Constellation Brands reports 3% sales increase 

USA – Constellation Brands, a leading global beverage alcohol company, has reported a 3 percent rise in net sales to US$2.92 billion for the second quarter of fiscal year 2025. 

The company’s operating income saw a significant 13 percent increase to US$1.09 billion on a comparable basis, and a reported increase of US$1.23 billion.  

Comparable adjusted EBIT rose 12 percent to US$1.09 billion, though it also dropped to US$1.23 billion on a reported basis. 

The company’s Beer Business contributed significantly to this growth, with net sales rising by 6 percent, driven primarily by a 4.6 percent increase in shipment volumes. 

Depletion volume growth was recorded at 2.4 percent, supported by the ongoing demand for Modelo Especial, which grew approximately 5 percent, and the impressive performance of Pacifico, which rose by about 23 percent.  

Meanwhile, the Modelo Chelada brands experienced a modest 2 percent increase. However, Corona Extra saw a decline of around 3 percent. 

Constellation Brands’ beer division remains optimistic about future growth, with expectations of 6 – 8 percent net sales growth and 11-12 percent operating income growth for the remainder of fiscal year 2025. 

On the other hand, the Wine and Spirits division faced challenges, with net sales declining by 12 percent, driven by a 9.8 percent drop in shipment volumes.  

Market conditions remain difficult, particularly in the U.S. wholesale channel, which has impacted most price segments within the wine category. 

CEO Bill Newlands acknowledged the ongoing struggles within the Wine and Spirits unit but expressed optimism for gradual improvement.  

He pointed to positive signs in the higher-end wine brands, including Kim Crawford, Meiomi, and The Prisoner, where tactical pricing and marketing efforts have started to show some positive consumer trends. 

Operating margins for Constellation Brands increased by 270 basis points to 42.6 percent, supported by ongoing cost-saving initiatives, favorable pricing, and volume growth.  

The company also benefited from the absence of costs related to a voluntary keg recall in Q2 fiscal 2024, although these gains were partially offset by higher marketing investments. 

Despite these operational improvements, Constellation Brands updated its full-year outlook, lowering its annual net sales growth forecast from between 6 percent and 7 percent to a range of 4-6 percent.  

The company revealed a non-cash goodwill impairment loss of US$2.25 billion in the quarter, impacting its Wine and Spirits division. 

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