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Constellation’s Sales Jump 15% In First Quarter, Driven By Modelo And New Additions

June 30, 2016

Constellation Brands started off strong in its fiscal 2017, achieving double-digit growth in net sales and operating income. Victor, New York-based Constellation enjoyed 15% net sales growth for the three-month period ending May 31, while operating income jumped by 21%.

Constellation’s impressive performance reflects 10% organic net sales growth on a constant currency basis, combined with acquisition benefits primarily from Ballast Point and Meiomi. The company’s growth is being driven by its beer unit, led by Corona Extra and the rest of the Grupo Modelo portfolio. Net sales for beer rose by 19% during the fiscal first quarter, due to a 15% increase in organic net sales and Ballast Point’s rapid rise. Constellation said the Ballast Point range—which it acquired for $1 billion in late 2015—had depletions growth of more than 60% in the quarter.

Meiomi is also on fire. The California wine brand, which Constellation acquired last summer for $315 million, posted value growth of more than 90% in IRI channels during the first quarter. Meiomi achieved double-digit depletion growth in the three-month period, according to Constellation, as did Kim Crawford, Black Box, Clos du Bois, Ruffino, Mark West and Woodbridge by Robert Mondavi.

Constellation expects to follow up on the strong first quarter with similarly solid growth for its full fiscal year (ending February 28, 2017). For the 12-month period, the company is projecting overall net sales and operating income growth of 14%-17%. For the wine and spirits business, Constellation is projecting net sales growth in the mid single-digit range and operating income in the mid-to-high single-digits, due in large part to an incremental benefit from the Meiomi and The Prisoner Wine Company acquisitions. Constellation closed on The Prisoner—which it purchased from Huneeus for $285 million—in late April. —Peter Zwiebach

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