Beer Sales Propel Constellation Brands to Strong Quarter

The stars are aligning for Constellation Brands. 

On Thursday, the massive beer-and-wine-and-spirits conglomerate reported stellar earnings results for its fourth quarter, thanks almost entirely to a strong performance in its beer division — which sells popular imported beers like Corona, Modelo, and Pacifico.

Skim Crawford

One company’s catastrophe is another’s opportunity. Last year, Anheuser-Busch InBev faced conservative backlash for its Bud Light ad featuring transgender activist Dylan Mulvaney, allowing Constellation’s not-quite-All-American cerveza Modelo to surge to the top of US beer sales (In an interesting quirk, AB InBev owns the rights to Modelo in every market in the world other than the US). 

Modelo’s strong sales, coupled with Corona and Pacifico, continued in its most recent quarter period, rising 11%. That powered Constellation’s earnings beat, with revenue of $2.14 billion besting most analyst expectations. Still, the company’s wine and spirits portfolio — which includes Kim Crawfords, Ruffino, Svedka, and Casa Noble tequila — struggled, and the company says it’s focused on a turnaround in those categories:

• Wine and spirits net sales declined 6% in the quarter, as wholesalers across the country reduce high-priced premium brands in response to consumer habits amid sticky inflation.
• While the company expects sales in the units to either decline or grow by, at most, a half-percentage point in its next fiscal year, it says it will put more focus and investment toward supporting its key brands across wine and spirits.

Still, citing continued beer demand, Constellation forecast profit for the upcoming year above analyst expectations.

Hard Truths: Thursday’s earnings marked the second major recent win for Constellation. In late March, a US appeals court ruled that the company was well within its rights to sell Corona and Modelo-branded hard seltzers in the US after AB InBev sued alleging the seltzers constituted a trademark violation. Constellation won the case in part by arguing that its contract with AB Inbev allowed it to distribute Modelo beer in the US, and that hard seltzers fell within the definition of “beer.” Sure, a judge may say so. But try telling that to the microbrew-loving, double-IPA sipping hops snob in your life.