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Constellation’s Sales Rise 5%, Led By Beer, Premium Wine And Spirits

January 5, 2023

Constellation Brands has posted sales up 5% on a comparable basis to $2.4 billion for its fiscal third quarter ended in November, propelled by its beer portfolio as well as its premium wine and spirits stable. Operating income slipped 7% on a comparable basis to $770 million, as increased costs ate into margins.

Constellation’s wine and spirits division saw sales decrease 1% for the quarter to $545 million, as the company continues to premiumize its range. Its new Aspira portfolio of fine wine and craft spirits brands posted 9% depletion growth, driven by 7% depletion growth from The Prisoner brand family and double-digit depletion growth from Mi Campo Tequila, High West Whiskey, and Casa Noble Tequila. According to Impact Databank, The Prisoner is estimated to have topped 300,000 cases on a second-consecutive double-digit gain in calendar 2022.

Constellation also called out the success of recent innovations like Kim Crawford Sparkling Prosecco and Meiomi Red Blend, adding that its Tequila labels Mi Campo and Casa Noble are expanding rapidly “in our targeted international metropolitan markets.” The company noted that its DTC channels delivered organic net sales growth of 23% for the quarter. Operating income for the wine and spirits unit fell 7% to $135 million on higher costs and DTC investments, but Constellation is targeting operating income growth of 3% to 5% for the division in its full fiscal year, even as it expects full-year sales to be in the range of flat to minus 2%.

On the beer side, sales grew 8% to $1.9 billion for the quarter on shipments up 2.7% to 98 million (2.25-gallon) cases, outpaced by 6% depletion growth. Operating income declined 2% to $710 million. Sales growth was led by Modelo Especial and Corona Extra, whose depletions rose 4% and 1%, respectively. Constellation also saw strong gains for the Modelo Chelada and Pacifico brands. The beer business now expects net sales and operating income growth of 9%-10% and 4%-5%, respectively, for the full fiscal year.

“Our beer business continued to outperform the market as the top share gainer for the sixth consecutive quarter,” said CEO Bill Newlands. “Our wine and spirits business further advanced its strategy with our largest higher-end brands delivering growth significantly above the category segments. Looking ahead, we remain confident that we can continue to build on our strong track-record of solid growth and value creation.”—Daniel Marsteller

Constellation Brands—Key Wines in the U.S.
Brand Origin Total1 2021
Depletions
2022 YTD2
Percent Change
in IRI Channels
Woodbridge by
Robert Mondavi
California 8,416 -2.1%
Robert Mondavi
Private Selection
California 2,060 0.7%
Cook’s California 2,050 -2.9%
Kim Crawford New Zealand 1,805 -1.3%
Meiomi California 1,699 11.2%
Ruffino Prosecco Italy 476 0.4%
Total Key Brands 16,507 -0.3%
1 Thousands of 9-liter cases.
2 YTD through November 27, 2022 in IRI channels.
Source: IRI and IMPACT DATABANK © 2023

 

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