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Constellation Sales Rise 1% In First Half As Profits Slip On Promotion, Innovation Drives

October 5, 2012

Constellation Brands posted a 1% net sales rise to $1.3 billion in the first half of its fiscal year, ended August 31, as net income fell to $196.6 million from $237 million a year earlier. Constellation CEO Rob Sands said the profit decline was due to a “planned increase in promotional spending for the company’s U.S. wine and spirits business, due in part to innovation initiatives.” Sands added that Constellation’s robust innovation campaign has been paying off, especially on the new Simply Naked, Dreaming Tree and Primal Roots wine brands, as well as on the recent launches of Svedka vodka’s new Colada flavor and Black Velvet Canadian whisky’s Toasted Caramel extension. Constellation’s key brands outperformed the market in IRI channels in the second quarter, Sands said.

Meanwhile, Constellation continues to benefit from the strong performance of beer unit Crown Imports, of which it expects to take full control early next year, buying out former joint venture partner Grupo Modelo for $1.85 billion. Led by Impact “Hot Brand” Modelo Especial, Crown’s sales rose 8% to $788 million in Constellation’s fiscal second quarter, with operating income up 14% to $143 million.


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