CONSTELLATION “INTERESTED IN PREMIUM SPIRITS"
There was a lot to cover in yesterday’s 2nd-quarter conference call, so let’s recap the highlights. Constellation’s profits are lower than the same quarter last year, but CEO Richard Sands is cutting costs by consolidating the company’s wine operations in Europe and Australia. Overall sales rose 19% to $1.42 billion from $1.19 billion thanks to heavy demand for Twin Fin wine and Corona beer.
Organic wine sales grew 7% in the second quarter, while North American wine (primarily the U.S.) grew 34% and 9% in organic sales. Spirits were up 8%. Constellation’s premium and super-premium brands remain the primary growth drivers, particularly in the U.S. where consumers continually trade up to $10-$14 wine bottles and high-end spirits.
FOCUSED ON PREMIUM WINES. Sands expects big things out of the company’s wine segment, relaying his expectations that “there will be a significant change in the marketplace that will really allow us to change our margins going forward, probably precipitated by a more stable performance in Australia,” he said. “Give it a couple of years and I think we’ll see some dramatic changes.”
SPIRITS “DOING VERY WELL.” Total spirits net sales increased 8% for the second quarter prompted by investments behind the company's premium spirits brands. Sands told investors that spirits growth “is being driven in a large extent by our premium brands.”
“Our basic [spirits] brands are doing very well, brands like Black Velvet and some of our vodka brands so on and so forth.”
INTERST IN ABSOLUT? When asked by Bonnie Herzog of Citigroup if Constellation had any possible interest in taking over Absolut, Sands replied:
“We definitely have the financial means but I am not going to comment on whether or not we would be interested. It’s premature since we believe the potential transaction won’t take place for a couple of years. We could be a very different company by the time that happens.”
However, he did confirm that Constellation is “interested in premium spirits, white or brown.”
"Our spirits business had a very strong quarter as we continue to build our premium spirits brand portfolio and focus on meeting consumer demand for innovative brands and flavor variety in the spirits category," said Sands.
CLARIFICATION. In yesterday's issue, we characterized Constellation's second quarter profits as a "loss", when we intended to say that their profits are "lower" than the same quarter last year, but not a loss as they obviously made money.
Organic wine sales grew 7% in the second quarter, while North American wine (primarily the U.S.) grew 34% and 9% in organic sales. Spirits were up 8%. Constellation’s premium and super-premium brands remain the primary growth drivers, particularly in the U.S. where consumers continually trade up to $10-$14 wine bottles and high-end spirits.
FOCUSED ON PREMIUM WINES. Sands expects big things out of the company’s wine segment, relaying his expectations that “there will be a significant change in the marketplace that will really allow us to change our margins going forward, probably precipitated by a more stable performance in Australia,” he said. “Give it a couple of years and I think we’ll see some dramatic changes.”
SPIRITS “DOING VERY WELL.” Total spirits net sales increased 8% for the second quarter prompted by investments behind the company's premium spirits brands. Sands told investors that spirits growth “is being driven in a large extent by our premium brands.”
“Our basic [spirits] brands are doing very well, brands like Black Velvet and some of our vodka brands so on and so forth.”
INTERST IN ABSOLUT? When asked by Bonnie Herzog of Citigroup if Constellation had any possible interest in taking over Absolut, Sands replied:
“We definitely have the financial means but I am not going to comment on whether or not we would be interested. It’s premature since we believe the potential transaction won’t take place for a couple of years. We could be a very different company by the time that happens.”
However, he did confirm that Constellation is “interested in premium spirits, white or brown.”
"Our spirits business had a very strong quarter as we continue to build our premium spirits brand portfolio and focus on meeting consumer demand for innovative brands and flavor variety in the spirits category," said Sands.
CLARIFICATION. In yesterday's issue, we characterized Constellation's second quarter profits as a "loss", when we intended to say that their profits are "lower" than the same quarter last year, but not a loss as they obviously made money.
posted at 9:02 AM
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