Constellation Brands sees sales dip
The company, which is a leading international producer and marketer of beverage alcohol in the wine, spirits and imported beer categories, with a significant market presence in the U.S., Canada, U.K., Australia and New Zealand and more than 250 brands, said revenue excluding excise taxes fell 6 percent to USD 1.03 billion in the third quarter.
Excluding currency fluctuations, sales rose 1 percent.
Gross margin increased to 39.2 percent from 35.8 percent on the company’s continuing strategy of raising prices in its key markets.
Branded wine sales, which represent the bulk of Constellation’s results, fell 6.9 percent to USD 848.7 million on the weaker dollar. Spirits sales slid 5.1 percent to USD 111.4 million.
Constellation, which has been buying and selling brands as the likes of you and me buy a train ticket, reported on 12 January 2009 that it plans to sell its Value Spirits Brands unit for USD 334 million, which includes more than 40 brands, to the New Orleans-based Sazerac Company. The deal is still subject to regulatory approval.
The deal, which includes USD 274 million in cash and USD 60 million in medium-term financing by Constellation, is expected to close by the end of February 2009, according to Constellation. The total 2008 sales volume for the brands being divested by Constellation was more than 10 million cases, with net sales for those brands totalling about USD 200 million.
Constellation is retaining several brands in the Value Spirits Brands unit, including SVEDKA Vodka, Black Velvet Canadian Whisky and Paul Masson Grande Amber Brandy. Those three spirits brands account for nearly 5 million cases in annual sales, it was reported.
In the economic crisis, mid-premium brands like Svedka vodka and Black Velvet whiskey seem to be outperforming their peers in the U.S. market. Svedka reported a 60 percent sales surge.
Now we know why Constellation is not selling them on.
In June last year, Constellation shed eight Bay Area and Pacific Northwest wine brands for USD 209 million, calling the sale a “strategic restructuring”. In August, it announced plans to sell three wineries and 20 vineyards in Australia as part of the same process. Given the wine glut Down Under, Constellation has not found a buyer yet but has caused a lot of aggro among Australians for its ostensible hit & run policies.
