Constellation’s Sales Jump 15% In First Quarter, Driven By Modelo And New Additions

Constellation Brands started off strong in its fiscal 2017, achieving double-digit growth in net sales and operating income. Victor, New York-based Constellation enjoyed 15% net sales growth for the three-month period ending May 31, while operating income jumped by 21%.

Constellation’s impressive performance reflects 10% organic net sales growth on a constant currency basis, combined with acquisition benefits primarily from Ballast Point and Meiomi. The company’s growth is being driven by its beer unit, led by Corona Extra and the rest of the Grupo Modelo portfolio. Net sales for beer rose by 19% during the fiscal first quarter, due to a 15% increase in organic net sales and Ballast Point’s rapid rise. Constellation said the Ballast Point range—which it acquired for $1 billion in late 2015—had depletions growth of more than 60% in the quarter.

Meiomi is also on fire. The California wine brand, which Constellation acquired last summer for $315 million, posted value growth of more than 90% in IRI channels during the first quarter. Meiomi achieved double-digit depletion growth in the three-month period, according to Constellation, as did Kim Crawford, Black Box, Clos du Bois, Ruffino, Mark West and Woodbridge by Robert Mondavi.

Constellation expects to follow up on the strong first quarter with similarly solid growth for its full fiscal year (ending February 28, 2017). For the 12-month period, the company is projecting overall net sales and operating income growth of 14%-17%. For the wine and spirits business, Constellation is projecting net sales growth in the mid single-digit range and operating income in the mid-to-high single-digits, due in large part to an incremental benefit from the Meiomi and The Prisoner Wine Company acquisitions. Constellation closed on The Prisoner—which it purchased from Huneeus for $285 million—in late April.

Diageo To Add Nutritional Information To Johnnie Walker Labeling

This autumn, Diageo will launch new bottles of Johnnie Walker Red Label featuring on-pack alcohol content and nutritional information per typical serve. By the end of the year, up to 30 million of the new Johnnie Walker Red bottles will be on shelves worldwide. Johnnie Walker Black Label, Reserve, Platinum and Green Label are expected to follow Red's lead in the first half of next year.

The new labeling conforms to Diageo’s new “consumer information standards,” which are based on research of 1,500 consumers in various global markets. That research found that consumers desire clearly presented labeling concerning “alcohol information (standard drink size, ABV, how many units), calories per serve, sugar content, allergens and brand facts, such as how a product is made and quality assurances.”

“Johnnie Walker is one of our largest global brands, which means these new labels will arm millions of people around the world with clear information about what’s in their glass and in a way they can understand at a glance,” said Diageo CEO Ivan Menezes.

News Briefs:

•Paul Draper, CEO and winemaker of California’s Ridge Vineyards, is stepping back from day-to-day management of the company, which he joined in 1969. Effective July 1, Draper will be replaced as Ridge CEO by Mark Vernon, who has served as president and COO for the past seven years. Draper will remain chairman of the board. Meanwhile, David Amadia, who joined Ridge in 2005 and has been vice president, sales and marketing, since 2009, will become president. Eric Baugher and John Olney will continue to oversee winemaking at Ridge’s Monte Bello and Lytton Springs wineries, respectively.

•Banfi is launching a new fizzy red wine under the Bell’Agio brand. Bell’Agio Rosso Dolce, an 8% abv, slightly sweet semi-sparkler that’s recommended to be served chilled, is rolling out nationwide, retailing at around $15 a bottle. The Bell’Agio portfolio also includes a Chianti offering.

•Hennessy is debuting the first U.S. campaign behind its VSOP Privilège ($70) in more than 10 years. The new campaign is entitled “Harmony. Mastered from Chaos.” It includes 60-, 30- and 15-second digital spots and an interactive “digital experience” focused on the inner workings of Hennessy’s Comité de Dégustation (tasting committee) and the craftsmanship behind the creation of VSOP Privilège.

•Republic National Distributing Co. (RNDC) is expanding the territory of region president Jay Johnson. Currently president of RNDC’s Texas, Colorado, Louisiana and Oklahoma region, Johnson will add Kentucky and Indiana to his purview on July 1. Johnson, who joined RNDC in 1991, will continue to report directly to RNDC COO Bob Hendrickson, who noted that Johnson has “successfully guided his markets to significant growth” over the past five years.

•Guy Smith, Diageo North America’s executive vice president, corporate relations, is retiring after 17 years with the company. Smith will be replaced by Jon Pageler, who has been with Diageo for 13 years and has served under Smith as senior vice president, corporate relations for the past seven years.

Craft Brewing and Distilling News:

•California-based Lagunitas Brewing has linked with three smaller brewers across the country on new alliances. In Santa Rosa, California, Lagunitas has entered a joint venture with Moonlight Brewery, with plans to help expand Moonlight’s reach. Lagunitas has also aligned with Austin, Texas-based Independence Brewing, and will help grow Independence’s brewing capacity. Finally, Lagunitas is under contract with Charleston, South Carolina’s Southend Brewery and Smokehouse to convert Southend’s existing brewpub into a new Lagunitas Taproom and Beer Sanctuary, which will be “the cornerstone location for Lagunitas in the Southeast,” according to the company. The slate of new ventures follows Lagunitas’s sale of a 50% stake to Heineken last fall.

•Montreal, Canada’s Unibroue is adding to its Éphémère series of fruit beers with the limited release of Éphémère Blueberry. The Belgian-style white ale featuring blueberries is available in the U.S. and Canada in 750-ml. cork-and-cage bottles retailing at $8-$9, as well as on draft. Unibroue, based in Quebec, brews more than 15 beer brands including La Fin du Monde, Blanche de Chambly and Trois Pistoles.

•Hawaii-based Kona Brewing Company, part of Craft Brew Alliance (CBA), is introducing its flagship Big Wave Golden Ale in 12-packs of 12-ounce cans nationwide for the first time this summer. Big Wave (4.4% abv) is brewed with Caramel 20 and Pale 2 Row Premium malts and a blend of Millennium, Galaxy and Citra hops. The Kona brand has been a growth driver for CBA, posting a 17% rise in shipments in 2015 and 19% depletions growth through the first quarter of this year.

•Correction: In yesterday’s news briefs, Washington’s Badger Mountain was incorrectly named among the brands handled by Arizona wholesaler TBK Beverage. In fact, Badger Mountain left TBK a few months ago, and its current Arizona wholesaler is Action Wine.

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