Constellation Brands CEO credits upbeat Q1 sales to its premium wine and beer brands

Constellation Brands' CEO said the acquisition of wine company Meiomi & craft beer Ballast Point coincides favorably with a consumer shift to premium beverages

Constellation Brands ended its first quarter with net sales of $1.9bn, a 15% year-over-year increase, driven by the company’s acquisitions of premium brands coupled with consumer demand for high-end alcohol products.

Beer business booms

The company’s entire beer portfolio grew roughly 9% compared the same period last year, hitting $1.15bn for the first quarter.

Its beer business expanded its operational footprint to Mexico and was the number one share gainer in the high-end segment of US beer, Constellation president and CEO Rob Sands said during a Q1 earnings call.

“Corona Extra and Modelo Especial remain two of the hottest brands in the US beer industry and held category leading positions as the number three and number two players respectively among overall brand share gainers,” Sands said.

Sands credited the brands' success to the company’s focussed market execution, particularly its national television advertising in English and Spanish for the Corona Extra, Modelo Especial, and Modelo Especial Chelada brands.

“Let’s not forget about Ballast Point, which continues to be the fastest growing major craft brand in the US posting depletion growth of more than 60% in the first quarter,” Sands said.

The company plans to distribute Ballast Point nationwide to all US 50 states and set up a Ballast Point Brewery in Virginia to ensure quality craft beer is reaching East coast consumers, he added.

Successful acquisitions of premium wine and spirits

Constellation’s wine and spirits business grew its earnings by 8% and expanded margins with the acquisition of premium wine brands Meiomi and The Prisoner leading the growth.  Meiomi, a 10-year-old Pinot Noir brand, reached $35.3m in sales for the first three months of 2016.

Sands noted that consumers are scaling up with their wine purchases from the $8 to $12 range up to $15 to $20 wine category.

“Constellation is now ranked number three in super luxury wine at the greater than $25 retail price point,” Sands said. “Meiomi is not only the largest Pinot Noir but also the largest dollar share gainer for the entire quarter.”

The company’s innovation platform in the wine and spirits segment also gained traction mainly due to enhanced offerings including: Robert Mondavi Private Selection Bourbon Barrel Aged Cabernet, SVEDKA Cucumber Lime, Ruffino Sparkling Rosé and Ravage Cabernet Sauvignon.

Overall positive outlook

Off to a promising start for 2016 and gaining market share across its beer and wine businesses, Constellation expects to continue to execute in the same areas into FY17.

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