Bill Newlands on the ‘bold moves’ of Constellation Brands

29th January, 2018 by Amy Hopkins

Svedka is the “third-fastest-growing vodka” in the US

Newlands says Constellation’s position as a TBA player – especially at a time when multinationals seem to be honing their focus – gives it an edge in terms of product innovation. “One of the things that is changing a lot in this marketplace is what I would describe as the blurring of categories,” he observes. “We have sold Bourbon barrel-aged Cabernet and Chardonnay – we could barely keep it in stock. We are now ageing Tequila [Casa Noble] in Robert Mondavi To Kalon wine barrels – again, a really different product profile, and we are selling it for over US$1,000 a bottle. It’s about finding those unique ways to cross-leverage our portfolio of total beverage alcohol, which gives us a unique position.”

For Newlands, innovation is important to sustaining organic growth. “For any organisation, you can’t take your eye off the ball of what you own to just go after something new,” he says. Svedka vodka, which Newlands says is the “number one imported vodka by volume in the US” and the country’s “third-fastest-growing vodka”, has benefited from flavour innovation lately – its new Blue Raspberry edition has proved to be “the most successful flavour launch in the brand’s history”, the executive claims.

He continues: “Despite the talk about brown spirits, the vodka category still represents one out of every three drinks in this country. So we still have a lot of opportunity to expand on the Svedka franchise. We are investing more consumer marketing spend than we have ever invested before, and we’re very excited about the potential growth in that area as well.”

Solid growth

Looking at Constellation’s recent financial performance, Newlands is understandably pleased. In the full-year 2016/17, Constellation’s net sales grew by 12% to reach US$7.3bn, while its reported operating income increased by 36% to US$2.4bn. The current fiscal period has also got off to a good start.

“We have brought almost 40% of the total retail growth across total beverage alcohol – more than three times the next-largest player,” says Newlands. “It’s not only working from a financial basis, which is important for a publicly held company, but it’s also working for the consumer, which is ultimately the real test, because you’ve got to please your consumer, at the end of the day, or it will come back to haunt you.”

This all-encompassing desire to connect with consumers and pre-emptively act on emerging trends means Constellation, despite its size, remains agile and quick to make business decisions. Newlands explains: “We have had three CEOs in our history – all members of the founding family – and their focus has always been on a narrow set of things: people, quality, entrepreneurship, and building brands. The other thing that overlays this is that they are really prepared and willing to make bold moves and follow consumer trends. I have worked with a number of different companies in this space and I have never seen an organisation that was more agile and quick to make smart decisions, not dumb ones, than this organisation.”

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