (6.7 | %) | |||||||||||||||||||
| U.S. Wholesale | 6.3 | 19.2 | (67.2 | %) | |||||||||||||||||||
Organic U.S. Wholesale (1) (2) | 6.3 | 6.8 | (7.4 | %) | |||||||||||||||||||
Depletions (1) (2) | (4.3 | %) | |||||||||||||||||||||
(1)Includes adjustments to remove volumes associated with the SVEDKA Divestiture for the period March 1, 2024, through January 5, 2025.
(2)Includes adjustments to remove volumes associated with the 2025 Wine Divestitures for the period June 2, 2024, through February 28, 2025.
The decrease in Wine and Spirits net sales is due to $711.2 million from the Wine and Spirits Divestitures that are no longer part of our business and a $133.9 million decrease in organic net sales. The decrease in organic net sales is driven by (i) a $43.0 million decrease in branded wine and spirits shipment volume, (ii) $38.9 million of unfavorable product mix, (iii) $30.0 million of lower contractual distributor payments as compared to Fiscal 2025, and (iv) a $17.6 million decrease from strategic pricing actions taken on certain brands. The decrease in branded wine and spirits shipment volume and unfavorable mix are primarily attributable to our U.S. wholesale market, including the change in cadence of shipments to better align with consumer demand following the shift to a portfolio of exclusively higher-end brands. Additionally, we believe our branded wine and spirits shipment volume was negatively impacted by both tariffs imposed by the U.S. government and by retaliatory tariffs and actions in certain international markets. For Fiscal 2027, we expect depletion volume to outpace shipment volume driven by mutually agreed upon inventory reductions with key distributors following the 2025 Wine Divestitures.
Gross profit
| Fiscal 2026 | Fiscal 2025 | Dollar Change | Percent Change | |||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Beer | $ | 4,361.5 | $ | 4,566.1 | $ | (204.6) | (4 | %) | ||||||||||||
| Wine and Spirits | 331.9 | 742.3 | (410.4) | (55 | %) | |||||||||||||||
| Comparable Adjustments | 18.1 | 6.2 | 11.9 | NM | ||||||||||||||||
| Consolidated gross profit | $ | 4,711.5 | $ | 5,314.6 | $ | (603.1) | (11 | %) | ||||||||||||
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 41 |
| PART II | ITEM 7. MD&A |
Gross profit as a percent of net sales decreased to 51.6% for Fiscal 2026 compared with 52.1% for Fiscal 2025. This decrease was largely due to rate decline of (i) 185 basis points and approximately 20 basis points from higher cost of product sold within the Beer and Wine and Spirits segments, respectively, (ii) approximately 30 basis points as a result of lower contractual distributor payments and strategic pricing actions within the Wine and Spirits segment, and (iii) 20 basis points of lower organic branded Wine and Spirits shipment volume. These declines were largely offset by rate growth of (i) approximately 110 basis points driven by divestitures of lower-margin brands, (ii) 75 basis points of favorable impact from beer pricing, and (iii) a favorable change in Comparable Adjustments, contributing 15 basis points.
Selling, general, and administrative expenses
| Fiscal 2026 | Fiscal 2025 | Dollar Change | Percent Change | |||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Beer | $ | 1,200.5 | $ | 1,171.7 | $ | 28.8 | 2 | % | ||||||||||||
| Wine and Spirits | 321.4 | 417.2 | (95.8) | (23 | %) | |||||||||||||||
| Corporate Operations and Other | 228.3 | 244.6 | (16.3) | (7 | %) | |||||||||||||||
| Comparable Adjustments | 98.2 | 116.5 | (18.3) | NM | ||||||||||||||||
| Consolidated selling, general, and administrative expenses | $ | 1,848.4 | $ | 1,950.0 | $ | (101.6) | (5 | %) | ||||||||||||
Selling, general, and administrative expenses as a percent of net sales increased to 20.2% for Fiscal 2026 as compared with 19.1% for Fiscal 2025. The increase is driven by (i) approximately 145 basis points of unfavorable impact from the Wine and Spirits Divestitures and (ii) approximately 70 basis points of rate growth from higher Beer
Constellation Brands, Inc. FY 2026 Form 10-K | #WORTHREACHINGFOR I 42 |
| PART II | ITEM 7. MD&A |
selling, general, and administrative expenses coupled with the decline in Beer net sales, partially offset by (i) approximately 70 basis points and 15 basis points of rate decline from decreases in selling, general, and administrative expenses within the Wine and Spirits and Corporate Operations and Other segments, respectively, and (ii) a favorable change in Comparable Adjustments, contributing 20 basis points of rate decline.
Operating income (loss)
| Fiscal 2026 | Fiscal 2025 | Dollar Change | Percent Change | |||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Beer | $ | 3,161.0 | $ | 3,394.4 | $ | (233.4) | (7 | %) | ||||||||||||
| Wine and Spirits | 10.5 | 325.1 | (314.6) | (97 | %) | |||||||||||||||
| Corporate Operations and Other | (228.3) | (244.6) | 16.3 | 7 | % | |||||||||||||||
| Comparable Adjustments | (221.8) | (3,120.0) | 2,898.2 | NM | ||||||||||||||||
| Consolidated operating income (loss) | $ | 2,721.4 | $ | 354.9 | $ | 2,366.5 | 667 | % | ||||||||||||
Income (loss) from unconsolidated investments
| Fiscal 2026 | Fiscal 2025 | Dollar Change | Percent Change | |||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Equity in earnings (losses) from other equity method investees and related activities | $ | 15.5 | $ | 23.1 | $ | (7.6) | (33 | %) | ||||||||||||
| Unrealized net gain (loss) on securities measured at fair value | (5.0) | (47.9) | 42.9 | 90 | % | |||||||||||||||
| Equity method investments impairment | (1.5) | (8.7) | 7.2 | 83 | % | |||||||||||||||
| Net gain in connection with Exchangeable Shares | — | 7.2 | (7.2) | NM | ||||||||||||||||
Income (loss) from unconsolidated investments | ||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-05-12 | Bourdeau James O. | EVP and Senior Advisor | Sell | -4,407 | $143.24 | -$631,259 |
| 2026-04-27 | Hernandez Ernesto M | Director | Sell | -2,000 | $153.91 | -$307,830 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-07-02 10-Q expected by 2026-07-07 (in 33 days)
- ~2026-10-07 10-Q expected by 2026-10-12 (in 130 days)
- ~2027-01-08 10-Q expected by 2027-01-13 (in 223 days)
- ~2027-04-21 10-K expected by 2027-04-27 (in 326 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-21 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-06 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
- 2026-05-05 8-K Other Events; Financial Statements and Exhibits
- 2026-05-05 424B2 Prospectus Supplement
- 2026-04-22 10-K Annual Report
- 2026-04-08 8-K Earnings Release; Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
- 2026-02-12 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-01-08 10-Q Quarterly Report
- 2026-01-07 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-07 8-K Other Events; Financial Statements and Exhibits
- 2025-10-17 8-K Material Agreement Terminated; Other Events; Financial Statements and Exhibits
- 2025-10-16 8-K Other Events; Financial Statements and Exhibits
- 2025-10-07 10-Q Quarterly Report
- 2025-10-06 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-02 8-K Officer/Director Change; Bylaws/Articles Amended; Regulation FD Disclosure; Financial Statements and Exhibits