Constellation Q1 wine and spirits sales drop 21%
High West Whiskey owner Constellation Brands saw its wine and spirits organic sales plunge by 21% in the first quarter of fiscal 2026.
For the three months to 31 May 2025, the US firm reported organic revenue of US$280.5 million – a decrease of 28% in net sales.
It followed a full-year sales drop of 7% for wine and spirits.
The group said the division’s first-quarter net sales were impacted by a 30.4% decrease in shipment volumes, which reflected the firm’s sale of Svedka Vodka to Sazerac in January this year.
Constellation also noted that its wine and spirits sales echoed the ‘cadence of shipments to better align with ongoing weaker consumer demand particularly affecting the mainstream price segments in the US wholesale market’.
The group said the decrease was mainly due to ‘ongoing consumer demand headwinds in the wine category, particularly in lower-price segments – which were further amplified by the challenging socioeconomic environment affecting beverage alcohol more broadly’.
The wine and spirits business saw its operating income plunge by approximately 110%, which was inclusive of US$14m of gross profit less marketing in the first quarter of fiscal 2025, as a result of the Svedka divesture.
In April, Constellation Brands signed an agreement with The Wine Group to divest some of its mainstream wine brands and related vineyards and facilities. Offloaded brands include Woodbridge, Meiomi, Robert Mondavi Private Selection and more.
The company said the closure of the deal with The Wine Group on 2 June supports its strategy to focus on ‘higher-growth, higher-margin [wine and spirits] brands driven by consumer-led premiumisation trends’.
The company restated that it expects wine and spirits to decline by between 17% and 20% in organic net sales for fiscal 2026. It also estimates organic operating income to plummet by 97%-100%.
In its commentary for the results, the group noted that this forecast considers distributor contractual payments from fiscal 2025, the recent wine divestures and the impact of the forthcoming tariffs announced by the US and Canadian governments.
In comparison, the group’s beer business dipped by 2% in first-quarter net sales to US$2.23 billion.
Constellation’s total sales for the quarter were down by 4% to US$2.51bn.
During the publication of its full-year results in April, Constellation said it was undergoing ‘a review of its organisational structuring’, which it anticipates will deliver net annualised cost savings in excess of US$200m by fiscal year 2028.
The group is currently facing a lawsuit in the US, which alleges that Constellation misled investors about the growth potential of its wine and spirits portfolio.
Constellation’s spirits portfolio also includes the Mi Campo and Casa Noble Tequilas, whiskey maker Nelson’s Green Brier, Copper & Kings brandy and ready-to-drink brand Austin Cocktails.
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