Constellation’s wine and spirits sales down nearly 50%
Constellation Brands’ first quarter results, although soft, provided some cheer and beat analysts’ forecasts. Beer is up, wine and spirits are considerably down and Tequila is well and truly stealing the show.
Net sales for Constellation Brands fell 3.3% to US$2.43 billion for the three months to the end of May, compared with analysts’ estimates of $2.39 billion. The group also made a quarterly profit of $3.43 per share, beating estimates of $3.20 per share.
That compares favourably with a profit of $516.1 million, or $2.90 a share, in the first quarter of 2025 and the shares rose by almost 4% as a result.
This allowed Constellation to reaffirm its guidance for the current year of profits per share between $11.20 to $11.90.
Beer sees growth
Volume trends were lower as the quarter progressed, new chief executive Nicholas Fink said, reflecting the effects of higher fuel prices from the war in Iran on top of inflation
“While we saw a resurgence of purchasing behaviour amidst a more normalised start to the quarter, these financial pressures then drove a more discerning and value-conscious consumer mindset, most notably within lower-income households,” he said.
Beer sales in the quarter grew by 2%, to $2.28 billion, driven by price cutting and higher shipments to distributors. However, beer sales to retailers fell 0.3% as declines of Modelo Especial and Corona Extra were partially offset by growth in the Pacifico, Victoria and Modela Chelada brands.
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Wine and spirits drop
In the much-pruned wine and spirit division sales fell 47%, to $149.2 million, however, depletions rose 6.6%, driven in part by 62% growth in the company’s Mi Campo Tequila label. On an organic basis wines and spirits sales rose by 8% compared with the same quarter last year.
The company is expecting beer sales and organic wine and spirit sales to both fall to a range between down 1% and up 1% for the year.
World Cup promise
There are some hopeful pointers that may help create added momentum for Constellation.
Although not in the same league as the Tartan Army, which drank parts of Boston dry before Scotland exited the World Cup, sales of Constellation’s Mexican beer brands will not be harmed among the Hispanic population by further progress in the competition by both Mexico and the USA.
As of the week ending 20 June, which includes the first 21 US-hosted matches, on-premise beer sales rose 5.5% nationally according to the Beer Institute, which monitors almost 90% of industry volumes.
On-premise beer sales specifically in World Cup host markets have climbed 15.4% compared with last year.
In addition, the high fuel prices about which Fink complained are trending downwards as hostilities in the Middle East cool while the 50% tariff on aluminium imposed by President Trump was removed in April. That will help to moderate canning costs.
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