Constellation Brands posted a 7% increase in net sales in its fiscal full-year results, as the US company was boosted by its Corona and Modelo beer brands.
During the 12 months to 28 February, net sales stood at $8.12 billion. Operating income was up 6% to $2.41 billion.
Net sales of Constellation’s beer brands – which also include Funky Buddha, Four Corners and Ballast Point – were up 11.6% for the year.
During a conference call, CEO Bill Newlands highlighted the performance of Modelo Especial, which he described as “the leading growth engine in the entire US beer market”.
Constellation Brands CEO Bill Newlands.
He said: “Modelo Especial is now the number-one brand in three markets and the entire state of California and the number-two brand in five additional major markets, growing double-digits in 41 of the 50 states.”
During the year, Corona brand family shipments volume reached 150 million cases while the Modelo brand family crossed the 125 million case mark.
Meanwhile, wine and spirits net sales were down 0.2% to $2.91 billion and operating income from the unit shrank 2.9%.
The results were published a day after Constellation announced a deal to offload around 30 of its wine and spirits brands and six US winemaking facilities to E & J Gallo Winery for $1.7 billion.
The transaction – which includes brands such as Clos du Bois, Black Box, Estancia, and Mark West – sees Constellation sell wines principally priced at $11 or less in retail stores, as it looks to focus on its premium beverage portfolio.
Newlands, who took over as CEO last month from Rob Sands, added: “We’ve positioned our wine and spirits business for success with our announced plans to sell a portion of the business, which enables us to continue to strategically focus on our powerhouse, high-margin, high-growth brands.
“During fiscal 2019, our beer business delivered industry-leading double-digit sales and operating income growth led by our powerful, high-end brands and successful consumer-led innovation. Overall, we’re confident in our ability to drive top-line growth of mid-to-high single digits over the next three to five years across our entire business.”
During the upcoming fiscal year, the company expects net sales and operating income in its beer segment to grow between 7% and 9%. Wine and spirits are expected to see a 25% to 30% decline in net sales and 30% to 35% reduction in operating income. The guidance includes the estimated impact from the transaction with Gallo.
© FoodBev Media Ltd 2019
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