Dive Brief:
- Constellation Brands reported a 17% jump in sales for fiscal second quarter sales, according to a statement to Nasdaq.
- The company announced a $160 million acquisition of High West Distillery, which will allow the company to produce more high-end and premium products, particularly in the fast-growing bourbon and rye categories.
- Constellation also increased its forecast for the fiscal year, riding the successes of a strong beer business.
Dive Insight:
This kind of sales growth is practically unheard of among major food and beverage companies today, many of which are posting top-line losses or short gains. The 17% sales gain stemmed from 13% organic net sales growth on a constant currency basis and acquisition benefits from Ballast Point, Meiomi and The Prisoner, according to a news release.
That means Constellation is seeing sales boosts from its recent acquisitions, but most of its growth is still coming from its own portfolio of brands. With its beer, wine and spirits in such high demand, Constellation can continue to generate revenue and invest it back into the company. That could be via more acquisitions to continue to propel the top line or improvements made to production facilities, which could lead to more efficient and cost-effective operations.
Constellation's most recent acquisition is focused on the popular premium spirits category. This can help the company establish a presence—if not dominance—in a fast-moving category. The company already proved it could accomplish such a goal with craft beer and premium wine following other recent acquisitions.
But the question is what acquisition or expansion plan Constellation might pursue next. Beer has been a large sales driver for the company, so craft brewers could still be an option. But if spirits or wine produce higher margins, or if the Anheuser-Busch InBev and SABMiller merger puts too much downward pressure on sales and space, the company may shy away from beer and look elsewhere.