Constellation Brands Inc. Common Stock

Item 1A. Risk Factors.

In addition to information discussed elsewhere in this Form 10-Q, you should carefully consider the risk factors disclosed in the 2024 Annual Report. The risk factors associated with our business have not materially changed compared to the risk factors disclosed in the 2024 Annual Report except for the updated risk factor below. The risk factor described below and the additional risks described in the 2024 Annual Report are not the only risks we face. Additional factors not presently known to us or that we currently deem to be immaterial could materially affect our business, liquidity, financial condition, and/or results of operations in future periods. The following risk factor is organized under a relevant heading; however, it may be relevant to other headings as well.

Strategic Risks

Dependence upon trademarks and proprietary rights, failure to protect our intellectual property rights

Our future success depends significantly on our ability to protect our current and future brands and products and to defend our intellectual property rights. We have been granted numerous trademark registrations and use certain trademarks under license covering our brands and products, and we have filed, and expect to continue to file or have filed on our behalf, trademark applications seeking to protect newly developed brands and products. We cannot be sure that trademark registrations will be issued with respect to any of such trademark applications. We could also, by omission, fail to timely renew or protect a trademark and our competitors could challenge, invalidate, or circumvent any existing or future trademarks issued to, or licensed by, us.

Our subsidiaries CB Brand Strategies, LLC, Crown Imports LLC, and Compaa Cervecera de Coahuila, S. de R.L. de C.V. were named as defendants in a lawsuit originally filed in U.S. District Court for the Southern District of New York on February 15, 2021, and most recently amended in March 2022, by Cervecera Modelo de Mxico, S. de R.L. de C.V. and Trademarks Grupo Modelo, S. de R.L. de C.V. The plaintiffs alleged, among other things, that our sub-license of the trademarks for our Mexican beer brands should not permit us to use the Corona brand name on our Corona Hard Seltzer or the Modelo brand name on our Modelo Ranch Water. At a trial in March 2023, the jury returned a unanimous verdict in our favor on all counts in the plaintiffs complaint, and the court entered judgment dismissing the complaint. In May 2023, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Second Circuit. In March 2024, the Second Circuit issued an order affirming the judgment of the district court. Plaintiffs did not petition the U.S. Supreme Court for a Writ of Certiorari prior to the June 24, 2024 deadline. Consequently, the district courts judgment dismissing this case is final and no longer subject to appeal.

We have been and may continue to be subject to other litigation related to our trademarks and intellectual property rights. Litigation is inherently unpredictable and subject to substantial uncertainties and unfavorable developments and resolutions could occur. A substantial adverse judgment or other unfavorable resolution of these matters or our failure to otherwise protect our intellectual property rights as well as the costs associated with such activities could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.