Fine wine stars in Constellation's first half
offset by a good performance from premium wine brands at the
US-based drinks group Constellation Brands, though the UK unit also
showed positive developments.
First half net profits at Constellation Brands, the US drinks group, increased by 27 per cent to $87 million (€88.9m) on the back of a good performance in the fine wine business which offset difficulties elsewhere.
First half sales were up 4 per cent compared to the previous year, although the rise would have been a more modest 2 per cent on a like-for-like basis excluding the impact of acquisitions and currency exchange rates.
Sales from the group's imported beer and spirits operations in the US were up 5 per cent in the half, although the second quarter figures show a 1 per cent drop to $286 million as a result lower volume sales of Mexican beer and a 3 per cent drop in spirit sales. In the US wine market (excluding fine wines), Constellation's first half sales dropped from $366 million to $348 million, due to a decline in bulk sales and lower branded wine sales following increased price competition.
In the UK, where Constellation sells a number of brands and also runs a wholesale business, the picture was a little rosier, with sales up 4 per cent in the half and 6 per cent in the quarter, although this was mainly due to the effect of currency conversion. In Sterling terms, sales were down 1 per cent for the quarter. The branded wine business in the UK registered a 10 per cent decline in sales, but this was offset by a good performance from the wholesale unit.
Constellation's fine wine unit was the main driver of growth during the difficult half, with sales up 19 per cent in the second quarter alone to $35 million (or by 12 per cent excluding the impact of the Ravenswood winery which Constellation bought during the same period in 2001) and by 29 per cent to $70 million for the six months. Organic growth was driven by volume increases from the Ravenswood, Estancia, Simi and Franciscan brands, although partially offset by lower average selling prices.
Constellation sells a broad portfolio of wines, spirits and imported beers in the US, and claims to be the largest single-source supplier of these products there. The brands it distributes or owns include Corona Extra, Pacifico, Modelo Especial, St. Pauli Girl, Black Velvet, Fleischmann's, Schenley, Ten High, Franciscan Oakville Estate, Simi, Estancia, Ravenswood, Alice White, Talus, Vendange, Almaden, Arbor Mist, Stowells of Chelsea and Blackthorn cider.
