Constellation Brands, Inc. (STZ): PESTLE Analysis [Nov-2025 Updated]

You're looking at Constellation Brands and seeing two very different companies: a Beer giant forecast to grow operating income by up to 12% in FY2025, and a Wine & Spirits segment dragging the whole enterprise down with an expected $1.5 billion to $2.5 billion non-cash goodwill impairment. That massive gap means the external environment-from Mexican political instability and 50% aluminum tariffs to the rise of the Sober Curious movement-is hitting STZ unevenly, and understanding these forces is defintely the key to mapping where the 4% to 6% overall net sales growth will actually come from. Let's break down the Political, Economic, Social, Technological, Legal, and Environmental (PESTLE) factors so you can see the clear actions needed to navigate this complex split.

Constellation Brands, Inc. (STZ) - PESTLE Analysis: Political factors

50% Tariff on Aluminum Cans Raises Costs for Imported Beer Packaging

You need to be defintely tracking the trade policy out of Washington, D.C., because it has an immediate, quantifiable impact on your bottom line. The biggest near-term risk for Constellation Brands is the recent escalation of tariffs on imported aluminum. In June 2025, the U.S. administration doubled the tariff on steel and aluminum imports from 25% to a punishing 50%. This directly hits your beer portfolio-Corona, Modelo Especial, and Pacifico-which relies heavily on aluminum cans for a significant portion of its packaging.

The company has already quantified this cost. Constellation Brands estimates the direct financial impact of this 50% aluminum tariff will be approximately $20 million over the fiscal year 2025/2026. That's a direct margin squeeze that you cannot fully offset with price hikes alone, according to management. This isn't just a cost; it's a competitive disadvantage against domestic brewers.

Political Factor	Impact on Constellation Brands (FY2025/2026)	Strategic Implication
50% Aluminum Tariff (June 2025)	Estimated $20 million increase in annual packaging costs.	Margin compression; forces price increases or sourcing diversification.
Mexican Import Tariff Threat (August 2025)	Potential 30% tariff on all Mexican imports (beer/wine).	Major supply chain and profitability disruption for core beer brands.

Political Instability in Mexico Risks Supply Chain and Trade Disruptions

Constellation Brands is uniquely exposed to political and trade volatility in Mexico because you import 100% of your core beer volume from there. Your success is tied to brands like Modelo Especial, which became the top-selling beer in the U.S. in 2023. So, any disruption south of the border is a major problem.

The political risk is two-fold. First, the U.S. administration announced a new round of 30% tariffs on imports from Mexico, set to take effect in August 2025. While the final scope is uncertain, a tariff of that magnitude on your primary revenue driver would be catastrophic. Second, there's the broader political environment in Mexico, which is creating a volatile regulatory environment and uncertainty for new investments. Here's the quick math: a 30% tariff on a product that is already facing a 50% aluminum tariff makes your Mexican-brewed beer significantly more expensive to land in the U.S. market.

Regulatory Scrutiny in the Beverage Sector Increased by a Significant Margin

You might not see a single '15% increase' metric, but the regulatory scrutiny in the U.S. food and beverage sector has surged dramatically in 2025, especially at the state level. This creates a complex, 'patchwork-y' compliance nightmare for a national company like Constellation Brands. State legislatures introduced over 350 bills related to food safety during the 2025 sessions, with 73 enacted as of August 2025. That's a lot of new rules to track.

This surge includes a focus on ingredient bans and labeling, which affects your ready-to-drink (RTD) and flavored malt beverage (FMB) products. For example:

• California banned several food additives, including brominated vegetable oil, by August 2025.
• Texas passed a law requiring warning labels on foods containing over 40 additives and synthetic dyes.
• The FDA is also increasing unannounced inspections at foreign manufacturing facilities, which includes your Mexican breweries.

This isn't just about compliance; it forces costly, product-by-product reformulation and packaging changes for specific states, slowing down your ability to move product nationally.

Strict Alcohol Laws Govern Distribution, Pricing, and Advertising in the US

The U.S. alcohol market is governed by the three-tier system-producers, distributors, and retailers-a post-Prohibition framework that is the foundation of all U.S. alcohol regulation. This system is a major political constraint because it legally separates the tiers to prevent market dominance, but it also creates immense complexity.

The state-by-state variation is the real challenge. You must navigate a maze of disparate rules across 50 jurisdictions, plus the District of Columbia. About 32 states operate an open system where Constellation Brands sells to private distributors, but 18 states are control states where the government is the distributor or even the retailer. This means pricing, advertising, and distribution agreements are not uniform.

For Constellation Brands, this means:

• Distribution: You are locked into long-term franchise laws in many states, which makes switching a distributor-even a poor-performing one-extremely difficult and costly.
• Pricing: Some states enforce 'price posting' rules, which limit your ability to offer flexible or immediate discounts to compete with local brands.
• Advertising: Regulations on what you can show and where you can advertise your products (especially spirits and FMBs) vary wildly based on state and local laws, requiring hyper-localized marketing compliance.

Constellation Brands, Inc. (STZ) - PESTLE Analysis: Economic factors

Fiscal 2025 Enterprise net sales growth is projected at 4% to 6%, a solid, but lower, pace.

You're looking for a clear picture of Constellation Brands' overall financial health, and the full-year outlook for fiscal 2025 (FY2025) is a story of two distinct businesses. The company's Enterprise net sales growth is projected to land between 4% and 6%. This is a solid mid-single-digit growth rate, but it represents a downward revision from earlier guidance, which was closer to the 6% to 7% range. This adjustment reflects the increasing pressure from macroeconomic headwinds, which are slowing the rate of consumer demand growth across the portfolio.

Here's the quick math on why this matters: even a small percentage drop in projected growth on a company of this scale is a significant amount of revenue that isn't materializing. The Beer segment is the primary engine keeping the overall enterprise growth positive. Still, the revised outlook signals that even premium categories are not defintely immune to a softer economy.

Expected non-cash goodwill impairment of $1.5 billion to $2.5 billion in Wine and Spirits for FY2025.

The most jarring economic indicator for Constellation Brands this fiscal year is the expected non-cash goodwill impairment charge in the Wine and Spirits segment. The company anticipates recognizing a loss of approximately $1.5 billion to $2.5 billion. This isn't a cash outlay, but it's a crucial accounting signal that the fair value of the Wine and Spirits business has fallen below its carrying value on the balance sheet.

This impairment is a direct result of the updated, more pessimistic financial outlook for the Wine and Spirits division, driven by prolonged inventory destocking in the U.S. wholesale market and broader category declines, especially in the mainstream and premium wine brands. What this estimate hides is the strategic challenge of managing a large, acquired portfolio that is struggling to keep pace with the rest of the company. The company has been divesting some of its mainstream wine brands, a move aimed at aligning the portfolio with consumer-led premiumization trends.

Beer segment operating income growth is strong, forecast at 11% to 12% for FY2025.

The Beer segment, home to iconic imported brands like Modelo Especial and Corona Extra, continues to be the financial powerhouse. Operating income growth for this segment is forecast to be robust, projected between 11% and 12% for FY2025. This is actually an increase from the initial guidance, which speaks to the strength of their market position and operational efficiency.

This impressive performance is fueled by a few factors:

• Sustained consumer demand for high-end imported beer in the U.S.
• Effective cost savings and efficiency initiatives.
• Strategic reinvestment of savings into incremental marketing programs.

The Beer segment is the company's clear advantage, outpacing the entire Consumer Packaged Goods (CPG) sector by nearly 3 percentage points in dollar sales across Circana tracked channels in fiscal 2025 to-date.

Wine and Spirits net sales are expected to decline (6)% to (4)% due to market weakness.

In stark contrast to the Beer segment, the Wine and Spirits business faces significant economic headwinds. Net sales for this segment are expected to decline by (6)% to (4)% in FY2025. This is a major revision from the initial forecast, which had anticipated a flat performance or a slight increase. The decline is a clear reflection of the economic pressures impacting consumer spending on these categories.

The updated outlook for the Wine and Spirits segment is detailed below, highlighting the divergence from the Beer segment's performance:

Metric (Fiscal Year 2025 Outlook)	Beer Segment	Wine and Spirits Segment	Enterprise (Total)
Net Sales Growth (Decline)	6% to 8%	(6)% to (4)%	4% to 6%
Operating Income Growth (Decline)	11% to 12%	(18)% to (16)%	8% to 9% (Comparable)
Non-Cash Goodwill Impairment	N/A	$1.5 Billion to $2.5 Billion	Included in Reported Operating Income Decline

Inflation and a softer macroeconomic backdrop drive consumer value-seeking behavior.

The underlying economic reality shaping Constellation Brands' performance is the combination of persistent inflation and a general softening of the macroeconomic backdrop. Management has pointed to 'incremental macroeconomic headwinds,' specifically citing rising unemployment, as a key factor in the recent deceleration of consumer demand. This environment forces consumers to become more value-seeking, which disproportionately impacts the Wine and Spirits portfolio, especially in the mainstream and premium wine categories.

You see this play out in the market as a shift in purchasing habits. When household budgets tighten, consumers often trade down to less expensive brands or reduce discretionary spending on premium items. Constellation Brands is responding with 'incremental tactical pricing and marketing actions' in the Wine and Spirits business to support demand for its core brands, but the market is still challenging. The Beer business, while still growing, has also seen some slower volumes due to these macroeconomic pressures, though its premium positioning has provided greater resilience.

Constellation Brands, Inc. (STZ) - PESTLE Analysis: Social factors

You're looking at Constellation Brands' (STZ) social landscape, and the picture is one of two extremes: premiumization continues to be a powerful tailwind, but near-term economic anxiety among a core demographic is creating a sudden headwind. The company is defintely leaning into the 'better-for-you' and flavored segments, which is a smart hedge.

Premiumization trend continues, favoring Constellation Brands' high-end beer portfolio.

The long-term consumer shift toward higher-quality, premium beverages remains the primary growth driver for Constellation Brands. This trend is evident in the beer segment, which is the company's powerhouse, making up roughly 83% of total sales. For fiscal year 2025, the company projects its beer net sales to grow between 4% and 7%, a strong performance even with macroeconomic pressures. Constellation Brands' strategy is to prioritize these high-margin, fast-growing segments.

Modelo Especial is the clearest example; it's now the top-selling beer in the US by dollar sales, a massive achievement. In the Wine & Spirits division, they are actively reshaping the portfolio, moving away from lower-performing assets like SVEDKA and investing in premium brands such as The Prisoner Wine Company, Kim Crawford, and High West Whiskey.

Weakness in the Hispanic consumer base is slowing Modelo's growth due to economic pressures.

Here's the quick math: Constellation Brands' beer business has a higher exposure to the Hispanic demographic in the US than the wider market, so when that group feels financial strain, the company feels it disproportionately. In the second quarter of fiscal year 2025, Constellation Brands' consumer research found that more than 80% of both Hispanic and non-Hispanic respondents were concerned about the broader US economy. This worry translated into lower buy rates for high-end beer, with the sharpest drop seen among Hispanic consumers.

The company has acknowledged this is a significant near-term challenge, but they believe it is cyclical, not structural, given the high loyalty to brands like Modelo and Corona. To counter the 'subdued spend and value-seeking behaviour,' they are taking clear actions:

• Launching affordability initiatives like smaller pack sizes.
• Repositioning Modelo Oro to play in the large light beer segment.
• Reinforcing marketing and community engagement to stabilize core consumer segments.

Rise of the 'Sober Curious' movement drives demand for low/no-alcohol options like Corona Non-Alcoholic.

The 'Sober Curious' movement-consumers actively moderating or abstaining from alcohol-is a major social shift, and Constellation Brands is moving fast to capture this market. The broader non-alcoholic wine segment, for instance, saw a notable 41% growth in dollar value in 2025, showing this is a high-growth space. Constellation Brands' key moves here are two-fold:

• Corona Non-Alcoholic: Launched to capture the non-alc beer space, this product was projected to be 84% incremental to the overall Corona portfolio, meaning it brings in new consumers rather than cannibalizing existing sales.
• Strategic Investment: In early 2025, the company announced a minority stake investment in Hiyo, a non-alcoholic 'social tonic' that uses adaptogens, directly targeting the health-conscious consumer looking for functional beverages.

Strong consumer interest in flavored segments: seltzers, RTD spirits, and flavored malt beverages.

Consumer demand for flavor innovation and convenience is reshaping the market, but not all segments are winning. You need to be precise about where the opportunity lies. Spirit-based ready-to-drink (RTD) beverages are the new center of gravity, showing a massive 20% increase in revenue year-to-date in 2025. Flavored malt beverages (FMBs) are also strong, up 16% in value. But hard seltzers are crashing.

Constellation Brands is capitalizing on the growth areas, particularly with its Modelo Chelada line, a flavored malt beverage that sold 20 million cases last year. They are expanding this line with new flavors like Sandía Picante (watermelon with chili peppers). The table below summarizes the key performance of these adjacent categories, which Constellation Brands is actively targeting through its innovation pipeline.

Flavored Beverage Category (US Market)	Revenue/Value Change (YTD 2025)	Constellation Brands Strategy
Spirit-Based RTDs	+20% Revenue Increase	Investing in innovation and new products to align with this high-margin, fast-growing segment.
Flavored Malt Beverages (FMBs)	+16% Value Increase	Expanding the successful Modelo Chelada line, which sold 20 million cases last year.
Hard Seltzers	-15.6% Value Drop	Shifting focus to more complex, cocktail-like RTDs and FMBs, as the seltzer market has peaked.

Finance: draft 13-week cash view by Friday, factoring in the lower end of the beer sales growth forecast to stress-test for consumer sentiment risk.

Constellation Brands, Inc. (STZ) - PESTLE Analysis: Technological factors

You're looking at Constellation Brands, Inc. (STZ) and trying to figure out where technology gives them an edge-or where it creates a risk. The short answer is that their massive capital spend on the Beer Business is driving significant automation and data-driven efficiency, but their digital sales and traceability remain areas to watch.

Increased investment in AI for demand forecasting and supply chain optimization.

Constellation Brands is defintely leaning into Artificial Intelligence (AI) and Machine Learning (ML) to squeeze more efficiency out of its complex supply chain. The company's focus in Fiscal Year 2025 (FY2025) was on 'end-to-end digital supply chain planning, logistics, procurement, and revenue growth management.' This isn't just buzzword bingo; it's about using AI-powered tools to analyze real-time data, which helps them predict demand spikes and adjust production schedules faster than a human planner ever could.

The financial impact of these efficiencies is already starting to show up in the numbers. The company's broader restructuring program, which relies heavily on streamlining operations through technology, is set to deliver $55 million in cost savings in FY2025 alone, part of a larger $200 million target by Fiscal Year 2028. For FY2026, they plan to expand this digital initiative to include consumer insights and analytics, which should further refine their demand forecasts. That's smart money at work.

Leveraging direct-to-consumer (DTC) and e-commerce platforms to capture shifting consumer purchases.

The shift to online buying is real, and Constellation Brands is pushing its direct-to-consumer (DTC) strategy to capture that growth, especially for its high-end wine and spirits portfolio. They use an omnichannel approach, meaning they integrate online and offline sales to meet the customer wherever they are. While a full-year FY2025 DTC figure isn't public, the trend is clear: the overall DTC channel saw net sales growth of +13% in Q1 of the prior fiscal year, with the e-commerce and customer loyalty portions growing over 40% in that same period.

This is a necessary move because the established D2C e-commerce market in the US is projected to jump from $135 billion in 2023 to $187 billion by the end of 2025. Constellation Brands has to keep pace with that market growth. The table below shows the core focus areas for their digital strategy.

Strategic Technology Focus Area (FY2025)	Primary Goal	Expected Financial Impact (Indirect)
AI/ML Demand Forecasting	Optimize inventory levels and production schedules.	Contributes to $55 million in FY2025 cost savings from restructuring.
Digital Supply Chain Planning	Reduce logistics costs and identify bottlenecks in real-time.	Industry benchmark suggests up to 15% reduction in logistics costs.
Direct-to-Consumer (DTC) Platforms	Capture high-margin sales and gather first-party consumer data.	DTC channel net sales grew +13% (Q1 FY2024) showing strong momentum.

Automation and real-time data visibility are critical for managing complex cross-border logistics.

Managing the flow of beer from Mexican breweries-like the massive new facilities-to the US market is Constellation Brands' biggest logistical challenge, and it requires serious tech investment. That's why the company is pouring billions into its infrastructure. Their total Capital Expenditure (CAPEX) for FY2025 was about $1.2 billion, and a huge chunk of that-approximately $1 billion-was specifically related to the expansion and optimization activities at their Mexican beer operations.

This spending goes directly into automation and real-time data systems. They use AI-powered tools to analyze that data and optimize delivery routes, which is crucial for a product like beer that moves in high volumes across a border. This focus is all about maintaining their best-in-class operating margins for the Beer Business, which they target to keep between 39% to 40%.

Exploring blockchain and IoT for enhanced product traceability and compliance.

While Constellation Brands has not publicly disclosed a major project using blockchain (a decentralized digital ledger) or the Internet of Things (IoT) for traceability in FY2025, the industry pressure for supply chain transparency is intense. Consumers and regulators are increasingly demanding to know the origin and journey of their products, especially with premium spirits and wine.

The need for enhanced product traceability is a major 2025 trend, driven by the push for more sustainable and ethical production. To meet this, the company must eventually adopt these technologies to track:

• Source of raw ingredients (e.g., hops, barley, agave).
• Real-time temperature and humidity during transport (IoT sensors).
• Proof of authenticity to combat counterfeit products (blockchain).

Right now, they rely on structured reporting systems and data-driven monitoring to track distribution efficiency, but the next step is a more granular, immutable record. Ignoring this shift could become a compliance and reputational risk down the line.

Constellation Brands, Inc. (STZ) - PESTLE Analysis: Legal factors

You're looking for the hard numbers on regulatory risk, and for a beverage alcohol company like Constellation Brands, Inc., the legal landscape is a constant, expensive headwind. The key takeaway is that while the company successfully secured its high-growth seltzer market, its ambitious cannabis strategy remains legally handcuffed by US federal law, and the sheer volume of excise taxes is a massive, non-negotiable cost of doing business.

Complex, varying excise taxes and duties are applied to beverage alcohol products across markets.

The most immediate and substantial legal cost Constellation Brands faces is the complex web of excise taxes, customs duties, and value-added taxes (VAT) imposed by various governments. These are not discretionary expenses; they are a direct reduction of gross sales and a significant cash outflow that must be managed across multiple jurisdictions, including the US, Mexico, New Zealand, and Italy.

To give you a sense of the scale, the company's total excise tax burden for the full Fiscal Year 2024 (ended February 29, 2024) was approximately $749.2 million. This figure represents an immense, recurring legal obligation that directly impacts net sales and cash flow. The first nine months of Fiscal Year 2025 (ended November 30, 2024) already saw excise taxes of $599.7 million, showing the consistent, unavoidable nature of this cost. You have to pay the government before you see a dime of profit.

Fiscal Period	Excise Taxes (in millions USD)	Note
Full Fiscal Year 2024	$749.2	Ended February 29, 2024
First 9 Months Fiscal Year 2025	$599.7	Ended November 30, 2024

Ongoing compliance costs for numerous governmental regulations.

Beyond taxes, the operational cost of complying with an array of regulations-from environmental, health, and safety (EHS) standards to product labeling, advertising, and distribution laws-is substantial. While a specific line item for 'compliance costs' is not typically disclosed, it is embedded within the company's Selling, General, and Administrative (SG&A) expenses and Corporate Expense guidance.

For Fiscal Year 2025, Constellation Brands provided an outlook for Corporate expense of approximately $260 million. This budget covers all centralized corporate functions, including the legal department, which manages the ongoing compliance for thousands of SKUs (stock-keeping units) across international borders. The regulatory environment is defintely a high-touch, high-cost area.

Strategic positioning in the cannabis market through Canopy Growth Corp. is constrained by US federal law.

Constellation Brands' strategic investment in Canadian cannabis producer Canopy Growth Corporation is a prime example of a legal constraint dictating corporate strategy. The company is poised to capitalize on the US cannabis market, but only when federal law permits.

Here's the quick math on the legal hurdle:

• The Constraint: Constellation Brands converted its stake in Canopy Growth Corporation into new exchangeable shares in April 2024.
• The Trigger: The company will not convert these exchangeable shares into common shares, which would grant full voting rights and financial exposure, until the US domestic sale of marijuana no longer violates the Controlled Substances Act and related anti-money laundering laws.
• The Cost of Waiting: This legal structure, while maintaining an option on the US market, required Constellation Brands to eliminate its governance rights, including the resignation of its board nominees from Canopy Growth Corporation's board. The initial investment was a significant $4 billion, which has seen a substantial impairment loss, highlighting the risk of pre-legalization positioning.

The potential reclassification of cannabis to Schedule III, which was being reviewed in 2025, is the key regulatory catalyst that would unlock this strategic position, but until that happens, the investment remains legally segregated from the core business.

Recent legal victory confirmed the right to sell Corona Hard Seltzer and Modelo Ranch Water.

A recent, major legal win has solidified Constellation Brands' ability to expand its high-growth beer trademarks into adjacent beverage categories. In March 2024, a US appeals court upheld a prior jury verdict, confirming the company's right to sell products like Corona Hard Seltzer and Modelo Ranch Water in the US market. The entire dispute with Anheuser-Busch InBev's Grupo Modelo hinged on the interpretation of the 2013 licensing agreement's definition of 'beer.' The court essentially agreed that the term was ambiguous enough that the jury's decision in Constellation Brands' favor stood.

This victory is crucial because it protects a major revenue stream in the rapidly expanding flavored malt beverage and hard seltzer categories, which are critical growth drivers for the Beer Business. Without this favorable ruling, Constellation Brands would have been forced to pull two key products from the market.

• The Products Secured: Corona Hard Seltzer and Modelo Ranch Water.
• The Date Confirmed: US Appeals Court ruling in March 2024.
• The Strategic Value: It ensures the company can continue to use its most valuable brands, Corona and Modelo, to innovate and compete in the lucrative, high-growth 'beyond beer' segment.

Constellation Brands, Inc. (STZ) - PESTLE Analysis: Environmental factors

You're an analyst looking at Constellation Brands, Inc. (STZ) and need to map their environmental exposure, which is a significant factor given their heavy reliance on agriculture and water. The clear takeaway here is that while the company has set ambitious, near-term fiscal year 2025 (FY2025) targets for its direct operations (Scope 1 and 2), the overwhelming majority of its climate risk-over 95% of its emissions-remains unaddressed by a Paris-aligned target.

This creates a dual reality: strong progress on operational efficiency, but a looming systemic risk from the broader value chain (Scope 3) that investors are defintely scrutinizing. You need to focus on where the company has put its capital to work and where the material gaps still exist.

Water stewardship is a critical risk, especially for Mexican breweries.

Water is the most immediate, material risk for Constellation Brands, particularly for its high-growth Beer Business, which operates large breweries in water-stressed regions of Mexico. The company recognized this by substantially increasing its water restoration commitment for the current fiscal period.

The original target to restore approximately 1.1 billion gallons of water withdrawals between Fiscal Year 2023 and Fiscal Year 2025 was surpassed ahead of schedule. So, the company expanded the goal to restore a total of 5 billion gallons of water withdrawals back to local watersheds near production facilities by the end of FY2025. This is a massive commitment that directly addresses the social license to operate in Mexico.

Here's the quick math on their water action:

Water Stewardship Metric	Target by FY2025	Latest Progress/Action
Total Water Restoration Goal (FY2023-FY2025)	5 billion gallons restored	Original 1.1 billion-gallon target surpassed ahead of schedule.
Community Water Impact (Mexico)	Improve accessibility/quality	Infrastructure projects expected to benefit approximately 11,150 people in communities near the Nava brewery.

What this estimate hides is the persistent, long-term regulatory and community risk in Mexico, which has historically challenged the construction and operation of new facilities.

Aiming to reduce Scope 1 and 2 greenhouse gas emissions by 15% by fiscal year 2025.

Constellation Brands has a clear, near-term goal to reduce its direct (Scope 1) and indirect (Scope 2) greenhouse gas (GHG) emissions by 15% by the end of Fiscal Year 2025, using a Fiscal Year 2020 baseline. This target focuses on operational control-the energy they buy and the fuel they burn.

The company is actively executing on this, including a major conversion project at a key production facility. They are currently installing infrastructure to convert the Obregón Brewery from higher GHG-emitting fuel oil to more efficient natural gas. Plus, they are utilizing renewable energy initiatives like solar panels at the Pontassieve Winery for the Ruffino wine brand.

Still, you need to be a realist about the total climate exposure. The current Scope 1 and 2 target covers less than 5% of the company's total climate footprint. This is the critical limitation: over 95% of the company's total emissions are categorized as Scope 3 (value chain emissions), which currently lacks a Paris-aligned reduction target, exposing the company to significant transition and reputational risk as peers like Molson Coors and Heineken have set 1.5°C-aligned targets for their full value chain. This is a material competitive lag.

Goal to source 100% of agricultural raw materials sustainably by the end of 2025.

As an agriculture-based company, the integrity of the supply chain is paramount. The goal is to source 100% of agricultural raw materials sustainably by the end of 2025. While a final progress percentage for the overall business is not yet public, the company is using third-party certifications to validate progress within its segments.

The Wine and Spirits business, for instance, is making headway through certified programs. The Ruffino Group in Italy is certified under both the National Quality System of Integrated Production (SQNPI) and the 'Biodiversity Friend' Certification. These certifications ensure a sustainable use of fertilizers and phytosanitary products, and promote biodiversity conservation in agriculture.

The company is also driving waste reduction and circularity with other FY2025 targets:

• Obtain a TRUE Zero Waste Certification for key operating facilities by FY2025. The Nava Brewery achieved the TRUE Zero Waste certification (Gold Level).
• Ensure 80% of packaging from the Wine & Spirits portfolio is returnable, recyclable, or renewable.
• Reduce the ratio of packaging weight to product weight by 10% across the Wine & Spirits portfolio.

The next step is to get the full Scope 3 emissions plan, because that's where the real financial risk for the next decade sits.