Constellation Sales Slide In First Quarter, But Crown Still ThrivesJune 30, 2011
As a result of the recent sell-off of its Australian and U.K. wine businesses, Constellation Brands’ net sales slid 19% to $635 million in its fiscal first quarter, which ended May 31st. On an organic constant currency basis, sales increased by 2%, while comparable net income rose 1% to $84 million.
Constellation’s core North American wine and Svedka vodka business saw volume decline during the period, which CEO Rob Sands attributed to price increases on some of the group’s value and specialty brands, as well as heavy promotional activity—and strong sales—during the same quarter a year ago, making for a tough comparison. Constellation expects the depletions trend to improve over the course of the year.
Svedka in particular faced a tough quarter in terms of shipments versus last year (when distributors bought in ahead of price increases), but Sands noted the brand’s continuing double-digit growth in SymphonyIRI data, and said it will “approach 4 million cases this year.” Svedka will see packaging and flavor innovations in the months ahead, Sands added. Meanwhile, Constellation has rolled out around 50% of the 20 new wine products it has slated for this year, with Rex Goliath Moscato, Ruffino Prosecco, Arbor Mist Pomegranate Berry Pinot Noir and the Simply Naked unoaked line already making their debuts.
Constellation’s Crown Imports joint venture with Grupo Modelo continued to provide momentum in the quarter, with its net sales rising 9% to $678 million. In the 52 weeks to June 12, Crown’s volume was up 2.3% to 53 million (2.25-gallon) cases in IRI channels, with Modelo Especial’s 17% growth offsetting declines by Corona, Corona Light and Pacifico. The continuing rollout of Modelo’s Victoria brand across the U.S. is paying benefits, with the new entry expanding to several new markets including California, Texas, Arizona, Colorado, Georgia and others so far this year. In the year through June 12, Victoria had already hit 425,000 cases in IRI scans—or about half Negra Modelo’s volume—despite a limited rollout.
|Constellation – Leading Wine/Spirit Brands
(millions of nine-liter cases)
|Calendar Year||Percent Change2|
|Paul Masson brandy||1.35||1.38||1.33||2.1%||-3.6%|
|1 excludes brands sold to Accolade Wines
2 based on unrounded data
Source: IMPACT DATABANK