Constellation Brands logged higher profit and revenue in the fiscal second quarter, as strong beer sales at bars and restaurants made up for slower sales in grocery and liquor stores. The beer company on Tuesday posted a profit of $565.8 million, or $3.32 a share, compared with $466.0 million, or $2.65 a share, a year earlier. Comparable per-share earnings were $3.74, ahead of the $3.55 anticipated by analysts, according to Fact Set. Revenue rose 6% to $2.63 billion. Analysts surveyed by Fact Set forecast revenue of $2.54 billion.
Sales in Constellation’s beer business, which includes Corona and Modelo, rose 5%, while its wine and spirits business saw a 17% increase in sales. Some World Cup-related activity during the quarter boosted beers sold at bars and restaurants, known as on-premise sales. However, off-premise sales, which includes beer purchased in stores, were pressured by tighter consumer budgets. Given the softer consumer backdrop, Constellation said it has held off on widespread price increases. Pricing net of mix in the quarter was roughly flat, while volume growth drove most of the increase in revenue.
Constellation also announced Tuesday that it acquired Spiked Ade, a brand that sells bottled vodka-based drinks. The company said the market share gains in its core business are allowing Constellation to expand into new areas with rising consumer demand. Consumer preferences are evolving toward personal care, new flavors, moderated drinking and choices based on specific occasions, the company said.
“Looking ahead, we remain focused on building on this momentum by expanding our reach across more consumers and occasions, while investing behind the brands and capabilities that will support our next phase of growth,” Chief Executive Nicholas Fink said. The Spiked Ade deal marks a foray into a ready-to-drink beverage brand that is outside Constellation’s core beer brands. Other beer companies, including Molson Coors, have seen strong growth in canned cocktails and other non-beer, ready-to-drink beverages. Constellation is also looking to grow its non-alcoholic beverage offerings. Its non-alcoholic version of Corona has become a top seller in the industry with limited direct investment, the company said. The company raised its outlook for full-year earnings per share to between $11.85 to $12.55, up from its previous guidance range of $11.50 to $12.20.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing