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Modelo is 'about to become America’s favorite beer,' Constellation Brands CEO says

·Anchor, Editor-at-Large
·2 min read
In this article:
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Step aside Budweiser — Modelo and Corona are coming for your crown this summer.

"Our beer business is doing extraordinarily well,” Constellation Brands (STZ) CEO Bill Newlands told Yahoo Finance Live (video above). “We really think [Modelo] is about to become America’s favorite beer.”

Newlands has some data to support the proclamation.

Constellation's beer sales — driven by Corona, Modelo, and Pacifico — rose 14% in the most recent quarter. That marked a quicker pace than the 11% gain for the full fiscal year.

The company's wine sales, meanwhile, dropped 7% from a year ago.

A bottle of Modelo Especial beer, one of Constellation Brands Inc products, is shown in this  illustration photograph taken in Encinitas, California, U.S. June 27, 2016.        REUTERS/Mike Blake
A bottle of Modelo Especial beer, one of Constellation Brands Inc products, is shown in this illustration photograph taken in Encinitas, California, U.S. June 27, 2016. REUTERS/Mike Blake

Fiscal fourth-quarter sales rose 8% from a year ago. Despite inflationary pressures in areas like labor and packaging, the company's operating profits increased 17% year over year.

Constellation issued relatively upbeat guidance for its new fiscal year as well.

For the full fiscal year, Constellation is looking for beer sales growth of 7% to 9% and for wine sales to drop 1% to 3%. The company sees earnings of $11.20 to $11.50 a share for the year. Analysts had expected $11.27 a share.

"We walk away from Constellation's FY4Q22 earnings seeing the company's FY23 outlook as relatively conservative, especially as it relates to beer profits/margin," Deutsche Bank analyst Steve Powers said. "While we agree the cost environment remains challenging across the supply chain, demand in beer remains remarkably robust, the company has reasonably solid visibility into its cost structure from hedges implemented, and its planned pricing actions are admittedly 'judicious'— leaving opportunities for greater price/mix and margin upside as the year progresses."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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