uploads///STZ Q Sales

Constellation Brands’ Sales Growth in Fiscal 2Q18: Strong or Not?



Analysts’ expectations

A strong imported beer portfolio has been driving Constellation Brands’ (STZ) sales growth. In fiscal 1Q18, which ended on May 31, 2017, its sales rose 3.4% on a year-over-year basis. In fiscal 2Q18, analysts expect sales to rise 1.8%, to $2.1 billion.

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Sales growth drivers

In fiscal 1Q18, Constellation Brands’ sales rose 3.4% to $1.9 billion, missing the consensus sales estimate by 0.60%. Organic net sales growth of 7.0% in fiscal 1Q18 was partially offset by the impact of the divestiture of the company’s Canadian wine business.

Sales of the company’s beer segment rose 7.9% to $1.2 billion in fiscal 1Q18. The growth was due to higher volumes within the company’s Mexican beer portfolio, driven by continued consumer demand and higher marketing spending. Higher pricing in select markets within the Mexican beer portfolio favorably impacted the beer segment’s sales by $21.8 million in fiscal 1Q18.

Sales of the company’s wine and spirits segment fell 3.8% to $693.2 million in fiscal 1Q18. The Canadian divestiture negatively impacted the segment’s top line by $89.6 million.

Performance of peers

Anheuser-Busch InBev (BUD) and Molson Coors Brewing (TAP) have already declared their second-quarter results. The reported revenue for Anheuser-Busch InBev rose 31.2% to $14.2 billion in 2Q17. On a comparable basis, its revenue growth was 5.4% in 2Q17, driven by revenue management initiatives and premiumization efforts.

Net sales of Molson Coors fell 0.60% on a year-over-year basis to $3.1 billion in 2Q17 due to currency headwinds.

Next, let’s take a look at Constellation Brands’ growth strategies.


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