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Constellation Brands reports Q1 FY 2014 results

Company kicks off the quarter with acquisition of Grupo Modelo’s US beer business

Constellation Brands Inc., Victor, N.Y., reported a 6 percent increase in net sales reaching $673 million for the first quarter of its fiscal-year 2014. Wine and spirits net sales increased 4 percent on an organic constant currency basis primarily due to an increase in volume, the report stated. The acquisition of Mark West Winery, Acampo, Calif., complemented the organic growth for a total net sales increase of 6 percent, it explained.

“We experienced positive top line results for our U.S. wine and spirits business in the first quarter driven primarily by our focus brands, including double-digit depletion trends for Rex Goliath, Kim Crawford, Nobilo, Simi and Black Box,” said Rob Sands, president and chief executive officer of Constellation Brands, in a statement. “In addition, we continue to gain traction with our award winning portfolio of new products including Simply Naked, Thorny Rose and The Dreaming Tree.”

The company also kicked off the quarter on June 7 with its acquisition of Grupo Modelo’s U.S. beer business from Leuven, Belgium-based Anheuser-Busch InBev for approximately $4.75 billion. The transaction includes full ownership of Crown Imports LLC, which provides Constellation with complete, independent control of the U.S. commercial business; a state-of-the-art brewery in Nava (Piedras Negras), Mexico; an exclusive, perpetual brand license in the United States to import, market and sell Corona and the other Modelo brands that Crown currently sells in the U.S. market with the freedom to develop brand extensions and innovations.

“The recent closing of our transformational beer acquisition has been a rewarding way to kick off fiscal 2014,” Sands said in a statement. “This deal positions Constellation within the top ranks of the U.S. beer industry and significantly increases the size and scope of our company. From an operational perspective, we are off to a positive start for the year, as we achieved our first quarter goals and objectives. I am particularly pleased with our commercial results as we continued to gain market share in [Information Resources Inc.] (IRI) channels across our beer, wine and spirits businesses during the quarter.”

During the first quarter of 2014, Crown increased 5 percent in net sales, generating $762 million. The increase in net sales for Crown was driven primarily by volume growth and the benefit of increased product pricing taken in select U.S. markets last fall, the company says.

“Crown continues to outperform the U.S. beer market and experienced robust first-quarter sales performance driven by Modelo Especial, Corona Light and Pacifico,” Sands said in a statement. “Strong retail execution by the Crown team and its distributor network drove excellent marketplace execution during the first quarter. In addition, Crown’s creative lineup of product advertising and promotions is well positioned for the key summer selling season.”

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