Constellation Brands Raises Profit Target on Strong Sales Performance

Constellation Brands, the renowned alcohol producer, has announced an increase in its annual profit target following a successful second quarter. The company’s higher prices and strong demand for its beers and spirits have contributed to a sales and profit beat. Constellation Brands, along with its peer Brown-Forman, has been able to offset rising raw material costs by capitalizing on increasing prices.

Despite a broader consumer slowdown in the U.S. due to sticky inflation, Constellation Brands’ popular beer brands, including Modelo Especial and Corona, as well as premium wine labels such as Meiomi and Kim Crawford, have maintained their demand. This positive performance has led the company to raise its annual sales forecast for its beer business.

While the overall wine business experienced softer demand, Constellation Brands remains optimistic about its future prospects. According to consulting company Bump Williams, Modelo Especial’s dollar share at retail outlets was 8.5% this year, slightly higher than Anheuser-Busch InBev’s Bud Light at 8.1% until the week ending September 16.

Constellation Brands now expects its fiscal 2024 comparable earnings per share to be between $12.00 and $12.20, surpassing its previous forecast of profit between $11.70 and $12.00 per share. However, CFRA Research analyst Garrett Nelson believes the forecast raise was modest and suggests that the company’s earnings expectations for the final two quarters might have been slightly lowered.

In the second quarter, Constellation Brands reported a 7% increase in quarterly sales, reaching $2.84 billion, exceeding analysts’ average estimate of $2.82 billion. The company’s positive performance reflects its ability to adapt to market conditions and maintain strong consumer demand.

As Constellation Brands continues to navigate the challenges of the industry, it remains committed to delivering quality products and meeting the evolving preferences of its customers. With its strategic focus on innovation and brand strength, the company is well-positioned for future growth in the competitive alcohol market.