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Strong Summer Beer Season Boosts Constellation In Second Quarter, Wine And Spirits Up 3%

October 2, 2014

Constellation Brands enjoyed continued momentum from its lineup of Mexican beer brands in its fiscal second quarter ended in August, as the company’s consolidated net sales rose 10% to $1.6 billion. On an organic basis, net sales increased 5%, and operating income on a comparable basis rose 17% to $413 million.

Constellation’s beer stable led the charge with a 9% net sales rise, including positive contributions from Impact “Hot Brand” Modelo Especial and flagship Corona Extra, as well as the introduction of Modelo Especial Chelada and an expanding U.S. market footprint for Victoria. The company also benefited from an increasing draft presence in the on-premise, with Corona Light draft handles extended to 35 new markets this year.

To support continuing beer growth, Constellation announced that it would up capacity at its Nava Brewery in Mexico from 20 million to 25 million hectoliters on an investment of about $500 million. It also plans to spend $300 million to acquire a Nava-based glass plant owned by Anheuser-Busch InBev, pending regulatory approvals, which is expected to furnish more than half of its glass needs for its U.S. beer unit looking ahead.

Meanwhile, Constellation’s wine and spirits business saw sales increase 3% in the second quarter, driven by Kim Crawford, Svedka, Mark West, Ruffino, Black Box and the Dreaming Tree. Excluding Svedka, which was up 3.3% to 4 million cases in the U.S. market last year, all of the above posted double-digit depletions growth in 2013 on their way to earning Impact “Hot Brand” honors. Constellation CEO Rob Sands noted that the group observed improving depletion trends and a favorable product mix on the wine and spirits side during the quarter.

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