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Constellation Sales Rise 3% To $1.9 Billion In Fiscal First Quarter

June 29, 2017

Constellation Brands posted a healthy start to its fiscal year this morning, with net sales up 3% to $1.9 billion in the three months through May. The increase registered 7% on an organic basis, excluding the effect of Constellation’s $784 million sale of its Canadian wine business last year. Operating income rose 3% to $568 million (+22% to $669 million on a comparable basis).

Constellation’s wine and spirits net sales grew 6% organically, driven by mix, price and volume growth, although shipments outpaced depletions for the quarter due to timing. “We have solid programming in place to drive growth for our key brands throughout the remainder of the year,” said president and CEO Rob Sands. “In addition, our spirits business posted double-digit sales growth driven by the success of our High West Whiskey portfolio, as well as Svedka Vodka and Paul Masson Brandy.” Paul Masson, an Impact “Hot Brand,” grew 10% to 2 million cases in the U.S. last year, while Svedka rose 3% to 4.3 million cases and High West was up 30% to 65,000 cases, according to Impact Databank.

Meanwhile, Constellation’s beer business, led by its Mexican portfolio, saw depletions increase 12% for the quarter, with net sales up 8%. Corona Extra (+5% to 122 million cases), Modelo Especial (+18% to 83 million cases), Corona Light (+6% to 16 million cases), Pacifico (+18% to 7.8 million cases) and Modelo Especial Chelada (+26% to 3.9 million cases) all posted strong growth in calendar 2016, according to Impact Databank.

So, too, did craft brand Ballast Point Sculpin IPA, which was up 15% to 1.5 million cases last year. However, Constellation revealed today that it recorded “an $87 million non-cash impairment charge to the trademarks associated with the Ballast Point business driven by the performance of the portfolio.” Constellation paid a hefty $1 billion to acquire the San Diego-based craft brewer in late 2015. Still, the company noted that it “remains focused on achieving its targeted return on investment for this acquisition.” —Daniel Marsteller

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