James Wilmore

just On Call - Constellation Brands eyes draught beer opportunity

By | 4 October 2013

Sands said taking control of the beer business has been "seamless"

Sands said taking control of the beer business has been "seamless"

Constellation Brands has said that it has a major opportunity to up its beer brands – such as Modelo Especial - on draught in the US, as it is “underpenetrated” in the format.

Speaking to analysts yesterday (3 October), following the release of the group's half-year results, CFO Bob Ryder said that draught beer sales account for less than 2% of its business. “We're extremely underpenetrated in the draft industry ... so we think there's a lot of opportunity,” said Ryder.

Through its Crown Imports business, Constellation is aiming to make Modelo Especial “the next Corona” in the US. “Distribution of Modelo Especial is probably 30% to 40% less than distribution on Corona,” said Ryder.

Meanwhile, he admitted the company is still “tinkering” with the labelling of its Modelo Light brand, prior to a full roll-out. The beer is currently being tested in one US market.

Corona Light draft – another recently-launched brand – is “growing in every market”, CEO Rob Sands said.

On the full takeover of Crown by Constellation, after completing its buy out of Grupo Modelo's stake in the business from Anheuser-Busch InBev in June, Sands said the transiton has been "successful and seamless". The company has also taken ownership ownership of the Piedras Negras brewery in Mexico. “Operations are running smoothly,” said Sands. 

Constellation is also planning the roll-out of its Modelo Especial Chelada brand this week to “key” markets, with a national roll-out planned for next summer, Sands added. 

The group's second quarter financial performance for wine and spirits was "impacted by the timing of product shipments", the CEO said. 

Meanwhile, a new wine brand is planned called Rosatello, described as “a sweet, low-alcohol wine targeted at Hispanic and urban female consumers”.

Expert analysis

Craft Beer Market in the US 2012-2016

The analysts in this report forecast the Craft Beer market in the US to grow at a CAGR of 17.46 percent over the period 2012-2016. One of the key factors contributing to this market growth is the changing consumer taste and preference for craft beer. The Craft Beer market in the US has also been witnessing an increase in canned craft beer production. However, lack of awareness about craft beer among consumers could pose a challenge to the growth of this market.

Sectors: Beer & cider, Company results, Spirits, Wine

Companies: Constellation Brands, Grupo Modelo, Anheuser-Busch InBev

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