(Reuters) – Corona beer maker Constellation Brands’ third-quarter sales fell short of market expectations on Friday, as demand for its higher-priced spirits and wines slowed down in the face of sticky inflation.
The Victor, New York-based company is seeing inflation-hit consumers pivot towards its affordable offerings and away from Constellation’s premium products like Robert Mondavi, Svedka Vodka and Casa Noble Tequila.
Constellation, like its industry peers Molson Coors and Brown-Forman, had undertaken price hikes to navigate rising costs of production, which have now come off their peaks.
This helped the company post a quarterly comparable profit of $3.19, topping estimates of $3, according to LSEG data.
The Clos du Bois wine-maker’s quarterly sales came in at $2.47 billion, compared with analysts’ average estimate of $2.54 billion.
Organic net sales in its premium wines and spirits segment fell 7% in the quarter, and the company now expects the segment to see an annual drop of 7% to 9%, compared to prior expectations of a 0.5% fall.
Constellation’s beer brands have benefited from customers increasingly preferring smaller pack sizes.
It also picked up customers as conservative backlash over a social media promotion by rival Anheuser-Busch InBev’s steered consumers away from Bud Light and Budweiser brands.
Net sales in the company’s beer business, which includes Corona Premier and Modelo Especial, rose 4% in the quarter.
The company, however, maintained its fiscal 2024 comparable profit forecast of between $12.00 and $12.20 per share.
Constellation’s shares were up marginally in volatile premarket trading. (This story has been refiled to correct a typo in paragraph 1)
(Reporting by Annett Mary Manoj in Bengaluru; Editing by Tasim Zahid)
