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Constellation Brands sees FY profits soar
Constellation Brands has reported a 12% net sales lift in 2016/17, with the group’s wine and spirits portfolio achieving “strong earnings growth and margin expansion”.
Constellation Brands has reported a 12% net sales lift in 2016/17
In the 12 months to February 2017, the US drinks group’s reported net sales reached US$7.3 billion, while reported operating income grew 36% to US$2.4bn.
While Constellation’s beer portfolio “continues to be a powerhouse for growth”, its wine and spirits business increased operating income by 6% – reflecting a 4% increase in organic net sales on a constant currency basis, “driven primarily by volume growth and favourable mix”.
Benefits from the acquisition of the Meiomi and Prisoner wine brands also attributed, though these were “partially offset” by the divestiture of the firm’s Canadian wine business in December 2016. As a result wine and spirits net sales fell flat in Q4.
“Fiscal 2017 has been a year marked by operational excellence and record financial performance,” said Rob Sands, president and chief executive officer, Constellation Brands.
“Our wine and spirits business achieved strong earnings growth and margin expansion driven by our fast-growing, high-margin Focus Brands, which collectively delivered depletion growth of 9% for the year.
“We continue to gain distribution for our newly acquired High West whiskey brands, as well as the Prisoner and Charles Smith wine brands, all of which posted strong, double-digit depletion growth for the year.”
During this financial year, Constellation acquired a minority stake in organic spirits producer Catoctin Creek Distilling Company, assumed complete ownership of Utah-based High West Distillery, and acquired a minority stake in Kentucky’s Bardstown Bourbon Company.
At the start of 2016, the group bought a minority stake in the recently reopened Nelson’s Green Brier Distillery through its investment unit, Constellation Ventures.
Looking to fiscal 2017, Constellation expects net sales for wine and spirits to decrease in the range of 4-6%, and for operating income to be “flat”.
Excluding the US$311m of net sales and US$50m of operating income from the fiscal 2017 wine and spirits segment results related to the Canadian wine business divestiture, Constellation expects net sales growth of 4-6% and operating income growth of 5-7% for fiscal 2018.