USA: Constellation Brands’ beer unit posts 14% net sales growth in the three months through August

Constellation Brands posted on October 6 sales up 5% on an organic basis to $2.37 billion in the three months through August, representing its fiscal second quarter, with its beer business in double-digit growth and its upscale wine portfolio led by The Prisoner, Kim Crawford, and Meiomi contributing solid momentum.

Operating income slipped 8% to $730 million on an organic basis, however, weighed down by increased costs and a slowdown in the hard seltzer business.

Constellation’s organic wine and spirits sales jumped 15% to $510 million for the quarter, as organic shipment volume increased 5.7%. The company touted newcomers Meiomi Cabernet Sauvignon, Kim Crawford Illuminate, and The Prisoner Cabernet Sauvignon and Chardonnay as all being among the top 10 innovations at the high end of the U.S. wine category in IRI channels since their respective rollouts. Most recently, SND exclusively reported the launch of former Prisoner offshoot Saldo as its own brand, in a bid to further tap the high end.

Looking ahead, Constellation will continue to leverage innovation, expanding the Woodbridge brand with wine seltzers, sparkling infusions, and a 3-liter box format, and is also aiming to widen distribution of Svedka’s RTD cocktails. The company also noted that its wine and spirits e-commerce sales, including direct-to-consumer, have increased three to four times versus 2019, bolstering its share in fine wine, particularly driven by “robust growth of The Prisoner on Instacart and Robert Mondavi on Wine.com.” Operating income fell 38% to $100 million for the wine and spirits business during the quarter, although that number includes some one-off factors like smoke-tainted bulk wine sales.

Meanwhile, Constellation’s beer unit posted 14% net sales growth to $1.86 billion in the three months through August, led by Modelo Especial’s 16% depletion growth and a 5% increase from Corona Extra. Operating income was flat at $693 million, owing to increased costs “largely driven by an increase in obsolescence of $66 million relating to excess inventory of hard seltzers, resulting from a slowdown in the overall category in the U.S.,” according to the company.

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