In the first quarter of 2021, Constellation Brands exceeded Wall Street expectations for profit, thanks to a strong demand for its core beer brands. Despite slower growth in its wines and spirits business, the company’s beer brands like Modelo Especial and Pacifico experienced continued demand. As a result, Constellation Brands maintained its annual forecasts and saw its shares rise nearly 3% in premarket trading.
Constellation’s beer business is a major revenue driver for the company, with a 6.4% volume growth in depletion compared to 5.5% growth the previous year. The company has been able to offset rising raw material and packaging costs through aggressive price increases over recent quarters, lower marketing expenses, and overall sales growth. This has allowed Constellation’s beer business to increase its operating margin by 260 basis points to 40.6%, indicating a positive trend for the company.
Throughout the first quarter, Constellation Brands reported a comparable profit of $3.57 per share, surpassing analysts’ estimates of $3.46 per share. While net sales were slightly lower at $2.66 billion compared to estimates of $2.67 billion, this was mainly due to reduced demand for premium wines and spirits rather than poor performance in the beer business itself.
Despite these market challenges, Constellation Brands was able to maintain profitability thanks to its strong core beer brands and effective cost management strategies.
Overall, Constellation Brands had a successful first quarter driven by strong demand for its core beer brands and effective cost management strategies that allowed it to offset rising raw material and packaging costs while still maintaining profitability despite sluggish performance in its wines and spirits business.
