Constellation Brands, the producer of drinks such as Modelo beer and Svedka vodka, has posted a 3% increase in sales to $2,085 million in the second quarter of its 2018 fiscal year.
Meanwhile, reported operating income experienced a 17% increase, growing to $714 million.
"Our second quarter results are a testament to the fact that our strategy is paying off," said Rob Sands, president and CEO of Constellation Brands.
"We remain the leader in the high-end of the US beer market, and we are reaping the benefits of our wine and spirits premiumisation efforts. Strong execution, coupled with smart portfolio and operational investments, continue to fuel our growth and solidify our leadership position."
Business Performance
Constellation says that its beer business drove more than 60% of its high-end category growth, particularly the Modelo brand family.
Meanwhile, the group's wines and spirits division delivered depletion growth of more than 12%, led by brands such as Black Box, Robert Mondavi Private Selection, Meiomi, Kim Crawfod, and Svedka.
During this period, the company acquired the Funky Buddha brewing company to expand its craft beer portfolio, as well as a number of wine brands, and High West Whiskey.
Outlook
Constellation Brands is targeting net sales growth in the range of 9-11% for fiscal 2018, with operating income growth of 17-19%.
The company expects sales to decrease in its wine and spirits business, offset by strong growth in its beers division.
“During the quarter, we gained market share, improved margins, continued to generate strong free cash flow and executed exceptionally well," said David Klein, Constellation's executive vice president and chief financial officer.
"These results are driving the upward revision to our EPS estimate for the year of $8.25-$8.40."
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
