Constellation Brands’ beer business reported double-digit shipment and net sales growth along with nearly 9% depletions growth in the second quarter of its 2023 fiscal year.
The company’s beer portfolio — which includes top-selling Mexican import brands Modelo, Corona, Pacifico and Victoria, as well as craft brands Funky Buddha and Four Corners — reported net sales growth of 15%, to more than $2.1 billion (+$865.6 million) for its beer portfolio.
Beer shipments increased +12.1%, to 113.2 million case equivalents for the three-month period ending August 31. That marked an increase of 12 million CEs compared to Q2 2022. Modelo Especial and Corona Extra depletions growth pushed Constellation’s overall beer depletions up +8.9% in the period.
Constellation noted strong depletions growth across four key brands:
- Modelo Especial increased depletions more than +10% in the quarter and was the No. 1 brand share gainer in the U.S. beer category in IRI dollar sales.
- Modelo Chelada increased depletions more than +60% and now holds around 60% of the chelada segment.
- Corona Extra increased depletions +6% and was the No. 3 share gainer in the U.S. beer category in IRI tracked off-premise channels.
- Pacifico depletions grew more than +37% and was a top 10 share gain in the beer category.
“Our core beer brands, Modelo Especial and Corona Extra, continue to outshine the market, and our next wave brands, Pacifico and Modelo Chelada, are achieving strong double-digit-growth,” Constellation president and CEO Bill Newlands said in a press release.
In IRI tracked off-premise retailers, Constellation gained 1.8 points of dollar share of the beer category and 2.5 points in the high-end segment during Q2, the company shared.
For full-year 2023, Constellation is forecasting net sales growth of 8-10% and operating income growth of 3-5% for its beer business.
Operating Margin Up, Increased Raw Materials Costs Offset
Constellation noted that its operating margin increased 330 basis points to 40.5% during the quarter, citing “benefits from favorable pricing, lower obsolescence charges, fixed cost absorption from strong volume growth, and lower marketing spend driven by timing.” All of that “more than offset expected higher raw material costs.”
Portfolio-Wide Net Sales Up to Nearly $2.7 Billion
Constellation Brands’ overall net sales, including its beer, wine and spirits business, increased +12%, to $2.655 billion in the quarter. The company’s wine and spirits business increased net sales +1%, while shipments were flat.
$1.06 Billion Non-Cash Impairment Charge on Canopy Investment
The company recorded a $1.06 billion non-cash impairment charge to its investment in cannabis firm Canopy Growth.
Company Divests More Wine Brands
Following the divestment of several wine brands to E&J Gallo in 2021, Constellation Brands has reached a deal to divest some of its mainstream and premium wine brands to The Wine Group, including Cooper & Thief, Crafters Union, The Dreaming Tree, Monkey Bay, 7 Moons, and Charles Smith Wines. The deal is slated to close today.
Constellation said it is “focused on competing predominantly in [the] premium and fine wine and craft spirits segments.”
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