sept 2009 constellation brands stz presentation

8/14/2019 Sept 2009 Constellation Brands STZ Presentation

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Barclays

Back-To-School ConferenceSeptember 10, 2009


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Barclays Back-To-School ConferenceSeptember 10, 2009

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Bob Ryder

Chief Financial Officer


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Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of the "safeharbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements

which are not historical facts and relate to future plans, events or performance are

forward-looking statements that are based on management's current expectations and

are subject to a number of factors and uncertainties that could cause actual results to

differ materially from those described in the forward-looking statements, including but notlimited to future global economic conditions, market conditions, regulatory conditions, the

consolidation of the companys U.S. distributor network, changes in tax laws, tax rates

interest rates and foreign exchange rates, the actions of competitors, consumer

preferences and operating and financial risks related to managing growth and integratingacquired businesses, greater costs related to or less than expected savings or synergies

from the companys ongoing integration and restructuring plans, realization of expected

proceeds from divestitures, and risks associated with the companys joint venture

businesses, including, among others, each joint venture's ability to operate and grow its

business successfully. Many of these factors are beyond the control of the company.Any projections of future results of operations should not be construed in any manner as

a guarantee that such results will in fact occur. More detailed information regarding risk

factors is included in company filings with the U.S. Securities and Exchange Commission.


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This presentation contains non-GAAP financial measures. These measures,

the purposes for which management uses them, why management believes

they are useful to investors, and a reconciliation to the most directly

comparable GAAP financial measures can be found on our website atwww.cbrands.com under the Investors section by selecting Financial

Information then Financial History or under the News section.All references to

profit measures and earnings per share on a comparable basis excluderestructuring charges, acquisition-related integration costs and net unusual

items. Non-GAAP financial measures are also referred to as being presented

on a comparable, organic or constant currency basis.

This presentation does not provide information regarding the companys fiscal

2010 second quarter results or financial condition.

Use of Non-GAAP Financial Data,

Quarterly Information


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A leading beverage alcohol company Wine

Spirits

Imported Beer

Leading market positions in wineand imported beer (through CrownImports joint venture)

Major presence in core markets U.S., Canada, U.K., Australia and

New Zealand

Portfolio of more than 100 brands

Included in S&P 500 Index

Constellation Today


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#1 Wine company in the world

#1 Premium wine company in U.S. ($5.00 and up)

#1 Wine company in Canada, U.K. & Australia

#2 Wine company in New Zealand

#1 Beer importer in the U.S.(1)

Source: Impact, IRI, ACNielsen, ACD, Adams Handbook Advance, Company estimates Calendar Year 2008.

(1) Through Crown Imports Joint Venture with Grupo Modelo.

Leading Market Positions


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Wine Category


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FY2009 - $3.02 billion

Constellation Branded Wine Net Sales

Geographic Regions

72%

17%

11%

North America Australia/New Zealand Europe


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U.S. Wine Market

0

50

100

150

200

250

300

98 99 00 01 02 03 04 05 06 07 08

Cases

(Millions)

Source: Adams Handbook Advance, Calendar 2008.

3%CAGR

297

217

(Shipment 9L Cases)


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Source: IRI, Adams, Impact Databank Calendar 2008.

Largest selling:Premium portfolio (>$5.00 retail)

Super-premium + (>$8.00 retail)

Wines in U.S.

18 of the top 100 table wine brands

Strong portfolio of leading scale brands at key premium retail price points:

Premium $5-$8 Woodbridge by Robert Mondavi, Rex Goliath

Super-Premium $8-$11 Robert Mondavi Private Selection, Blackstone, Ravenswood

Ultra-Premium $11-$15 Clos du Bois, Estancia, Toasted Head

Luxury $15-$20 Simi, Franciscan, Robert Mondavi Winery, Wild Horse


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Acquired Fortune Brands U.S. wine business December 2007

Clos du Bois 2 million case ultra-premium brand Wild Horse 150k case luxury brand

Sale of Almaden and Inglenook value brands February 2008

Brands represent approximately 10 million 9-liter cases and retail forless than $3.00 per 750ml bottle equivalent

Sale of value spirits business March 2009

Brands represented more than 10 million cases Svedka and Black Velvet brands retained and integrated into U.S.

wine business

SKU rationalization

Increased focus on selling higher growth, higher-margin premium,consumer-preferred scale brands

Portfolio Transformation


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July 2009 - Exclusive rights awarded to distributors in19 states representing over 50 percent ofConstellations wine/spirits volume

Dedicated distributor sales resources

Incremental marketing/promotional support to be

provided by distributors

Distributor incentive structure better aligned withConstellations performance goals

U.S. Distributor Consolidation


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SVEDKA

2.1 million cases in 2008, up 38% versus 2007 Third largest and fastest growing major imported

vodka in the U.S.

Strategy in FY 2010:

Expand on-premise and control statedistribution

Grow national accounts in on/off premisechannels

Increase west coast distribution

New packaging

(1)

1) Source: Adams Handbook Advance. Calendar Year 2008.


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Largest Canadian wine company

6 brands in the top 25

Market share almost 3 times nearest competitor Key domestic brands: Jackson-Triggs, Inniskillin,Sawmill Creek, Naked Grape, Sumac Ridge

Inniskillin - leading icewine brand

Consumers trading up to premium price points

New World Wines (NWW) fastest growing

category

Wine in Canada

Source: ACD Calendar 2008.


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#2 Wine company in New Zealand

High price points and margins

Capitalize on domestic market growth

Export opportunities into the U.S., Canada,U.K. and expansion markets

Source: AZTEC

Wine in New Zealand


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#1 Wine company in the U.K.

Strong positions in NWW categories Australia, New Zealand, South

Africa and California wines

5 brands in the top 25

#1 Wine company in Australia

6 brands in the top 25 Export opportunities

Echo Falls

Stowells

Hardys

Kumala Banrock Station

Wine in U.K. / Australia

Source: ACNielsen


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Running businesses with a focus on cash Reducing cost

Decreasing net working capital and fixed asset investment

Consolidating production

Simplifying organization to provide increased synergieswithin the U.K. and Australian markets

Consolidating Australian operations selling vineyards andfacilities

Consolidating bottling operations and rationalizing SKUs inboth markets

Australia / U.K. Focus


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Imported Beer Category


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Commenced January 2, 2007

50/50 JV: Constellation and brand owner Grupo Modelo

First time Grupo Modelo brands imported and marketed throughoutthe U.S. by a single U.S. company

Largest imported beer company in the U.S. with 40% shareof imported beer market

Third largest U.S. beer company overall

FY 2009 Crown Performance:

Net Sales $2.4 billion Operating Income Over $500 million

1) Source: Adams Handbook Advance Calendar Year 2008.

(1)

Crown Imports

(1)


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Source: Adams Handbook Advance, Calendar 2008.

#1 Corona Extra

#3 Modelo Especial#5 Corona Light#

17 Pacifico#19 Negra Modelo#23 St. Pauli Girl Lager

6 of Top 25 Imported Beer Brands


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Package / Product Introduction

Opportunities Corona Extra 12 pack cans

Coronita Light

Corona Light Tall Cans

Corona and Corona Light 18packs

Modelo Especial and NegraModelo variety packs and draftformat

d ildi


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Creative advertising, marketing spend and sponsorships Optimizing promotional activity and media support during key selling

seasons

Brand Building

FY 2009 R l (1)


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(1) On a comparable basis.

9%$ 321.0$ 351.3Net Income

11%$ 1.44$ 1.60EPS diluted

34.9%37.1%Gross Margin

16.4%

$ 598.0

$ 3,654.6 (3%)$ 3,773.0Net Sales

14.4%Operating Margin

10%$ 544.9Operating Income

Equity Earnings

EBIT $ 867.9

$ 269.9

$ 818.8

$ 273.9

6%

(1%)

1%$ 376.0$ 378.3Free Cash Flow

FY 2009 FY 2008 %

$ in millions, except EPS

FY 2009 Results(1)

FY 2010 Q1 R lt(1)


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(1) On a comparable basis.

(1%)$ 73.6$ 72.7Net Income

(3%)$ 0.34$ 0.33EPS diluted

36.4%34.9%Gross Margin

15.6%

$ 123.3

$ 791.6 (15%)$ 931.8Net Sales

14.1%Operating Margin

(6%)$ 131.3Operating Income

Equity Earnings

EBIT $ 186.1

$ 62.8

$ 203.4

$ 72.1

(9%)

(13%)

5/31/09 5/31/08

Q1 Ended

%

$ in millions, except EPS

FY 2010 Q1 Results(1)

D bt P d Hi t


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Debt to Trailing Twelve Months Comparable Basis EBITDA

0x

1x

2x

3x

4x

5x

6x

May-04 May-05 May-06 May-07 May-08 May-09

RobertMondavi

Ruffino

Effen

12/04

Vincor6/06

Svedka3/07

Matthew Clark JVProceeds

4/07

$500 Million ShareRepurchase

5/07

Fortune BrandsU.S. Wine Business

12/07

Almaden/InglenookDivestiture

2/08

Certain Californiaand Pacific

Northwest Brands

Divestiture6/08

Value SpiritsDivestiture

3/09

Debt Pay-down History

Summary


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Grow strong, premium, consumer-preferred scale brands Portfolio transformation, SKU rationalization, organic focus and

distributor consolidation initiative

Leverage scale Distributor consolidation initiative, U.S. SG&A consolidation and

winery rationalization

Leverage P&L Global cost initiative, U.S. SG&A consolidation, wineryrationalization and debt pay-down

Improve ROIC Sale of Almaden/Inglenook and value spirits, SKU rationalization

and organic focus

Summary


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sept 2009 constellation brands stz presentation

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