Beer is it for Constellation

Constellation Brands, the U.S. seller of Corona beer, Svedka Vodka and Robert Mondavi wine, on 3 October 2013 reported net earnings of USD 189 million, or USD 0.96 per share. Net sales, which exclude excise taxes, more than doubled to USD 1.46 billion during the second quarter of fiscal 2014 (end of August 2013).

In June this year, Constellation acquired Grupo Modelo’s U.S. beer business from AB-InBev and took over the 50 percent stake in Crown Imports it did not yet own. The deal was a byproduct of AB-InBev’s USD 20.1 billion purchase of Mexican brewer Grupo Modelo and made Constellation the third-largest beer supplier to the U.S.

In the quarter, Constellation’s net beer sales were up 3.4 percent to USD 815 million, while net sales for the wine and spirits segment, on the other hand, were down 1 percent to USD 697 million. Wine and spirits shipment volume rose 1.8 percent compared with beer shipments up 1.1 percent only.

Constellation Brand shares are up 70 percent year-to-date and hit a high of USD 60.58 on 3 October 2013.

Although Americans are increasingly choosing wine and liquor over beer, imported beers – particularly from Mexico – are performing better than many domestic brands like Budweiser and Miller. In 1997, Corona Extra overtook Heineken to become the number one imported beer in America. Today Constellation have 105 SKUs in the Modelo portfolio. In 2012 the Modelo portfolio of brands sold more than 170 million cases. While Corona is still the biggest seller, Modelo Especial is starting to close the gap. In 2012, Modelo Especial sold 40 million cases after having hit 30 million just two years previously. Constellation are expecting Modelo Especial to hit 50 million cases shortly and compete with Heineken for the number two rank.

According to Beer Marketers Insights, between 2009 and 2011, Modelo Especial grew from 1.9 million barrel to 2.6 million barrel (3.0 million hl). In 2011, the Heineken brand sold about 4.0 million barrel (4.7 million hl).