Mondavi wine keeps Constellation moving

By staff reporter

- Last updated on GMT

Related tags Constellation United kingdom Robert mondavi

World wine giant Constellation Brands continued to profit from its
takeover of Robert Mondavi wine in its third quarter as the group
looks to focus more seriously on Europe.

Constellation's branded wine sales increased 32 per cent to $672.2m in its third quarter results, largely helped again by its recently acquired Robert Mondavi brand and its stake in Ruffino wines.

Total sales rose 15 per cent to almost $1.6bn, also helped by gains in imported beers to the US. Constellation's success from importing Mexican beers and Chinese brand Tsingtao highlighted one of the few growth areas on America's stagnant beer market.

Branded wine net sales only rose six per cent without Mondavi and Ruffino; something unlikely to quieten calls from some analysts that Constellation has relied on acquisitions to hide pretty average organic growth.

The group's share price also dipped by around $1 on Thursday after it announced earnings per share would likely be lower than previously predicted.

Chief executive Richard Sands, however, said Constellation's organic growth was solid and that "to a great degree we were able to mitigate the impact of natural disasters and higher energy and raw materials costs, factors that were largely beyond our control"​.

Constellation has fixed its wine goggles more firmly on Europe this year, and more specifically the UK. Britons now drink three-quarters more wine than 15 years ago, although competition for their palates has intensified sharply among winemakers.

"Constellation leveraged its leadership position and relationships with U.K. retailers to gain key placement, promotion and advertising of our brands as we headed into the always important holiday season,"​ said Sands.

Earlier this year, Sands highlighted Europe as the starting point for an international roll-out of Mondavi. Constellation's branded wine sales to Europe rose four per cent in the third quarter.

UK supermarkets began selling Mondavi at the end of August and the group said "early marketplace feedback has been positive"​.

British supermarkets are becoming an ever more important outlet for wine firms, and Constellation said on-trade conditions were challenging, prompting a drop in sales through wholesalers.

Constellation and fellow US wine firm Gallo already control around a fifth of UK wine imports, although Australian wine currently leads the UK's crucial mid-price market (bottles from £3 to £5).

Related topics Manufacturers Beer & cider

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