Mexican Beer Continues to Power Constellation Brands

06 Jan 2017 --- Constellation Brands has reported that its earnings per share were up 38 percent to $1.96 while sales were up ten percent to $1.81bn in the quarter, swelled by the performance of its Mexican beer brands. However, its shares tumbled 7.13 percent to $146.75 today following the results announcement. The share price fall comes amid fears that new US president Donald Trump could raise the cost of Constellation Brands Mexican beer imports by imposing protectionist measures.

In Q3, net sales for its beer portfolio were up 16 percent, helped by volume growth and favorable pricing.

“Our beer business delivered double-digit sales and profit growth for the third quarter, and gained significant market share of the high-end of the U.S. beer category, as the number one contributor to growth, with our key brands growing across all market channels,” said Rob Sands, president and chief executive officer, Constellation Brands.

Constellation is now ranked as the third biggest beer seller in the US and beer has been the driver of the company’s growth.

Mexican beer brands are hugely popular in the US and Constellation has benefited from the popularity of brands such as Corona Extra and Modelo.

Wine and spirits net sales increased five percent, bolstered by the acquisition benefit of The Prisoner wine brands though this was partially offset by lower volume as U.S. depletion volume outpaced shipment volume during the quarter.

Robert Mondavi, Clos Du Bois and Svedka vodka are amongst those wine and spirit brands in the Constellation Brands stable.

“During the quarter, our wine business gained IRI volume and dollar share driven by strong depletion growth for our Focus Brands, and became the number 1 share gainer in the U.S. wine category. We also successfully integrated Charles Smith and High West into our portfolio. We're driving strong growth trends for these brands, which are enabling us to capitalize on U.S. market trends that favor high-end wine and spirits,” added Sands.

“It has been another dynamic quarter for our business and I am proud of our impressive financial results and recent accomplishments. We sold our Canadian wine business as part of our strategy to focus on premium, margin accretive, growth opportunities.”

“We increased our functioning brewery capacity and innovation flexibility to support our fast-growing, high-end Mexican beer portfolio with the purchase of the Obregon brewery operation in Mexico. We strengthened our premium wine and spirits portfolio with the acquisitions of Charles Smith Wines and High West Distillery, and we repurchased a significant number of our shares. Our business has never been stronger and the prospects across our beer, wine and spirits portfolio are compelling,” he added.