What Drove Constellation Brands’ Beer Sales in Fiscal 1Q18?
Beer segment performance
Constellation Brands’ (STZ) Beer segment accounted for 64% of the company’s net sales in fiscal 1Q18, which ended on May 31, 2017. The company’s Beer segment sales rose 7.9% to $1.2 billion as the company’s imported beer brands continued to enjoy strong demand.
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Constellation Brands’ Beer segment sales growth in fiscal 1Q18 was driven by higher volumes and increased pricing. The segment’s shipment volume increased 7.0% on a year-over-year basis in fiscal 1Q18. In the fiscal 1Q18 conference call, Constellation Brands’ CEO, Robert Sands, mentioned that successful execution during Cinco de Mayo and Memorial Day helped in driving significant market share gains in the first quarter.
New products like Corona Premier and Corona Familiar are also seeing strong demand. The segment’s operating income grew an impressive 22.3% to $500.6 million in fiscal 1Q18, driven by strong sales, improved productivity, and higher pricing.
Constellation Brands’ popular Mexican beer brands helped it become the third-largest beer producer in the US market. Anheuser-Busch InBev (BUD), which acquired SABMiller in October 2016, is the leader of the US beer market. Molson Coors (TAP), which is now the sole owner of MillerCoors, is the second-largest player in the US beer market.
Constellation Brands continues to project net sales growth in the Beer segment in the 9% to 11% range for fiscal 2018. The company now expects its Beer segment operating income in the 13% to 15% range for fiscal 2018 in comparison to the company’s previous guidance of operating income growth in the 11% to 13% range.
Let us look at the company’s Wine and Spirits segment in the next part of this series.