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Constellation Brands Faces 27 Percent Revenue Drop in 3rd Quarter

Weakened sales and higher prices in North America plague the producer of Svedka vodka and Robert Mondavi wines
 Constellation Brands Faces 27 Percent Revenue Drop in 3..
 
 

At the end of June in 2011, Constellation Brands Inc (the beverage company best known as the producer of Svedka vodka, Corona and Tsingtao, and especially for its major wine brands including Robert Mondavi and Clos du Bois) failed to meet Wall Street’s expectations; nonetheless, the company still posted a 52 percent revenue increase. In its third quarter, however, Constellation Brands hasn’t been so lucky – today Constellation reported a 27 percent dip in revenue from $966.4 million to $700.7 million, again falling short of Wall Street expectations.

According to the Washington Post, Constellation Brands attributes this falling off in revenue to reduced wine and beer sales in the North American market (with no boost from Australian or British sales, as Constellation sold those sectors off last January), with beer sales dropping by 12 percent. Profits were allegedly further stymied by price increases among its low-end wine offerings like Arbor Mist, likely due to raised commodity costs that have been affecting many food and beverage producers, as well as increased spending on Constellation’s part to advertise the launch of 20 new brands in the coming year.

 

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The result has been a reported net income of 52 cents per share, a 13 cent decrease from last year’s numbers. According to reports, Wall Street had predicted 53 cents per share. But the company is still optimistic through it all: Constellation Brands CEO Rob Sands told the Post that wine sales are on the rise in restaurants after a sharp decrease in 2009, and the company is hoping to capitalize on the trend.

 

[Via: The Washington Post]



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