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Constellation Brands: Its Strong Fiscal 2Q18 Results

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Part 4
Constellation Brands: Its Strong Fiscal 2Q18 Results PART 4 OF 7

Constellation Brands’ Beer Segment Continues to Impress

Beer segment sales

Constellation Brands’ (STZ) beer segment accounted for 66.2% of the company’s net sales in fiscal 2Q18, which ended on August 31, 2017. The segment’s sales rose 12.8% to $1.4 billion in fiscal 2Q18. The company’s strong performance on the crucial July 4th holiday as well as the rest of the summer helped it deliver impressive growth in beer sales.

Constellation Brands’ Beer Segment Continues to Impress

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Key growth drivers

Sales growth for the beer segment was due to strong volumes, which contributed to the $147.0 million rise in fiscal 2Q18 sales. The segment’s volumes were driven by continued consumer demand for its Mexican beer portfolio. Along with strong demand, the company’s aggressive marketing efforts also helped generate higher beer volumes in the quarter. Higher pricing in select markets within the company’s Mexican beer portfolio contributed $20.8 million to the sales increase.

Lower wine and spirits sales

Sales for the wine and spirits segment fell 11.7% to $706.0 million in fiscal 2Q18. The fall reflected the impact of the divestiture of the company’s Canadian wine business. Net sales from acquired brands such as Prisoner and Charles Smith as well as High West Whiskey favorably impacted the segment’s fiscal 2Q18 sales by $13.6 million.

Sales guidance intact

Constellation Brands continues to expect net sales for its beer segment to rise 9.0%–11.0% in fiscal 2018. For the wine and spirits segment, the company expects net sales to fall 4.0%–6.0%. The wine and spirits segment’s sales growth estimate takes into account the impact of the divestiture of the Canadian wine business and the estimated incremental benefits from acquired brands.

In the next part, we’ll look at the company’s margins.

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