Constellation Brands reports net income rose 143% to $390 million, or $2.06 a share, as fiscal first quarter sales rose 17% to $2.36 billion.
Beer Business
The beer business achieved double-digit net sales and operating income growth and 9%depletion growth driven by continued solid performance by Modelo Especial, which saw depletions grow 15%, and Corona Extra. Modelo Especial continued as the No. 1 brand in the high-end and No. 1 brand share gainer in the entire U.S. beer category, based on IRI data, Constellation said. Modelo Chelada remained the No. 1 chelada with depletions growing more than 39% and expanding its share to more than half the entire chelada segment.
Pacifico’s depletions grew more than 21%. The company said the brand regained distribution with increased brown glass availability.
The beer business’s operating margin eased 260 basis points, a result of higher raw material, transportation, brewery and depletion costs.
In IRI channels, Constellation’s beer business “significantly outpaced the entire beer category as well as high-end beer, adding 1.4 share points and carrying four of the top 15 share-gaining brands.
Wine and Spirits Business
The wine and spirits business share net sales and depletion grow 2% to $465 million, driven by strong performance of its higher-end brands including Meiomi, Kim Crawford, SIMI, The Prisoner Wine Co., High West Whiskey and Casa Noble Tequila.
The company noted its wine and spirits business outperformed the total U.S. wine and spirits category and gained share. Aspira, the company’s fine wine and craft spirits portfolio, achieved 16% depletion growth. The Prisoner Wine Co., High West Whiskey and Casa Noble Tequila all grew significantly ahead of their corresponding categories.
Operating margin fell 330 basis points to 19.6% and higher raw material costs, transportation costs, increased general and administrative costs and marketing spending all took a bite. Wine and spirits continues to expect sales to ease 1% to 3% in fiscal 2023 and net operating income to grow 4% to 6%.