Constellation Brands’ Corona and Modelo beers help push net sales 7% higher

USA – Wine and spirits company, Constellation Brands has recorded 7% increase in in net sales to US$8.12 billion for the year ended 28 February, boosted by its Corona and Modelo beer brands.

The beers category which also includes Funky Buddha, Four Corners and Ballast Point recorded 11.6% increase in net sales for the year, accounting for the main growth segment during the period.

Operating income was up 6% to US$2.41 billion while wine and spirits net sales were down 0.2% to US$2.91 billion plus a shrinking operating income.

Wine and spirits benefited from “double-digit distribution gains” for High West whiskey and wine brands Kim Crawford, Meiomi, Ruffino Sparkling and Cooper & Thief.

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Modelo Especial was identified as the leading growth engine in the entire US beer market, greatly contributing to the good performance in the year.

Corona brand family shipments volume reached 150 million cases while the Modelo brand family crossed the 125 million case mark.

In the fourth quarter, net sales of wine and spirits dropped by 7.6% while High West and wine brands Kim Crawford, Meiomi, Ruffino and the Prisoner portfolio posted double-digit growth.

The deal comes after Constellation Brands agreed to sell around 30 of its wine and spirits brands and six US winemaking facilities to E & J Gallo Winery for US$1.7 billion.               

“We’ve positioned our wine and spirits business for success with our announced plans to sell a portion of the business, which enables us to continue to strategically focus on our powerhouse, high-margin, high-growth brands,” said Bill Newlands, president and CEO.

“During fiscal 2019, our beer business delivered industry-leading double-digit sales and operating income growth led by our powerful, high-end brands and successful consumer-led innovation.

“Overall, we’re confident in our ability to drive top-line growth of mid-to-high single digits over the next three to five years across our entire business.”

The company said the move will enable it focus on the premium segments based on changing consumer trends, accelerate growth and increase shareholder value.

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Looking ahead to fiscal 2020, the company expects net sales of its wine and spirits to decline by 25-30% and operating income to drop by 30-35% as a result of the divestment.

It completed investment of US$4 billion in cannabis producer Canopy Growth after acquiring a minority stake in the firm in 2017 for US$191 million.

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