Corona imports in trouble
On 9 April 2010 Mr Sands said Constellation’s modest fiscal 2011 profit forecast partly reflects the weakness of the joint venture, as many U.S. consumers continue to buy less expensive beers.
Constellation Brands, which owns brands like Robert Mondavi wine, Svedka vodka and other drinks, expects to earn USD 1.53 to USD 1.68 per share in fiscal 2011, below analysts’ forecast of USD 1.77 per share.
Corona Extra has been a strong brand for a long time, but it is expected to continue to lose market share to new entrants as more craft and imported beers enter the United States.
Beer sales have declined in bars, restaurants and convenience stores, but Mr Sands reported that the Crown portfolio outperformed other imported beers and grew market share last year.
Crown Imports’ sales fell 4 percent during the fiscal fourth quarter ended 28 February 2010, and Constellation’s cut of the venture’s profits fell 11 percent to USD 41 million.
Like most wine, beer and spirits companies, Constellation’s sales have suffered in the downturn as consumers cut back on drinking at bars and restaurants or buy lower-priced drinks.
It is expected that U.S. consumers will spend the same amount or less on alcoholic drinks this year.
Crown’s volume should be flat to down in a low-single-digit percentage range this year, while Constellation’s equity earnings from the venture should drop in the mid-single digits, Chief Financial Officer Bob Ryder was reported as saying. He added that the joint venture would spend more on marketing in the current first quarter (March to May 2010).
Constellation Brands, the world’s biggest seller of branded wine, reported a net loss of USD 51 million for its fiscal fourth quarter, compared with a loss of USD 406.8 million a year earlier. Sales fell 3.5 percent to USD 708.7 million.