Constellation Brands
Annual Report 2013

Plain-text annual report

WE’RE pouring IT ON 2013 SUMMARY ANNUAL REPORT FISCAL 2013 AWARD WINNERS BUILDING BRANDS THAT PEOPLE TOP 30 Momentum Beer Brands* TOP 30 Momentum Table Wine Brands* TOP 20 NEW Table Wine Brands* For a complete listing of all of our awards visit www.cbrands.com/about-us/awards *SymphonyIRI channels, 2012 FELLOW SHAREHOLDERS, Our strategic journey to achieve profitable organic growth has reached an exciting, and extremely fulfilling, milestone. Fiscal 2013 was a watershed year for Constellation Brands as we delivered on our promise to create shareholder value. We also set in motion a transaction in the beer industry that will become the most transformational acquisition in the history of our company − solidifying our leadership position in the U.S. beer market for years to come. Our investors have responded with resounding confidence, causing our stock value to more than double from this time a year ago. What’s most rewarding about this landmark progress is that it is built on a solid and sustainable foundation of operational excellence, financial strength and breakthrough innovation that took talent, vision and firm resolve to achieve. And all credit for this lies squarely with our people. Dedicated to our vision, mission and upholding our values, our employees prove year-in and year-out that success is earned, not given − and anything worth achieving requires a willingness to consistently go above and beyond. Today we celebrate the remarkable early rewards of our hard work and express our deepest appreciation to you, our shareholders. Your ongoing support has enabled Constellation Brands to confidently stay steady and disciplined in pursuit of measurable long-term growth. This Summary Annual Report proudly showcases the impressive accomplishments that propelled our extraordinary progress in fiscal 2013. Looking ahead, we will continue to do what we do best − build brands that people love, enrich the communities where we live and work, and strive to bring value to our shareholders. Stay tuned for a pioneering future that’s even more exceptional than our storied past. Cheers! Richard Sands Chairman of the Board CHAIRMAN’S LETTER A TOAST TO growth Richard Sands Chairman of the Board 1 CONSTELLATION BRANDS / Summary Annual Report / 2013CHIEF EXECUTIVE OFFICER’S LETTER FROM PROMISE TO PROVEN performance FELLOW SHAREHOLDERS, On all fronts, fiscal 2013 was an extraordinary year. Constellation Brands evolved from a position of great promise to one of proven performance. We executed our key strategic goals and initiatives − and further strengthened the underlying health of the company. We also achieved powerful growth milestones that reinforce the credibility and foresight of our long-term strategy − showcasing what’s possible with passionate leadership, accountability and perseverance. Through our multi-year efforts to pursue organizational efficiencies, we were well positioned in fiscal 2013 to invest strategically in new products and brand-building activities, particularly for our U.S. wine and spirits business. These investments were carefully guided by groundbreaking research in consumer and shopper insights that revealed changing taste preferences for more fruit forward and easier drinking wines. In response, we targeted our new product developments in high-growth categories like moscato, malbec and sweet red blends. As a result, we were able to successfully launch approximately 50 new items, including new brands, product line extensions and packaging innovations. These launches were fully supported by innovative multi-media marketing campaigns and promotions, with more merchandising displays than ever before, which drove new points of distribution. Consequently, our products, particularly our new brands and Focus Brands, enjoyed a positive response from consumers and strong sales that garnered numerous awards and recognition from prominent industry publications. We also acquired Mark West, a top-selling pinot noir brand and an outstanding addition to our portfolio. Mark West posted double-digit depletion and marketplace growth, well exceeding the pinot noir category. And of course, we can’t forget our “crowning” achievement that propelled our stock value to increase by more than 100% in a single year. In fiscal 2013, we announced our intention to purchase the remaining 50% interest in Crown Imports, as well as a state-of-the-art brewery in Mexico, which over time will produce all our Mexican beers for the U.S. market. This agreement also gives us the perpetual brand rights for the Modelo portfolio currently sold in the U.S., which includes five of the top 25 imported beer brands (Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico).* I am thrilled to share that in April 2013, we received clearance from the U.S. Department of Justice to proceed with the acquisition, paving the way for what I am sure will be a game-changing fiscal 2014 for Constellation Brands as we secure our position as the #1 multi-category supplier of wine, beer and spirits in the FISCAL 2013 HIGHLIGHTS GAINED market share collectively across all channels in U.S. Wine and Spirits, and for wine in Canada LAUNCHED more than 50 new brands, product line extensions and packaging innovations BEST PERFORMING S&P500® Consumer Staples Stock of calendar year 2012 GARNERED more brand awards and industry recognition than ever before BEER ACQUISITION paves the way to become 3rd largest importer and brewer for the U.S. market WON Cheers Supplier of the Year Award in the “Best Large Wine Company” category for second year in a row 2 *Beverage Information Group, 2012 U.S. and fully capitalize on our exciting new position as the #3 beer company for the U.S. market. The following pages provide a closer look at our fiscal 2013 highlights across our wine, spirits and beer categories, as well as a review of our latest Corporate Social Responsibility efforts. I want to personally thank you for your support of our company, our leadership, our employees and our brands. We’re extremely proud that our fiscal 2013 results yielded the shareholder value we have worked so hard to achieve. And we want to assure you that while we’ve reached this important milestone, the journey is far from over. Our long-term strategy remains firmly focused on building brands to grow revenue faster than the market, applying rigorous financial discipline and building the best organization. It’s an exciting time to be a part of Constellation Brands. We’re grateful you’ve chosen to be an invested partner with us as we fulfill our mission to build brands that people love. Rob Sands President & Chief Executive Officer In fiscal 2013, we paved the way for what I am sure will be a game-changing fiscal 2014 for Constellation Brands as we solidify our position as the third-largest total beverage alcohol company in the U.S. and fully capitalize on our exciting new position as the #3 beer company for the U.S. market. Rob Sands President and CEO CONSTELLATION BRANDS / Summary Annual Report / 2013 3 3 CONSTELLATION BRANDS / Summary Annual Report / 2013New Packaging & Formats wine & spirits GET THE PARTY STARTED Throughout fiscal 2013, our U.S. wine and spirits business benefited from ongoing consumer trade- up trends, positive mix, distribution gains at retail and great consumer response to our new product introductions. We outperformed the U.S. wine and spirits category, driving excellent marketplace momentum and above-market depletion trends across our entire U.S. portfolio. Our collection of award-winning Focus Brands, including Kim Crawford, Robert Mondavi, SIMI, Ruffino, Mark West, Black Box and Rex Goliath, experienced double-digit depletion growth for the year. Our new brands, including Simply Naked, Primal Roots and The Dreaming Tree also delivered solid sales and depletion trends and captured industry growth awards for calendar year 2012. And our new Rex-Goliath Free Range Red won the 2012 Best Red Wine under $8 from the World Value Wine Challenge Competition. Top 20 New Table Wine Brands* Both new brands launched in Fiscal 2013 were top U.S. performers 7# 10# 4 * SymphonyIRI channels, 2012; Beverage Information Group, 2012 New Brands Today, more than 5% of our U.S. sales come from new products. INNOVATION YIELDS PIPELINE OF IMMEDIATE CONSUMER FAVORITES NEW PACKAGING & FORMATS NEW BRANDS LINE EXTENSIONS We also increased national advertising support for certain key brands like Kim Crawford, which launched its Undo Ordinary media print campaign centered on art and fashion lifestyles. Kim Crawford recently surpassed the 1-million-case mark in global sales, which is a great new milestone for this popular brand. Our brands also became TV stars in fiscal 2013, as we aired many new high-impact commercials supporting our fast-growing Black Box, Simply Naked, Jackson- Triggs and SVEDKA vodka brands, as well as our largest brand, Woodbridge by Robert Mondavi. Heading into fiscal 2014, the overarching strategy for our wine and spirits business is to maintain our strong marketplace momentum and pursue market share gains by: 1. Keeping our big brands healthy 2. Continuing our focus on innovation and new products 3. Investing further in our high-growth Focus Brands Line Extensions 5 CONSTELLATION BRANDS / Summary Annual Report / 2013Promotions Social Media Campaigns targeted INVESTMENTS Advertising and promotions return exceptional results for new and established brands Retail Displays & Promotions Special Events National Advertising 6 2# Imported Vodka in U.S.* T H I S I S W H AT GREAT TASTE L O O K S L I K E 7# U.S. Spirits Brand* iNTroDuciNg ThE NEW looK of SVEDKA flAVorS SVEDKA Citron, SVEDKA Clementine, SVEDKA Raspberry, SVEDKA Cherry, SVEDKA Vanilla Y. N , k r o Y w e N , e n O e u q r a M s t i r i p S 3 1 0 2 © Y. L B I S N O P S E R Y A L P SVEDKA is one of the fastest-growing major vodka brands in the U.S., with solid double-digit market growth. Must-have bottle skins like the Stars & Stripes version create enhanced visibility for SVEDKA, and the newest Strawberry Colada and Orange Cream Pop flavors continue to draw new consumers to the iconic brand. SVEDKA AND BLACK VELVET shake things up BLACK VELVET capitalized on the hot growth trend of flavored whiskys with the launch of Black Velvet Toasted Caramel. Responding to growing consumer interest in mixology, food pairings and the combining of ingredients, Black Velvet Toasted Caramel offers a distinctive flavor that is selling well and has contributed to double-digit market growth for the entire Black Velvet brand. Coming soon: Black Velvet Cinnamon Rush. 2# Brand in the Canadian Whisky Category* 90 P OI N T S G OL D M E DA L B E V E R AGE T E S T I NG I NS T I T U T E I n t e r n a t i o n a l R e v i e w o f S p i r i t s A w a rd "Golden c olor. A romas of c aramel c orn, maple syrup in oa tmeal, and hazelnu t spread on toas t w ith a supple, modera tely swee t medium - to -full body and a long maple sugar, tof feed nuts, minerals, bu t ter s c otch and p epp er y spic e finish. Flavor ful and fun." b l a c k v e l v e t w h i s k y . c o m fa c e b o o k . c o m / b l a c k v e l v e t IT’S THAT GOOD. YEAH, e m u l o V y b l o h o c l A % 5 3 Y N , a u g i a d n a n a C . y l b i , s n o p s e r . o C t r o p m I t e v l e V t e v l e V k c a l B y b k c a l B y o j n e d e t r o p m I e s a e l P 3 1 0 2 © top 25 Spirits Brand* *Beverage Information Group, calendar year 2012 7 CONSTELLATION BRANDS / Summary Annual Report / 2013 CROWN IMPORTS creates AN UNQUENCHABLE THIRST FOR BEER Crown Imports had another exceptional year, driving record sales for Modelo Especial, Corona Light, Negra Modelo and Pacifico, while posting positive depletion trends for all major Modelo brands. Overall, the business grew depletions in fiscal 2013, outperforming U.S. beer market trends. While draft represents only a small part of the Crown overall volume, depletions grew almost 60% for this format, increasing brand recognition for Corona Light, Modelo Especial, Negra Modelo, Pacifico and Victoria. This is the third consecutive year that Crown has outperformed the import and total U.S. beer categories, demonstrating its mastery of brand marketing programs, execution at retail and talent for creating strong relationships with distributors. We will work to accelerate this momentum even further in fiscal 2014, once again targeting sales and depletions to exceed the U.S. beer industry and import trends. LARGEST imported beer company in U.S. THIRD LARGEST U.S. beer company overall FIVE of top 25 imported beer brands Data source: Beverage Information Group, 2012, unless otherwise specified 8 Modelo Especial, Corona Light and Pacifico received Impact Magazine’s Blue Chip Brand Awards for 2012. CORONA EXTRA continued to blaze new trails through marketing investments with sports properties that are strategic for the brand, like the National Football League, Major League Baseball, the National Basketball Association and NCAA basketball. • #1 imported beer in U.S., #6 beer brand overall CORONA LIGHT strengthened its identity with the new “Refreshing Change of Beer” advertising campaign that is motivating consumers to trade up from domestic lights. Overall, Corona Light outpaced the premium light category and grew across all major geographies. • #1 imported light beer in U.S., #7 imported beer Corona Extra & Corona Light were finalists for outstanding effectiveness in marketing communications MODELO ESPECIAL achieved a new milestone in calendar year 2012, surpassing 40 million cases in depletions. • #1 momentum beer brand (SymphonyIRI channels, 2012) • #2 import beer in the U.S. based on volume (SymphonyIRI convenience store channel, 2012) • #3 imported beer in U.S. • Depletion growth trend of 20% – equals more than 7 million cases of growth in a single year • Market Watch magazine’s Leaders’ Choice Award for “Beer Brand of the Year” and Hot Brand Award winner for 19th consecutive year Corona Extra exceeded the 100-million-case mark for the year – the only imported brand in the U.S. to achieve this sales milestone. 9 CONSTELLATION BRANDS / Summary Annual Report / 2013ENRICHING THE COMMUNITIES WE love In addition to the tremendous shareholder value we cultivated in fiscal 2013, Constellation Brands and its employees also made remarkable progress in building community value through our support of Social Responsibility, Giving and Sustainability programs. SOCIAL RESPONSIBILITY “WE DON’T SERVE TEENS” Constellation Brands and Crown Imports proudly and actively supported the “We Don’t Serve Teens” campaign to prevent underage drinking in our respective headquarter locations in Victor, NY and Chicago, IL. This national campaign is coordinated by the Federal Trade Commission and supported by a coalition of public and private organizations, including DISCUS, the Century Council, WSWA and the Beer Institute. TIPS EMPLOYEE TRAINING All Crown Imports employees are required to attend Training for Intervention Procedures (TIPS) for the Workplace. TIPS provides critical skills for addressing problem situations involving alcohol in the trade and how to avoid such problems before they happen, including intoxication, drunk driving and underage drinking. CROWN IMPORTS PROMOTES SAFE CINCO DE MAYO CELEBRATIONS Crown Imports’ employees distributed free Chicago Transit Authority (CTA) cards in Chicago and free Metro fare cards in Washington, DC to area bars and taverns to provide patrons with a safe ride home after Cinco de Mayo celebrations. 10 GIVING CROWN IMPORTS’ GENEROSITY Our excitement about becoming the sole owner of Crown Imports extends far beyond the business benefits. Like Constellation Brands, Crown and its employees share a deep personal commitment to give back to the community and we are privileged to have them join our team. In fiscal 2013, Crown and its employees raised hundreds of thousands of dollars to support special causes, collected thousands of pounds of food, clothing and other items for those in need, and donated hundreds of volunteer hours to give a hand to those less fortunate. NEW ZEALAND WINE INDUSTRY SCHOLARSHIP PROGRAM We announced the introduction of new scholarships to support the development of the New Zealand wine industry. The scholarships are intended to add value to the New Zealand wine industry by supporting students interested in developing a career in the business. The program includes four scholarships open to students studying viticulture and oenology at local universities, and five scholarships available to family members of employees. EMPLOYEE MATCH PROGRAM SUPPORTS HURRICANE SANDY RELIEF EFFORTS Constellation Brands matched every employee donation to the American Red Cross Hurricane Sandy Relief Fund, 2-to-1 up to $100,000, yielding a final donation of $191,000. Overall, our total Employee Match program for employee and company contributions reached nearly $500,000 since the program began in fiscal 2012. SUMMER CONCERTS BRING FUN & VITAL COMMUNITY FUNDING The 2012 summer concert series held at Jackson- Triggs’ Niagara Estate Winery (Canada), Robert Mondavi Winery (California) and Constellation Brands-Marvin Sands Performing Arts Center (New York) provided award-winning musical lineups and collectively raised more than $100,000 to support worthy causes in their respective communities. 11 CONSTELLATION BRANDS / Summary Annual Report / 2013SUSTAINABILITY 12 WETLANDS STEWARDSHIP AT TURNER ROAD VINTNERS Our Turner Road Vintners winery in California works hard to provide wetlands habitat for the benefit of local wildlife. The wetlands restoration efforts, which include the installation of process water ponds, improve water quality and reduce water use. CONSTELLATION BRANDS RECEIVES SUSTAINABILITY INNOVATION AWARD FROM SAM’S CLUB The award was given in recognition of our best practices regarding sustainable fertilization and vineyard fertilizer use. Constellation Brands was selected to be one of three presenters (from 30 industry and sustainability subject matter expert submissions) at the Adult Beverage Sustainability Summit hosted by Sam’s Club. In addition, participating wineries were rated by Walmart’s Sustainability Index Scorecard – and Constellation Brands ranked #4 out of 20. ROBERT MONDAVI WINERY BEGINS FOOD COMPOSTING PROGRAM Through its partnership with the Upper Valley Recycling Food Composting Program, Robert Mondavi Winery began collecting all clean food waste from the Vineyard Room’s kitchen to be composted. In November and December of 2012 alone, the winery sent 1.24 tons of clean food waste to be recycled. CLOS DU BOIS HOSTS FISH FRIENDLY FARMING ENVIRONMENTAL AWARDS Constellation Brands hosted a reception at Clos du Bois to honor the recipients of the 2012 Fish Friendly Farming (FFF) Environmental Awards, and won the following: • Robert Mondavi Winery −“Outstanding Efforts in Stream Habitat Improvement and Restoration” • SIMI −“Light Touch Vineyard Development and Operations” • Constellation Brands – All lands certified in the FFF program • Keith Horn, Director, North Coast Vineyards and President, California Land Stewardship Institute − “Leadership in Environmental Stewardship” FINANCIAL HIGHLIGHTS For the Years Ended February 28 or 29 (in millions, except per share data) INCOME STATEMENT REPORTED RESULTS Sales Net sales Operating income Equity in earnings of equity method investees Net income (loss) Diluted earnings (loss) per share INCOME STATEMENT COMPARABLE RESULTS Net sales Operating income Equity in earnings of equity method investees Net income Diluted earnings per share CASH FLOW DATA 2013 2012 2011 2010 2009 $ 3,171.4 $ 2,979.1 $ 4,096.7 $ 4,213.0 $ 4,723.0 2,796.1 2,654.3 3,332.0 3,364.8 3,654.6 522.9 233.1 387.8 2.04 486.5 228.5 445.0 2.13 502.5 243.8 559.5 2.62 311.5 213.6 99.3 0.45 29.6 186.6 (301.4) (1.40) $ 2,796.1 $ 2,654.3 $ 3,332.0 $ 3,364.8 $ 3,654.6 556.7 234.1 415.9 2.19 540.0 228.5 487.8 2.34 533.7 244.4 408.0 1.91 560.2 239.0 373.3 1.69 604.6 269.9 351.3 1.60 Net cash provided by operating activities $ 556.3 $ 784.1 $ 619.7 $ 402.6 $ 506.9 Purchases of property, plant and equipment Free cash flow (62.1) 494.2 (68.4) 715.7 (89.1) 530.6 (107.7) 294.9 (128.6) 378.3 Comparable financial results are provided because the Company believes this information provides investors better insight into underlying business trends and results in order to evaluate year-over-year financial performance. Management uses this information in evaluating the results of continuing operations of the Company and internal goal setting. The comparable financial results primarily reflect the exclusion of the following items: the flow through of inventory step-up associated with acquisitions; accelerated depreciation; write-down of inventory; loss on the adjustment of certain inventory, primarily Australian, related to prior years; transaction and related costs associated with pending and completed acquisitions; net (gains)/losses on sale of 80.1% of the Australian and U.K. business; (gain)/loss on sale of certain Pacific Northwest wine brands; net (gain)/loss on sale of certain other nonstrategic assets/business; certain other selling, general and administrative costs; gains in connection with releases from certain contractual obligations; net gains on acquisition of Ruffino; (gain)/loss on obligations from put options of Ruffino shareholders; net (gain)/loss on March 2009 sale of the value spirits business; acquisition-related integration costs; restructuring charges and other related costs; impairment of certain goodwill, intangible assets and equity method investments; an equity method investee’s transaction costs associated with a pending acquisition; loss on write-off of financing costs; valuation allowance against deferred tax assets in the U.K.; and income tax expense for gain on settlement of certain foreign currency economic hedges. The impact of excluding these items from the comparable financial results for: operating income totaled $33.8 for 2013, $53.5 for 2012, $31.2 for 2011, $248.7 for 2010 and $575.0 for 2009; equity in earnings of equity method investees totaled $1.0 for 2013, $0.6 for 2011, $25.4 for 2010 and $83.3 for 2009; net income totaled $28.1 for 2013, $42.8 for 2012, ($151.5) for 2011, $274.0 for 2010 and $652.7 for 2009; diluted earnings per share totaled $0.15 for 2013, $0.21 for 2012, ($0.71) for 2011, $1.24 for 2010 and $3.00 for 2009. Net income and diluted earnings per share amounts on a comparable basis are net of income taxes at a rate of 26.2% for 2013, 17.0% for 2012, 30.0% for 2011, 30.1% for 2010 and 36.3% for 2009. “Free cash flow,” as defined in the reconciliation above, is considered a liquidity measure and provides useful information to investors about the amount of cash generated, which can then be used, after required debt service and dividend payments, for other general corporate purposes. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Free cash flow should be considered in addition to, not as a substitute for, or superior to, cash flow from operating activities prepared in accordance with U.S. generally accepted accounting principles. 13 CONSTELLATION BRANDS / Summary Annual Report / 2013 PERFORMANCE GRAPH Set forth below is a line graph comparing, for the fiscal years ended the last day of February 2009, 2010, 2011, 2012 and 2013 the cumulative total stockholder return of the Company’s Class A Common Stock and Class B Common Stock, with the cumulative total return of the S&P 500 Index, and a peer group index (the “Peer Group Index”) (see footnote(1) to the graph). The Peer Group Index consists of the companies which comprised the Company’s executive compensation peer group as of the conclusion of its fiscal year ended February 28, 2013. The graph assumes the investment of $100.00 on February 29, 2008 in the Company’s Class A Common Stock, the Company’s Class B Common Stock, the S&P 500 Index, and the Peer Group Index, and also assumes the reinvestment of all dividends. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN $250 $200 $150 $100 $50 $0 2/08 2/09 2/10 2/11 2/12 2/13 Constellation Brands, Inc. Class A Constellation Brands, Inc. Class B S&P 500 Peer Group(1) 2/08 2/09 2/10 2/11 2/12 2/13 Constellation Brands, Inc. Class A $ 100.00 $ 67.93 $ 78.29 $ 105.78 $ 113.69 $ 230.30 Constellation Brands, Inc. Class B S&P 500 Peer Group(1) 100.00 100.00 100.00 68.54 56.68 64.48 76.82 87.07 99.41 105.05 106.72 125.85 113.85 112.19 154.63 231.25 127.29 179.89 (1) The Peer Group Index is weighted according to the respective issuer’s stock market capitalization and is comprised of the following companies: Beam, Inc.; Brown-Forman Corporation (Class B Shares); Campbell Soup Company; Church & Dwight Co., Inc.; The Clorox Company; Coach, Inc.; Diageo plc.; Dr. Pepper Snapple Group, Inc.; Energizer Holdings, Inc.; The Estée Lauder Companies Inc.; Harley-Davidson, Inc.; H.J. Heinz Company; The Hershey Company; The J.M. Smucker Company; Lorillard, Inc.; McCormick & Company, Incorporated; Mead Johnson Nutrition Company; Molson Coors Brewing Company (Class B Shares); Ralph Lauren Corporation; and Revlon, Inc. The stock price performance included in this graph is not necessarily indicative of future stock price performance. The Company neither makes nor endorses any predictions as to future stock performance. 14 DIRECTORS AND EXECUTIVE OFFICERS (AS OF MAY 20, 2013) DIRECTORS RICHARD SANDS Chairman of the Board, Constellation Brands, Inc. JAMES A. LOCKE III (3) Senior Counsel to the law firm of Nixon Peabody LLP EXECUTIVE OFFICERS RICHARD SANDS Chairman of the Board, Constellation Brands, Inc. ROBERT SANDS President and Chief Executive Officer, Constellation Brands, Inc. JUDY A. SCHMELING (2) Chief Operating Officer and Chief Financial Officer, HSN, Inc. JERRY FOWDEN (1) Chief Executive Officer, Cott Corporation BARRY A. FROMBERG (2) Chief Financial Officer, Hospitalists Now, Inc. ROBERT L. HANSON (1) Chief Executive Officer, American Eagle Outfitters, Inc. JEANANNE K. HAUSWALD (1) (3) Managing Partner, Solo Management Group, LLC; Retired from The Seagram Company Ltd. PAUL L. SMITH (2) (3) Retired from Eastman Kodak Company KEITH E. WANDELL (1) Chairman of the Board, President and Chief Executive Officer, Harley-Davidson, Inc. MARK ZUPAN (2) Dean, William E. Simon Graduate School of Business Administration, University of Rochester ROBERT SANDS President and Chief Executive Officer, Constellation Brands, Inc. F. PAUL HETTERICH Executive Vice President, Business Development and Corporate Strategy, Constellation Brands, Inc. THOMAS M. KANE Executive Vice President and Chief Human Resources Officer, Constellation Brands, Inc. THOMAS J. MULLIN Executive Vice President and General Counsel, Constellation Brands, Inc. CONSTELLATION BRANDS PRODUCTION FACILITIES (AS OF APRIL 30, 2013) ITALY Poggio Casciano Winery (Bagno a Ripoli, San Polo, Florence) Santedame Winery (Castellina in Chianti, Siena) Gretole Winery (Castellina in Chianti, Siena) La Solatia Winery (Monteriggione, Siena) Greppone Mazzi Winery (Montalcino, Siena) Pontassieve Winery (Pontassieve) UNITED STATES CALIFORNIA Bedford Winery (Napa) Clos du Bois Winery (Geyserville) Dunnewood Vineyards (Ukiah) Estancia Winery (Soledad - Monterey County) Franciscan Oakville Estates (Rutherford) Gonzales Winery (Gonzales - Monterey County) Mission Bell Winery (Madera) Mt. Veeder Winery (Napa) CANADA ALBERTA The Black Velvet Distilling Co. (Lethbridge) BRITISH COLUMBIA Inniskillin Okanagan Winery (Oliver) See Ya Later Ranch (Okanagan Falls) Sumac Ridge Estate Winery & Vineyard (Summerland) Oliver Winery (Oliver) ONTARIO Ravenswood Wineries (Sonoma) Robert Mondavi Winery (Oakville) Simi Winery (Healdsburg) Inniskillin Winery & Vineyard (Niagara-on-the-Lake) Jackson-Triggs Estate Winery (Niagara-on-the-Lake) Turner Road Vintners Wineries (Lodi/Woodbridge) Le Clos Jordanne (Jordan, Niagara Peninsula) Wild Horse Winery (Templeton) Niagara Cellars (Niagara Falls) Woodbridge Winery (Acampo) QUÉBEC NEW YORK Canandaigua Winery (Canandaigua) WASHINGTON The Hogue Cellars (Prosser) Constellation Brands Québec (Rougemont) WINE KITS RJ Spagnol’s (Delta, British Columbia) RJ Spagnol’s (Kitchener, Ontario) ROBERT RYDER Executive Vice President and Chief Financial Officer, Constellation Brands, Inc. W. KEITH WILSON* Executive Vice President, Constellation Brands, Inc. JOHN A. (JAY) WRIGHT Executive Vice President and Chief Operating Officer, Constellation Brands, Inc. Additional biographical information about the Directors is included in the Proxy Statement relating to the Company’s 2013 annual meeting distributed with this Annual Report and posted on the Company’s website. (1) Member of Human Resources Committee (2) Member of Audit Committee (3) Member of Corporate Governance Committee *Retiring June 2013 NEW ZEALAND Corner 50 Winery (Hawkes Bay, North Island) Drylands Winery (Marlborough, South Island) Kim Crawford Winery (Marlborough, South Island) Nobilo Winery (Huapai, West Auckland, North Island) 15 CONSTELLATION BRANDS / Summary Annual Report / 2013INVESTOR INFORMATION HEADQUARTERS Constellation Brands, Inc. 207 High Point Drive Building 100 Victor, New York 14564 585.678.7100 888.724.2169 www.cbrands.com Investor Center: 888.922.2150 STOCK TRANSFER AGENT AND REGISTRAR Computershare 877.810.2237 (toll free, U.S. and Canada) 201.680.6578 (outside U.S. and Canada) www.computershare.com/investor Regular Delivery: P.O. Box 43006 Providence, RI 02940-3006 Overnight Delivery: 250 Royall Street Canton, MA 02021 COMMON STOCK TRADING The Company’s Class A and Class B Common Stock trade on the New York Stock Exchange (NYSE) under the ticker symbols STZ and STZ.B, respectively. There is no public market for the Company’s Class 1 Common Stock. As of April 30, 2013, there were 782; 152; and 1 holders of record of Class A, Class B, and Class 1 Common Stock, respectively. INFORMATION REGARDING FORWARD-LOOKING STATEMENTS The statements set forth in this report, which are not historical facts, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in, or implied by, the forward-looking statements. For risk factors associated with the Company and its business, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2013. 16 ANNUAL REPORT This Fiscal 2013 Summary Annual Report together with the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2013 (the “Form 10-K”), which accompanies the mailing of this Fiscal 2013 Summary Annual Report, form the Annual Report to Stockholders. The Form 10-K includes important financial and business information regarding the Company. In particular, stockholders should refer to the Form 10-K for the Company’s: audited financial statements and notes thereto; supplementary financial information; selected financial data; Management’s Discussion and Analysis of Financial Condition and Results of Operations; Management’s Annual Report on Internal Control over Financial Reporting; Reports of Independent Registered Public Accounting Firm; discussion about market risk; description of its industry segments, foreign and domestic operations, and exports sales; and discussion about the market price of and dividends on its common equity, dividend policy and related stockholder matters. COPIES OF FORM 10-K The Annual Report on Form 10-K for the fiscal year ended February 28, 2013 accompanies the mailing of this Summary Annual Report and also may be obtained by writing Constellation Brands, Inc.’s Investor Relations department at our corporate headquarters address provided on this page. Alternatively, a copy is available on our Constellation Brands website at www.cbrands.com, as well as on the Securities and Exchange Commission’s internet site at www.sec.gov. ANNUAL STOCKHOLDERS’ MEETING The annual meeting is scheduled to be held at 11:00 a.m., Eastern time, on Wednesday, July 24, 2013, at the Callahan Theater at the Nazareth College Arts Center, 4245 East Avenue, Rochester, New York. The Nazareth College Arts Center is located in the Town of Pittsford, New York. FISCAL 2013 BRAND MILESTONES 100+ MILLION cases sold in U.S. 1 MILLION cases sold globally 1 MILLION cases sold in Canada retail stores 40+ MILLION cases sold in U.S. WINE GROWTH IN KEY U.S. IMPORT CATEGORIES NEW ZEALAND 50% sales growth #1 New Zealand Sauvignon Blanc Top 5 New Zealand brand ITALY • Double digit depletion and marketplace growth • Fastest growing among top 10 Italian wine brands • Outperformed Italian wine category ARGENTINA • Double digit depletion and marketplace growth • Top 10 Argentina brand • Outperformed Argentina wine category BRANDportfolio 2013 – 2014 REMOVE AND SAVE FOR FUTURE REFERENCE ABOUT CONSTELLATION BRANDS Constellation Brands is a leading wine, beer and spirits company with a broad portfolio of premium brands. Constellation is the world leader in premium wine, the number one beer importer and the number three beer company in the U.S. The company’s brand portfolio includes Arbor Mist, Black Box, Blackstone, Clos du Bois, Estancia, Franciscan Estate, Inniskillin, Kim Crawford, Mark West, Mount Veeder, Nobilo, Ravenswood, Rex Goliath, Robert Mondavi, Ruffino, SIMI, Toasted Head, Wild Horse, Corona Extra, Corona Light, Modelo Especial, Negra Modelo, Pacifico, Black Velvet Canadian Whisky and SVEDKA Vodka. Constellation Brands (NYSE: STZ and STZ.B) is an S&P 500 Index and Fortune 1000® company with more than 100 brands in our portfolio, sales in approximately 100 countries and operations in approximately 40 facilities. The company believes that industry leadership involves a commitment to our brands, to the trade, to the land, to investors and to different people around the world who turn to our products when celebrating big moments or enjoying quiet ones. We express this commitment through our vision: to elevate life with every glass raised. To learn more about Constellation, visit the company’s website at www.cbrands.com. © 2013 Constellation Brands, Inc. Design: © Calm & Sense Communications, Ltd. | www.calmandsense.com Executive Portraits: © Kurt Brownell Photography | www.kurtbrownell.com Data source: SymphonyIRI channels, 2012 FPO 17 CONSTELLATION BRANDS / Summary Annual Report / 2013Enjoy Responsibly Constellation Brands, Inc. 207 High Point Drive | Building 100 | Victor, New York 14564 1.888.724.2169 | www.cbrands.com 

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