Founded in 1945 as a small bulk wine business in upstate New York, Victor, N.Y.-based Constellation Brands has grown into a leading total beverage alcohol (TBA) supplier in the United States. “I’m sure my father never dreamed that his modest wine business would eventually grow into the No. 1 multi-category supplier in the U.S.,” President and Chief Executive Officer of Constellation Brands Rob Sands says.
“We now have approximately 9,000 employees; about 40 wineries, breweries and distilleries; and offer more than 80 premium brands,” he continues. “We have grown tremendously, but we’ve never forgotten our roots or the values that drive our success.”
Portfolio and personnel growth are just the tip of the iceberg. In fact, for the full 2017 fiscal year, Constellation Brands’ net sales reached $7.3 billion, a consolidated net sales growth of 12 percent, as a result of gains within its beer, wine and spirits portfolios, Rob Sands explains.
Driving the company with a strategy based on four key principles — Know Our Customers, Be Bold & Innovative, Execute Flawlessly and Live Our Values — Rob Sands has been inspired by the leadership of his father, Marvin Sands, and his brother, Richard Sands, who both led the business prior to his assumption of the role of chief executive officer in 2007.
“I learned a lot about good leadership from my father and brother, as each served as CEO,” he explains. “From my father, I learned the importance of listening to diverse viewpoints and leading by example. He took pride in his people as much as his brands, and he loved giving back to his community. From my brother, I learned the importance of numbers to help drive business strategy. I try to implement those lessons in my work as CEO.”
Rob Sands’ leadership has been essential to the evolution that led Constellation Brands to become a successful TBA company with consistently growing sales and an empowering corporate culture that recognizes the company’s responsibilities to the environment and its community. For these reasons, Rob Sands has been named Beverage Industry’s 2017 Executive of the Year.
A full portfolio
Through Constellation Brands’ TBA portfolio, the company’s effort to build a multi-category line up of consumer preferred, premium brands across beer, wine and spirits is at the core of its continued success.
“Our unique position as the leading TBA supplier in the U.S. and our winning strategy of premiumization is what continues to drive our success and our point of difference in the market today,” Rob Sands explains. “We have high-performing brands across all three categories and can deliver on what consumers are looking for. This is an excellent selling point with our distributors and retailers. We invest to fuel growth and innovation, have a portfolio across high-growth segments and use our TBA position to stay ahead of consumer trends. Our recent acquisitions across our beer, wine and spirits portfolios demonstrate this focus.”
Regularly building its portfolio, the company recently acquired several brands, including High West, Charles Smith Wines, Schrader Cellars, Meiomi, The Prisoner Wine Co. and Funky Buddha. In all three categories, high-end and premium products dominate Constellation Brands’ portfolio. All of the new additions are high growth, high margin and will accelerate overall company growth, Rob Sands says.
“Our recent acquisitions helped us further premiumize our beer, wine and spirits portfolio, enhancing our high-end, high-margin portfolio,” he says. “They’ve also helped us stay ahead of consumer trends like Rosé, sparkling, red blends, craft beer and whiskey. We’ve seen great results from recent acquisitions with double-digit growth and continued innovation across brands.”
In the beer category, Constellation Brands’ beer division is positioned for long-term growth benefiting from its selection of high-end, craft and imported products, as these are current growth drivers in the beer market, Rob Sands explains.
Through a joint venture with Crown Imports LLC, Constellation Brands has been building its portfolio by importing Mexican beer brands Corona Extra, Modelo, Corona Light and Pacifico to the United States for more than 30 years. A turning point came in 2013 when Constellation Brands acquired the exclusive U.S. distribution rights for its Mexican beer portfolio and became a full-fledged brewer. Today, Constellation is the parent company of five of the Top 15 imported beer brands in the United States, having sold more than 240 million cases in fiscal year 2017, according to Rob Sands.
“In 2015, we took a major step as part of our long-term strategy to lead the high-end when we welcomed Ballast Point into the Constellation Brands family,” he explains. “With expertise in brewing premium, high-quality, award-winning products including its flagship Sculpin [IPA] as well as a grassroots approach to innovation, Ballast Point serves as the centerpiece, or engine, of our newly formed Craft & Specialty Beer Group. The group, which also includes Funky Buddha, preserves the unique culture of creativity, entrepreneurship, passion and brewing style intrinsic to those brands while leveraging the broader beer division capabilities and resources of key functions critical to the business.”
Premiumization also is key in the wine and spirits markets, Rob Sands notes. Along with consumer trends, Constellation Brands works to trade up its wine and spirits portfolios to provide the products consumers want.
Constellation Brands’ wine division has experienced continually improving margins as a result of its premiumization and acquisition efforts. Among the top-selling brands in its wine portfolio are Robert Mondavi, Clos du Bois, Kim Crawford and Ruffino, Rob Sands says.
Its spirits portfolio posted double-digit sales growth in the first quarter of its fiscal 2018, benefiting from consumer trends toward premiumization, flavors and whiskey, he explains. Constellation Brands’ premium spirits brands include Casa Noble Tequila and High West Whiskey.
Since acquiring High West Distillery in 2016, Constellation Brands has encouraged strong growth for the distillery, with sales increasing 81 percent for the 52 weeks ending May 14, according to Chicago-based Information Resources Inc.
“We know that today, more than half of all TBA dollars come from consumers who participate in all three categories: beer, wine and spirits. And, from a consumer perspective, the lines across categories are blurring. With this in mind, we use our unique position in TBA to look across all three categories and take advantage of changing consumer preferences and consumption trends to match consumer desires and lifestyles,” Rob Sands says. “We invest to fuel growth, have a portfolio of high-growth segments and use our TBA position to provide unique insights and value to retailers and distributors that enables us to capture more of the shelf and more of the market.”
Spreading the word
Constellation Brands supports all of the products in its portfolio in a variety of ways, including cross-category promotions, brand refreshes, brand and packaging extensions, and targeted programming. “For example, when the company redesigned the Corona can, it significantly accelerated the growth of Corona can sales,” says Jim Sabia, senior vice president and chief marketing officer of the Beer Division.
“Most consumers associate Corona with the iconic bottle and many didn’t even know it came in a can,” he continues. “The brand overhauled the packaging to keep it more in line with the iconic bottle that consumers loved. In just one year, we more than doubled the size of our can beer business. And this summer, we came up with our first ever limited-edition, beach-themed can that really excited our retailers and consumers.”
Effective marketing campaigns that drive brand equity, deepen consumer connections and draw on insights also are core to the company’s support. One example comes from its Woodbridge wine brand, which launched Pairs with Today, a TV and digital ad campaign, in June.
“A mix of national cable TV and digital advertising, Pairs with Today is based on qualitative and quantitative research done to test emotional engagement and brand resonance with target consumers,” explains Ben Dollard, senior vice president and chief marketing officer of the Wine and Spirits Division. “Consumers see themselves in the ad, and it resonates by way of being reflective of their every day. And these times are made even more special when great wine is shared with our friends and family. The resulting campaign is one that is highly engaging, strongly linked to the brand and motivates consumers to consider Woodbridge [the] next time they are at the store.”
The company utilizes word of mouth and grassroots efforts as well. This is most notably seen with its High West whiskey brand. The brand leverages the more than 300,000 visitors to its Saloon distillery in Park City, Utah, as ambassadors for the brand.
“The epic experience we are able to create converts consumers into advocates of the brand,” Dollard says.
Digital also is gaining a significant role in Constellation Brands’ marketing efforts for its brands. The company utilizes digital tactics across its TBA portfolio to help target its efforts toward the appropriate consumers. Digital marketing efforts for its wine and spirits division have been especially successful, notes Karena Breslin, vice president of digital marketing for the Wine and Spirits Division.
“Our consumers are increasingly turning to digital channels to discover brands and purchase products,” she says. “In response to this changing consumer behavior, we have grown our digital investment significantly; in fact, within wine and spirits, digital advertising now accounts for 77 percent of our total advertising spend. And we are seeing strong results, with a [return on investment] (ROI) as high as three-times our investment, which further validates our continued focus in digital marketing.”
Joanne Coleman, vice president of media for the Beer Division, adds: “As consumer media habits are changing rapidly, we continue to increase our digital investment across our beer portfolio as well. Our focus is on integrating digital into our marketing communications efforts with paid, owned and earned media all working together. We look for ways to create an authentic brand connection to both drive and become part of the conversation. For instance, we worked with Esquire magazine to create a content partnership with Modelo Especial that celebrates the Fighting Spirit by featuring real stories and inspiring others to share their stories. Content will be shared via digital, print and social platforms.”
The company also has embraced digital outlets like YouTube, Hulu, Spotify and Shazam to reach its consumers. These outlets allow for targeted, custom content that also can help to drive engagement, Coleman notes.
Creating a culture
Although building its extensive TBA portfolio has been essential for the growth of Constellation Brands, creating a unique corporate culture has been invaluable to the company’s success.
“At Constellation, our culture, brands and people set us apart. We believe Constellation is a place where you can elevate yourself and others to new heights to achieve great things,” Rob Sands says. “We keep things exciting for our people, provide meaningful opportunities for our employees to learn and develop, stay healthy and well, and take on new challenges. We empower Constellation Brands’ employees to help the company grow and share in our success when we do. It takes great people to make a great company, and we’ve got the best.”
This corporate culture blossomed from the company’s roots and extends beyond its employees. “My father, Marvin Sands, was passionate about his business. He took as much pride in the people of Constellation as he did in our brands,” Rob Sands explains. “He understood that to be a good leader you must earn trust, and that you earn trust by walking the walk, not just talking the talk. He also knew that successful companies hire the best people and work to incorporate their ideas. This lives on in our efforts to foster our people’s creativity and entrepreneurial spirit.
“My grandparents emigrated from Russia, so my father was committed to giving back to the community that had supported them and himself in the U.S.,” he continues. “This remains a core part of the values that we live every day.”
The company looks to make a positive impact in the communities in which it operates through three core outlets: sustainability, alcohol responsibility and giving back. “At Constellation Brands, we believe our success is tied directly to our ability to make a positive difference in the communities where we live and work,” Rob Sands says. “… We are committed to doing business the right way and continue to innovate when it comes to enhancing lives in the communities we call home.”
When it comes to sustainability, Constellation Brands was ranked No. 150 out of 500 of the largest companies in the United States based on environmental impact and sustainability by Newsweek in 2016. The company actively works to reduce its impact on the environment and to preserve natural resources, Rob Sands says.
In regards to alcohol responsibility, the company supports and builds programs that promote responsible drinking. In fact, it has implemented employee alcohol responsibility training globally and participates in large-scale consumer-outreach efforts.
Embracing its giving-back initiative, Constellation Brands recently donated $250,000 to the Anti-Defamation League and the Southern Poverty Law Center to support efforts to enhance the equality, respect and inclusion of people, Rob Sands says. And in response to the devastation and flooding caused by Hurricane Harvey, the company and its employees donated more than $200,000 to the Hurricane Harvey Relief Fund through a two-to-one match campaign.
“Our employees’ passions continue to drive our giving back programs,” he says. “Last year, Constellation Brands’ employee participation in our Nourishing Neighbors program — a program where employees donate time, food and money to help fight hunger in our communities — increased by 42 percent, and [we] increased funds donated through our Employee Match program by 83 percent.”
With its stable base and premium TBA portfolio, Constellation Brands is poised to continue growing, according to Rob Sands. “We’ve come a long way from our humble beginnings in 1945 as a small wine producer in upstate New York,” he says. “What excites me most about the future of our company is the opportunity we have to introduce more consumers to our outstanding portfolio of brands and the tremendous runway we have for sustainable, profitable growth that outpaces the market and competition for the long-term.
“We’re positioned well for long-term growth,” he adds. “With our leading position in TBA, Constellation Brands has the scale and clout to win with consumers. We’re focused on continued growth and what consumers want and have the unique ability to see, meet and stay ahead of shifting consumer preferences and trends across total beverage alcohol.”
Rob Sands hopes to continue to drive growth and share in the high-end beer segment through imports, craft and innovation; continue to premiumize Constellation’s wine portfolio; and grow share in the spirits segment during the next few years, he says.
In line with these goals, he highlights avenues of opportunity that are bound to benefit Constellation Brands. “The nation’s Hispanic population is one of the fastest growing U.S. populations in recent decades,” Rob Sands explains. “By 2025, more than 45 million Hispanics will be of legal drinking age in the U.S. This consumer has a strong preference for imported Mexican and craft beer brands. This sets up Constellation Brands for continued growth in high-end beer.
“Our focus on premiumization also positions Constellation Brands for continued success,” he continues. “Growth in the industry has been and will continue to be about premiumization. We have premiumized our portfolio across beer, wine and spirits, and are looking at opportunities for consumers to ‘trade up and across’ our portfolio.”
A combination of its TBA portfolio, its people and its culture sets the company to take on these goals and opportunities. “With our TBA leadership, we’re able to offer consumers what they want,” Rob Sands says. “But it’s not as easy as it sounds. It takes dedicated employees, ‘spot on’ consumer insights, top-to-bottom innovation, high-margin brands, strong routes-to-market, the resources and expertise to leverage TBA scope and scale, and a company culture that makes it fun and rewarding to do the best we can for the business and our communities. With continued year-over-year, record-breaking performance, we’re committed to continued success and growth through TBA.” BI