Constellation Brands is staying focussed on paying off its debt, according to the groups CEO

Constellation Brands is staying focussed on paying off its debt, according to the group's CEO

The boss of Constellation Brands has played down rumours linking the company to a possible buy-out of Treasury Wine Estates by saying it is focussed on paying down its debt.

The group was cited last month as a possible buyer for the embattled Australian wine firm. However, on an analysts' conference call today (2 July), Robert Sands, Constellation's CEO, said: “Our postion remains the same (on M&A)... as to the use of capital, our primary focus remains our debt pay down.” He flagged the debt it acquired, following its buy-out of Crown Imports last year from its JV partner Grupo Modelo.

However, Sands did not rule out possible “tuck-in” deals. “If a brand came around that was something really hot and met our financial objectives, of course we would take a look at an opportunity like that,” he said. Some rumours have suggested TWE could be looking to hive off its Penfolds brand to a consortium, with French luxury goods firm LVMH having been flagged as a possible buyer.

Meanwhile, Constellation's CFO Bob Ryder said that the group is aiming to move away from relying on Anheuser-Busch for raw materials for beer production at its brewery in Mexico. The company is currently buying 40% of its goods from the Budweiser brewer, but is in negotiations with other suppliers, including glass producers, Ryder said. Packaging accounts for 50% of costs for beer, he noted.

Sands later rejected the idea the company is being significantly affected by glass supply issues, but said there had been some “isolated” incidents in the US. “It's well in hand, we do not have a glass shortage,” he said.

The conference call followed the release of Constellation's Q1 results earlier today.