Constellation spirits fall flat despite US success

Svedka vodka owner Constellation Brands has reported “better than expected” sales for its spirits brands in 2014/15, however results remained flat.

Despite the increasing market share of Svedka’s flavoured portfolio, brand owner Constellion Brands saw flat spirits sales in 2014/15

Reporting its full-year financial results for 2014/15, Constellation Brands revealed a 1% net sales increase for its wine and spirits business.

However the group’s Mexican beer portfolio, including recently acquired Corona, was the main growth driver, experiencing a 12% net sales increase. Overall, Constellation’s reported net sales grew 24% to US$6bn.

The combined growth of Constellation’s labels has allowed it to initiate its first common stock cash dividend since the company went public in 1973.

“Within our wine and spirits business, we achieved strong earnings growth and margin expansion, while delivering better than expected results for our spirits portfolio,” said Rob Sands, president and CEO of Constellation Brands.

Sands added that the group’s spirits portfolio gained market share in the competitive US arena due to the performance of its flavoured vodkas, particularly Svedka Strawberry Lemonade and Svedka Mango Pineapple, as well as its Paul Masson Grande Amber Peach brandy.

He also claims that recently acquired Casa Noble Tequila, which was previously part-owned by musician Carlos Santana, was “gaining traction”. Constellation will introduce linked promotional activity between Casa Noble and Corona to maximise sales over Cinco de Mayo.

In a conference call today, Constellation said it “had work to do to reinvigorate the top line” of its wine and spirits portfolio, but that it expected low to mid-single digit growth in 2015/16 and to “at least retain market share”.

In its third quarter results, the company said its flavoured Svedka bottlings and whiskies had helped it achieve “outstanding growth”, offsetting a decline in its wine portfolio.

Based in New York, Constellation Brands also owns Black Velvet Canadian whisky.