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Behind Constellation Brands’ Q2 Beer Sales

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Strong results in fiscal Q2

Constellation Brands’ (STZ) beer segment continued to drive the overall sales growth of the company in the second quarter of fiscal 2019. The company’s beer segment sales grew 10.5% to $1.5 billion in the second quarter due to continued strength in its imported beer portfolio. In contrast, net sales of rival Molson Coors Brewing (TAP) declined 0.2% to $3.1 billion, as the company’s volumes continued to be weak in North America.

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Growth factors

Sales growth of Constellation Brands’ beer segment was driven by higher volumes of the company’s Mexican beer portfolio, which accounted for $119.7 million of top-line growth in the second quarter. The company’s volume growth was a result of persistent consumer demand, higher marketing spending, and product innovation. Corona Brand Family and Modelo Especial continued to be the key drivers of the beer segment. Constellation Brands is experiencing better-than-expected results for its new launches, Corona Premier and Corona Familiar.

Constellation Brands’ second-quarter beer segment sales also gained from higher pricing in select markets of the Mexican beer portfolio, which contributed $24.8 million to segment sales growth.

Guidance intact

Constellation Brands continues to expect its beer segment net sales to grow in the 9% to 11% range in fiscal 2019, which ends on February 28. The demand for the company’s Mexican beer brands and favorable pricing are expected to drive the beer segment’s sales growth in the current fiscal year.

Constellation Brands continues to focus on the high-end segment of the US beer market and is on track to expand its production capacity and enhance its distribution to support the growing demand.

We’ll discuss Constellation Brands’ margins and its segments in the next part of this series.

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