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As Constellation’s Sales Rise 17%, Sands Family Proposes Relinquishing Majority Control

June 30, 2022

Constellation Brands posted sales up 17% to $2.36 billion in its fiscal first quarter ending in May, with operating income rising 10% to $793 million. Concurrently, controlling shareholders the Sands family have formally proposed diluting their voting rights to relinquish majority control of the group, while remaining its largest shareholders.

Constellation’s beer business saw depletions rise almost 9%, driven by ongoing gains for Modelo Especial (+15%) and solid growth from Corona Extra (+4%). Modelo Especial Chelada and Pacifico also contributed growth to the beer unit, whose sales increased 21% to $1.9 billion, generating operating income up 13% to $763 billion. The beer business continues to expect net sales and operating income growth of 7%-9% and 2%-4%, respectively, for its current fiscal year.

On the wine and spirits side, net sales rose 2% to $465 million, while operating income slipped 13% to $91 million on increased costs. Constellation noted that its Aspira fine wine and crafts spirits portfolio achieved 16% depletion growth, with The Prisoner Wine Company, High West Whiskey, and Casa Noble Tequila growing significantly ahead of their corresponding categories. The Wine and Spirits division is expecting a fiscal 2023 reported net sales decline of 1%-3% and operating income growth of 4%-6%.

Meanwhile, Constellation’s board is recommending to shareholders a proposal to simplify its capital structure by eliminating Class B common stock and take the Sands family’s voting control down from 60% to about 20%, with the family remaining the group’s largest shareholders. If the proposal is approved by shareholders, Robert and Richard Sands, who currently serve as executive chairman and executive vice chairman of the board, respectively, will retire from their current executive capacities, with Robert becoming non-executive chairman and Richard continuing as a board member.

“The company’s simplified capital structure will provide a solid foundation as the company continues to pursue its strategic growth initiatives and capital allocation priorities to build shareholder value,” said Constellation CEO Bill Newlands.—Daniel Marsteller

Constellation—Leading Wines & Spirits In The U.S. Retailing At $15 And Up1
(thousands of 9-liter case depletions)
Brand Origin/Type 2020 2021 Percent
Change2
Kim Crawford New Zealand 1,615 1,810 12.0%
Meiomi California 1,545 1,699 10.0%
Simi California 578 551 -4.5%
Ruffino Prosecco Italy 446 476 6.8%
The Prisoner California 227 267 17.7%
High West Bourbon/Rye 132 146 10.4%
Unshackled California 107 139 30.3%
Cooper & Thief California 112 124 10.4%
Robert Mondavi Winery California 104 121 16.5%
Kim Crawford Illuminate New Zealand 13 102 712.0%
Total3 4,878 5,436 11.4%
1 At least $15 a 750-ml.
2 Based on unrounded data.
3 Addition of columns may not agree due to rounding.Source: IMPACT DATABANK © 2022
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