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US: Constellation Brands plays down Crown Imports row

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The CEO of Constellation Brands has insisted that there is no rift with Grupo Modelo over the Crown Imports beer venture.

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Constellation and Modelo "continue to work closely together" despite no resolution of their legal dispute, Rob Sands told analysts during Constellation's first quarter results call last week.

Mexico-based Modelo filed a lawsuit against Constellation in December, seeking to recoup marketing funds from its joint venture partner.

Crown sells Modelo's Corona beer in the US and the lawsuit caused some analysts to question the venture's viability, particularly in the midst of a tough beer market in the US.

Sands dismissed the lawsuit as "a dispute over financially immaterial items".

He added: "Our primary focus is on driving this business and on making sure we're doing the right thing for the brand and consumers.

"Imports are taking share [and] our portfolio is now performing the best in the import category. So, I would say both parties are pretty pleased with what's going on and, despite this dispute, we're working pretty well together and we'll continue working well together in the future."

Both firms are contracted to work together in Crown until 2016.

Crown's net sales fell by 3% to US$622m during Constellation's first fiscal quarter, to the end of May. The venture was damaged by "higher promotions, unfavourable mix and lower volume", Constellation said. The firm's share of earnings from Crown fell by 14% to $54m for the three months, compared to the same period of last year.

However, the firm reported growth in depletions during the period, driven by advertising and promotion spend.

The rise in depletions prompted analyst group Stifel Nicolaus to raise its sales estimate for Crown, from 1% to 2% growth over Constellation's full-year. 


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