Yahoo Finance Beer drinking 'isn't dead': Corona maker CEO
Long live the iced cold cerveza.
“Beer [drinking] is not dead,” said Constellation Brands (STZ) CEO Bill Newlands in an interview with Yahoo Finance.
Newlands — who leads the maker of the well-known high-end suds Corona and Modelo and a sizable top-shelf wine portfolio — certainly has data on his side to prove 21-year-olds drinking hard seltzer and canned rosé haven’t derailed the beer industry.
That is provided the beer is on the premium side of the equation (sorry, Bud Light fans) and plays into some form of health and wellness trend.
Constellation Brands is fresh off reporting its first fiscal quarter sales and operating profit in its beer business rose 7.4% and 11.7%, respectively. The company said shipment volume growth was above its expectations in the quarter, fueled by interest in premium options such as Modelo and new lower carb Corona Premier.
Meanwhile, the company was successful in passing through higher prices to offset its increased costs. The beer segment’s performance was far away better than Constellation Brands’ wine and spirit portfolio.
The stock popped 5% on Friday in response to the better-than-expected quarter and outlook.
According to Newlands, Constellation Brands is just out-working rivals such as Anheuser-Busch (BUD), Boston Beer (SAM), and Molson Coors (TAP) to win with fickle consumers.
Appealing to health-conscious consumers
“Our beer business is performing well. I think one of the key reasons around it is our share of voice and advertising. We are spending more on advertising year on year against our business. But not everyone in the category is doing that. So our share of voice with beer drinking consumers is going up,” Newlands explained.
Count this proud millennial as one who has been inundated in recent months with TV spots for Modelo and Corona Premier.
Newlands points to growth in Modelo outside of its core hispanic community as a key driver. Corona Premier, Newlands says, is “on trend” with health-conscious consumers who are looking for a low-carb option.
“We are really broadening our reach,” Newlands adds.
That much is for sure.
Constellation Brands’ overall beer portfolio sales for the 52 weeks ended June 15 has increased an impressive 10.6%, according to Nielsen data. That ranks it first in terms of growth among all its rivals in the beer industry, powered by strong growth in Modelo, Corona Premier and Pacifico.
No small feat in such a competitive consumer category.
Sales for the beer category as a whole during that same stretch has fallen 0.1%, per Nielsen data. Anheuser-Busch, Miller Coors, Heineken, Pabst, and the once mighty craft beer king Boston Beer have seen sales decline during the past 52 weeks.
“We continue to be impressed by Constellation Brands’ beer performance (especially Modelo Especial), illustrating Constellation’s command of the high-end beer segment, which drives the lion’s share of category growth,” wrote veteran Wells Fargo beverage analyst Bonnie Herzog following Constellation’s latest results.
The next frontier for Newlands and his team: getting the word out about the new Corona ReFresca. Think hard seltzer meets tropical wine cooler from the early ‘90s, but with a name everyone knows.
Step aside, White Claw.
Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi
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