Constellation predicts decline for wine and spirits

US drinks firm Constellation Brands has reported a marginal net sales increase for its wine and spirits business in Q3, but expects to register a decline for the full fiscal year.

Bill Newlands: “Innovation will “continue to fuel growth”

In the three months to 30 November 2018, the group’s wine and spirits unit registered a reported net sales increase of 0.4% to US$762.8 million, while operating income grew by 3.3% to US$206m.

However, the unit’s net sales and operating income are expected to decline by “low single digits” in fiscal 2019.

Despite “outperforming” the US wine market, Constellation’s performance in the below-US$11 wine segment has been “challenged”.

Constellation’s beer business reported the strongest growth, with a reported Q3 net sales increase of 16% to US$1.2bn.

The group’s total reported net sales, including beer, increased by 9% in Q3 to US$1.97bn.

Constellation completed its US$4bn additional investment in cannabis producer Canopy Growth Corporation in November and is set to benefit from a US$1.2bn “unrealised gain” since its initial investment in Canopy in 2017.

According to Bill Newlands, president and chief operating officer at Constellation Brands, innovation will “continue to fuel growth” for the group in the year ahead.

“Our focus on innovation is driving incremental growth for our beverage alcohol portfolio,” he said. “We recently introduced Meiomi Sparkling, Crafters Union canned wine and Mi Campo Tequila, which tap into fast growing sectors of the wine and spirits market. Corona Premier continues to drive strong growth as a trade up for consumers who want a low-calorie, low-carb option.”

Newlands will take over from Rob Sands as CEO of Constellation on 1 March as Sands moves to the role of executive chair.