Constellation Brands saw sales of Corona rise in 2020
USA | Americans drank plenty of Corona and Modelo beers while being stuck at home during the pandemic, boosting Constellation Brands’ third quarter results (until end of November 2020) beyond investors’ estimates.
Constellation posted a turnover of USD 2.44 billion for the quarter, up 22 percent over the same quarter 2019. Its operating income was USD 783 million, an increase of 30 percent. Constellation’s beer business, its major earner, grew revenue to USD 1.7 billion (+30 percent) and operating income to USD 715 million (+39 percent).
For its 2021 fiscal year, Constellation is targeting a net sales growth of 7 to 9 percent, and operating income growth of 8 to 10 percent.
From bar stools to couches
Commenting on the performance of Constellation’s beer business, CEO Bill Newlands told Yahoo Finance on 8 January 2021: “Despite these great results that we’ve had, we’re off 53 percent in the on-premise this year. What’s interesting, though, is we haven’t really lost any opportunities. The opportunities have just moved venues. People who might have been out consuming in bars and restaurants have actually gone home.”
He added: “Per capita consumption rates [of beer] have been very consistent over the course of the pandemic. So it really has not hurt us substantially, even though it has hurt one of our channels greatly.”
Offloading cheaper wine brands
However, Constellation’s wine and spirits unit continues to struggle. For the full financial year, it is forecasted to report a net sales and operating income declines of 9 to 11 percent and 16 to 18 percent, respectively.
In view of this, Constellation may be glad that, on 5 January, it managed to finally offload 30 low-priced wines to E. & J. Gallo for USD 810 million, making it one of the most significant transfers in the country’s wine industry. Although these less expensive brands, which sell for USD 11 per bottle or less in supermarkets, have long been Constellation’s backbone, the firm has gradually shifted its wine portfolio to more premium offerings in recent years.
