Beer sales driving growth of Constellation Brands

Strong beer sales have helped drinks giant Constellation Brands adjust its earnings forecast for 2020, pushing shares prices up by almost 14% last Friday.

As reported by the Financial Times, strong sales of Constellation’s Corona and Modelo beer brands have helped investors look past a decline in wine and spirits sales.

Constellation forecasts its net sales and operating income for its beer division to increase by between 7% and 9% next year, and is now expecting a shallower decline in wine and spirits sales.

The company’s net beer sales are up by 7.4% on a year ago, while sales of wine and spirits have fallen by 7.8%.

Adjusted earnings were bumped up to between $8.65 and $8.95 a share in 2020, an increase of 15 cents at both ends of the range compared to previous estimates.

The company reported earnings of $17.57 a share in fiscal 2019. For the first quarter that ended on 31 May, net sales were up by 2.4% on a year ago to $2.1 billion.

In April, Constellation agreed to sell 30 entry-level brands from its wine and spirits portfolio for $1.7bn in an effort to focus on its premium portfolio.

“Our wine and spirits transformation strategy is working. In addition, our beer portfolio continues to be a cornerstone of growth in the US beer industry driven by double-digit growth for Modelo Especial and Corona Premier,” said Constellation’s CEO, Bill Newlands.