Constellation Brands Faces Up To $2.5 Billion Write-Down for Wine and Spirits Portfolio

Constellation Brands has revised its financial forecast for fiscal year 2025, citing considerable challenges faced by the company’s wine and spirits brands. The revision accounts for a $1.5-$2.5 billion goodwill impairment loss for its wines and spirits for the company’s second fiscal quarter, ended in August. The company attributes the expected write down to difficulties in the wholesale market as well as part of the wider headwinds facing wine.

Constellation’s revised outlook forecasts overall net sales growth to be in the 4% to 6% range, down from 6% to 7%, with wine and spirits the primary culprit. Looking ahead, Constellation now projects beer net sales growth of 6% to 8%, down from 7% to 9%, and wine and spirits losses of 4% to 6%, a revision from the previous guidance showing a range of 0.5% losses to 0.5% growth.

In addition, Constellation’s updated outlook includes a new estimate for reported diluted net income per share of $3.05-$7.92, down from the previous guidance which showed an expected $14.63-$14.93. “While ongoing macroeconomic headwinds, particularly rising unemployment, have led to a recent deceleration in the rate of growth of consumer demand for our products, we are on track to deliver a solid mid single-digit volume increase this fiscal year for our Beer Business,” said Bill Newlands, president and CEO. “In our Wine and Spirits Business, the commercial and operational execution initiatives introduced earlier this year are improving the performance of our largest brands, but we continue to face incremental category headwinds further affecting our outlook for this fiscal year.”

In 2023, according to Impact Databank, the company’s wine and spirits business dipped 6.5% to 21.6 million cases. Leading wine labels Woodbridge and Robert Mondavi Private Selection both faced 10%+ declines last year, dropping to just under 7.1 million and 1.8 million cases, respectively. On the spirits side, Svedka fell 4% to 3.7 million cases. At the higher end, Constellation Brands’ portfolio is more stable, with Kim Crawford (including Illuminate) up 0.6% to 1.84 million cases and Meiomi (including Bright) shedding fewer than 20,000 cases and holding steady at 1.8 million. California wine brand Unshackled and Tequila brand Mi Campo also showed growth but from much smaller bases.—Shane English

Tagged : Constellation Brands, Kim Crawford, Meiomi, Mi Campo, Robert Mondavi, unchackled, Woodbridge

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