US: Constellation Brands' Q1 profits drop, CEO promises he'll stay clear of Mexican acquisitions
- Q1 net profits fall US$2.5m to $72m
- Net sales remain flat at $634.8m
- Operating profits increase from $101.7m to 106.1m
- CEO says no limit to growing beer portfolio outside of Mexican brands
Constellation Brands said it won't add Mexican beer to its portfolio
Constellation Brands has reported a slight drop in Q1 net profits on the day it confirmed a US$1.85bn deal to acquire full ownership of Crown Imports.
Net profits dropped to $72m in the first three months of the year from $74.5m over the same period last year, the beer, wine and spirits company said today (29 June). Net sales remained stable at $634.8m.
Earlier today, Constellation said it had agreed to buy the remaining 50% of Crown Imports off Grupo Modelo as a result of Anheuser-Busch InBev's deal to buy the Mexican brewer. The deal gives Constellation exclusive US distribution rights to Modelo brands, including Corona Extra and Modelo Especial.
In a conference call with investors following Constellation's Q1 results, company executives said Crown Imports' wholly-owned strategy would function in much the same way it did in tandem with Modelo.
“The [US distribution] contract is designed to preserve the economics of the old contract,” said Rob Sands, Constellation's president & CEO. “There will be no significant or material change.”
Under the distribtion agreement with A-B Inbev and Modelo, Constellation can add any beer to its portfolio as long as it is not Mexican, Sands said. He said the agreement would protect both parties' product innovation.
“We are the exclusive importer to the United States of their Mexican products and they can't do knock-offs and we can't do knock-offs,” Sands said. “There are provisions that protect both parties from that.”
Earlier, Sands had praised his company's Q1 results, saying they were in line with expectations.
“From an operational perspective, we are experiencing excellent marketplace momentum for our wine and spirits business and Crown’s imported beer business,” he said.
The company said it will suspend a share buyback project to help fund the Crown Imports deal. First-quarter results showed the company spent $383m to buy back 18m shares in the first three months of the year.
Constellation shares jumped 25% today on news of the Crown deal.
To view Constellation's Q1 results, click here.
The penultimate part of just-drinks' review of 2012 looks at a tumultuous year for the wine category....
The wine category is, to put it tactfully, different in many ways. No more so than when it comes to its relationship with the environment. Part one of this month's four-part briefing on environmental ...
Last week we ran the first part of an exclusive interview with Constellation Brands' CEO Rob Sands. In this second and final part here, Sands discusses the group's spirits portfolio, its pending move ...
The current CEO of Constellation Brands, Rob Sands, is only the group's third boss in its 67-year history - and he's been with the firm for 26 years. Clearly, then, he'll know a things or two about th...
Hats off the Sunday Telegraph for breaking the story today (9 December) that Diageo has been sniffing around Beam Inc....
Just over six months after Troy Christensen assumed the position of CEO for Constellation Europe, I was granted an audience with him. We met in London in the summer of 2007 and, after three different ...
With the end of the year looming, just-drinks is running a series of 'Top Tens of the Year' in the run-up to Christmas. Here are the ten most read Hot Topics on just-drinks in 2012....
- Why Didn't Diageo Act Sooner on Mallya?
- just The Facts - The Global Wine Industry
- CCE head shines light on price talks
- Interview: Head brewer at Hall & Woodhouse
- just On Call - Pernod shifts Scotch focus in China
- A-B InBev "regrets" Bud Light bottle message
- Diageo teams Johnnie Walker up with Entourage
- MEPs call for calorie, ingredient facts on alcohol
- Bacardi opens Dewar’s Travel Retail whisky store
- Pernod readies Avion Tequila US sweepstake
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global rum insights - market forecasts, product innovation and consumer trends research
- ALDI 2015: Radically transforming Anglo Saxon grocery markets
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research