Constellation Brands (STZ) Morgan Stanley Global Consumer & Retail Conference summary

Macroeconomic and policy environment

• Evaluating potential impacts of U.S. tariffs on Mexico, with contingency plans for cost savings, inventory management, and pricing adjustments depending on tariff specifics.

• 75% of inputs are USD-denominated, with significant cross-border operations affecting both U.S. and Mexican stakeholders.

• Multi-year hedging strategy in place, currently 90% hedged against the peso for FY25, with incremental hedges layered for FY26–FY28.

• Demographic growth projections are based on U.S. census data, not reliant on outsized immigration.

Business performance and outlook

• Recent beer depletion slowdown seen as transitory, attributed to macroeconomic headwinds, with optimism as inflation and interest rates improve.

• Incremental marketing investments in Q3 expected to support brand momentum.

• Circana data shows consumer shift to value channels, with higher Hispanic unemployment impacting key markets.

Long-term growth drivers

• Distribution gains expected to deliver 500,000 incremental points by FY28, with strong shelf space growth.

• Innovation pipeline robust, with 30% of growth from new products, line extensions, and pack architecture.

• Demographics and innovation remain key contributors to growth.