Constellation Brands, a leading player in the beverage alcohol industry, recently reported a 2% increase in full-year sales, reaching $10.2 billion for the fiscal year ended in February. Despite facing challenges such as softer consumer demand, the company managed to achieve a 7% growth in comparable operating income, totaling $3.5 billion. This growth was primarily driven by the company’s beer business, which accounts for over 80% of its sales and saw a 5% increase to $8.5 billion during the fiscal year.
However, Constellation’s beer division experienced a flat performance in the fourth quarter, with depletions decreasing by 1%. This decline was attributed to decreases in popular brands like Modelo Especial, Corona Extra, and the Modelo Chelada brands. On the other hand, the company’s organic wine and spirits sales dipped by 6% to $1.7 billion for the year, mainly due to decreases in the mainstream portfolio, which is now being divested to The Wine Group.
As part of its strategic realignment, Constellation announced the divestiture of brands totaling 12 million cases to The Wine Group, including well-known names like Woodbridge, Meiomi, Robert Mondavi Private Selection, Cook’s, Simi, and J. Rogét sparkling wine, along with related California facilities. This divestiture is expected to yield proceeds of approximately $900 million, subject to closing adjustments.
Post-divestiture, Constellation’s wine and spirits unit will focus on high-end products, with a portfolio that includes prestigious labels like Robert Mondavi Winery, Schrader, Kim Crawford, Ruffino Estates, Sea Smoke, and others. The company’s spirits portfolio will continue to feature popular brands like High West whiskey, Nelson’s Green Brier whiskey, and Casa Noble Tequila.
Looking ahead, Constellation expects its sales for the new fiscal year to range from a decline of 2% to a gain of 1%. The beer division is projected to achieve growth between 0% to 3%, while the wine and spirits segment is anticipated to decline by 17% to 20%. The company also revised its medium-term outlook for fiscal 2028, projecting sales growth of 2% to 4%, down from the previous estimate of 6% to 8%, due to the expected impact of tariffs amid global trade tensions.
In conclusion, Constellation Brands remains focused on optimizing its portfolio and adapting to changing market conditions to drive sustainable growth in the future. By strategically divesting certain brands and reshaping its product offerings, the company aims to enhance its competitiveness and profitability in the evolving beverage alcohol industry landscape. Subscribe to Shanken News Daily’s Email Newsletter to stay informed about the latest developments in the industry.
