Constellation sees wine and spirits grow in Q3
Svedka vodka owner Constellation Brands experienced an improved performance for wine and spirits during the third quarter of its 2021 fiscal year.
Reported net sales for wine and spirits in the three months ending 30 November 2020 rose 10% to US$760.2 million, up from US$688.8m in the same period in 2019. The firm’s wine and spirits sales decreased by 11% during its second quarter.
Overall, reported net sales for the group during the third quarter grew by 22% to US$2,438m.
Bill Newlands, president and chief executive officer, said: “Our business performance accelerated during the quarter despite ongoing headwinds from the pandemic, as we remain obsessed with meeting the needs of our consumers while staying focused on our long-term growth strategy.”
Earlier this month, Constellation Brands received authorisation from the US Federal Trade Commission to sell Paul Masson Grande Amber Brandy to Sazerac for US$255m.
The divestment included the Paul Masson brand, related inventory and interests in certain contracts, and is expected to be completed this month (January 2021).
Garth Hankinson, chief financial officer, said: “The finalisation of our wine and spirits transactions enhances the financial profile of our business and enables further debt reduction so that we can continue to execute our commitment to return US$5 billion in value to shareholders through dividends and share repurchases through fiscal 2023.”
Furthermore, Constellation Brands reported a US$12.4m loss during its third quarter from its share in cannabis firm Canopy Growth. In December 2020, Canopy Growth revealed plans to close five Canadian production facilities as part of its efforts to streamline operations and further improve margins.
Looking ahead to the end of the fiscal year, Constellation Brands expects reported net sales for wine and spirits to decline by 9%-11%, and for operating income to drop by 16%-18%.