Constellation Sees Beer Business Drive First-Quarter Growth
July 3, 2024Constellation Brands saw sales grow 6% to $2.7 billion in its fiscal first quarter ended in May, led by continuing strong gains for its Mexican beer portfolio, partially offset by a decline on the wine and spirits side. Operating income jumped 12% to $924 million for the quarter on a comparable basis against the prior year.
Momentum continued during the quarter for Constellation’s beer unit, with sales up 8% to $2.3 billion—accounting for 85% of company revenue—and operating income rising 16% to $923 million. Eight brands from Constellation’s beer and flavored malt beverage stable recently earned Impact “Hot Brand” awards, including Modelo Especial, the third-largest beer brand in the U.S. at just under 200 million (2.25-gallon) cases, along with Modelo Chelada, Pacifico, Corona Familiar, Victoria, Modelo Oro, Corona Non-Alcoholic, and Modelo Ranch Water.
In the quarter through May, Modelo Especial depletions grew 11%, Pacifico was up 21%, and Modelo Chelada rose 5%, the company noted. Corona Extra depletions declined 1%, but the brand is expected to deliver depletion growth for the full fiscal year. New offerings in the portfolio include Corona Sunbrew and two new versions of Modelo Chelada: Fresa Picante and Negra Con Chile.
On the wine and spirits side, Constellation continues to battle tougher conditions, and says it remains committed to boosting upscale labels such as The Prisoner, Meiomi, and High West, with category headwinds believed to be temporary. In the three months through May, the wine and spirits unit’s sales dipped 7% to $389 million on shipments down 5% to 5.6 million 9-liter cases, and depletions were behind shipments at -13%. Operating profit fell 25% to $60 million. “The business continues to face challenging market conditions, primarily in the U.S. wholesale channel across most price segments in the wine category,” the company said.
Still, Constellation maintained its full-year guidance for the wine and spirits division, with sales expected to come in roughly flat and operating income targeted at -9% to -11%. Overall, Constellation sees sales climbing 6% to 7% for the full year, led by beer, with comparable operating income expected to tally 8% to 10% growth.
In March, Constellation named company veteran Sam Glaetzer to lead the wine and spirits division, replacing Robert Hanson, who departed in February, as it looks to weather the tougher market and renew growth looking ahead.—Daniel Marsteller
| Constellation—Leading Wines & Spirits in the U.S. Retailing At $15 & Up1 (thousands of 9-liter case depletions) |
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| Brand | Origin/Type | 2022 | 2023 | Percent Change2 |
|
|---|---|---|---|---|---|
| Kim Crawford | New Zealand | 1,829 | 1,840 | 0.6% | |
| Meiomi | California | 1,828 | 1,809 | -1.0% | |
| Ruffino Prosecco | Italy | 529 | 520 | -1.7% | |
| Simi | California | 536 | 498 | -7.0% | |
| The Prisoner | California | 287 | 285 | -0.8% | |
| Unshackled | California | 175 | 195 | 11.3% | |
| High West | Bourbon/Rye | 170 | 170 | -0.1% | |
| Mi Campo | Tequila | 94 | 161 | 71.9% | |
| Total Leading $15 & Up3 | 5,447 | 5,477 | 0.5% | ||
| 1 At least $15 a 750-ml. 2 Based on unrounded data. 3 Addition of columns may not agree due to rounding. Source: IMPACT DATABANK © 2024 |
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Tagged : Constellation, Corona, Modelo, Pacifico
