Constellation Sees Super-Premium Headwinds As Temporary

Following Thursday night’s news that president for wine and spirits Robert Hanson will be departing at the end of February, Constellation Brands on Friday downgraded its full-year outlook for wine and spirits to decrease by 7% to 9% in sales terms and 6% to 8% in terms of operating income. Constellation CEO Bill Newlands told analysts the company is committed to boosting performance in the wine and spirits unit moving forward, despite temporary headwinds.

“We are not pleased with these revisions and both our leadership team and our wine and spirits teams remain fully committed to improving the performance of this business and to achieving its medium-term targets,” Newlands said.

Looking ahead, Newlands remained positive about the wine and spirits business’s potential to rebound, noting that 2023 proved challenging for many in the market and that Constellation is not alone in facing headwinds. “We continue to believe over the medium term, our wine and spirits should accelerate its net sales growth to 1% to 3% percent and improve operating margins to 25% or 26% percent,” he said. He pointed to Constellation’s focus on premiumization and international growth as potential sources of future growth for the wine and spirits business.

Pointing to 8-million-case Woodbridge and 3.8-million-case Svedka, two of the company’s largest wine and spirits labels, Newlands said that the team is dedicated to reviving the brands but that they expect the efforts will extend beyond fiscal 2024. “More broadly, while we are maintaining a disciplined approach to taking price across our portfolio, the competitive environment is now adding pressure with more brands discounting,” he said. He added that he believes that the current headwinds for more premium brands are only temporary and that Constellation’s continued efforts to bolster their higher-end labels—such as The Prisoner, Meiomi, and High West, among others—will produce results.

Mitigating the struggles in wine and spirits, Constellation’s stable of beer brands continues to excel. “We achieved depletion growth of over 8% for our beer portfolio with a particularly outstanding end to November,” Newlands said, adding that Constellation’s beers were the best selling brands in the U.S. in tracked channels for the week after Thanksgiving. He added that Constellation’s beer business continues to gain market share. —Shane English

Tagged : Constellation Brands

GET YOUR FIRST LOOK AT 2025 ESTIMATES AND 2030 PROJECTIONS FOR THE WINE AND SPIRITS INDUSTRIES. ORDER YOUR 2025 IMPACT DATABANK REPORTS. CLICK HERE.