Constellation Brands misses quarterly sales estimates on tepid wine, spirits demand

Reuters

Published Jan 05, 2024 08:53AM ET

Updated Jan 05, 2024 09:06AM ET

(Reuters) - Corona beer maker Constellation Brands (NYSE:STZ)' third-quarter sales fell short of market expectations on Friday, as demand for its higher-priced spirits and wines slowed down in the face of sticky inflation.

The Victor, New York-based company is seeing inflation-hit consumers pivot towards its affordable offerings and away from Constellation's premium products like Robert Mondavi, Svedka Vodka and Casa Noble Tequila.

Constellation, like its industry peers Molson Coors (NYSE:TAP) and Brown-Forman, had undertaken price hikes to navigate rising costs of production, which have now come off their peaks.

This helped the company post a quarterly comparable profit of $3.19, topping estimates of $3, according to LSEG data.

The Clos du Bois wine-maker's quarterly sales came in at $2.47 billion, compared with analysts' average estimate of $2.54 billion.

Organic net sales in its premium wines and spirits segment fell 7% in the quarter, and the company now expects the segment to see an annual drop of 7% to 9%, compared to prior expectations of a 0.5% fall.

Constellation's beer brands have benefited from customers increasingly preferring smaller pack sizes.

It also picked up customers as conservative backlash over a social media promotion by rival Anheuser-Busch InBev's steered consumers away from Bud Light and Budweiser brands.

Net sales in the company's beer business, which includes Corona Premier and Modelo Especial, rose 4% in the quarter.