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Analysis - Constellation Brands ready for Crown Imports price hike

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Constellation Brands is poised to accelerate pricing on its Crown Imports labels after first-quarter results showed the recently-acquired beers in rude health, an analyst has said.

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The Crown portfolio, which Constellation acquired full-control of from former JV partner Grupo Modelo last month, saw sales increase by 5% in yesterday's Q1 figures. An announcement of a bigger marketing spend for the rest of the year was also “a sign of confidence” in the brands, Stifel's Mark Swartzberg said today (3 July).

Swartzberg added that pricing for Crown Imports beyond the 2% taken last year “may be imminent”.

“We believe pricing in-line with Anheuser-Busch InBev's 3% to 4% rate increases is likely long-term,” Swartzberg said.

Swartzberg also reiterated his view that pressure to promote and innovate in wines and spirits will continue to erode the categories' EBIT margins until at least the end of fiscal-2016.

The Crown Imports deal, which gives Constellation perpetual US rights for the Modelo brands, makes the company the third-biggest brewer and beer seller in the US market. It also gave it ownership of a Modelo brewery on the Mexico-US border.

For a full round-up of just-drinks' coverage of Constellation's Q1 results, click here.


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