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Constellation Rides Beer, New Acquisitions To Double-Digit Sales Gain

October 5, 2016

Constellation Brands enjoyed a strong first half of its fiscal year, following up on the 15% net sales growth it achieved in the first quarter with a 17% sales increase in the second quarter. Constellation also saw accelerated growth on the profit side, as its second-quarter operating income jumped by 27% after a 21% first-quarter bump.

For the second quarter (the three months ending August 31, 2016), Constellation garnered organic sales growth of 13%, while the acquisition benefits from craft brewer Ballast Point and the Meiomi and The Prisoner wine brands further boosted growth.

Beer remains the Victor, New York-based company’s growth engine, with second-quarter net sales rising by 20%. That includes 15% organic growth, as the company’s Grupo Modelo range (led by Corona Extra and Modelo Especial) continues to register double-digit volume gains, as well as the acquisition benefit from Ballast Point. Constellation purchased the fast-rising California craft brewer for $1 billion in late 2015.

Constellation achieved a 12% net sales increase in wine and spirits during the second quarter, including 8% organic growth and a solid contribution from Meiomi and The Prisoner, which Constellation acquired in the summer of 2015 and spring of 2016, respectively.

Constellation has been an aggressive acquirer over the past 18 months, adding nearly $2 billion worth of new additions. The company’s latest purchase occurred earlier today, when Constellation announced it had agreed to purchase Utah craft spirits producer High West Distillery. As SND reported last night, Constellation beat out rivals such as Moët Hennessy and Pernod Ricard for High West, which projects 70,000 cases in sales this year and expects to sell as much as 100,000 cases in 2017. While the price was undisclosed, sources close to the deal say Constellation paid roughly $160 million for High West. —Peter Zwiebach

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