Constellation Brands' beer business gained further ground in the third quarter after its Modelo Especial toppled Bud Light as the top-selling beer in the U.S. last year, following parent Anheuser-Busch InBev's controversial partnership with transgender activist Dylan Mulvaney last spring.
In its earnings report released Friday, Constellation fell short of quarterly sales estimates due to a decline in wine and spirit demand but stuck with its 2024 profit forecast because of the growth of its beer brands.
Constellation Brands' Modelo Especial became the top-selling beer in the U.S. last year, overtaking Bud Light, which is brewed by Anheuser-Busch. (Illustration by Mario Tama/Getty Images / Getty Images)
"Modelo Especial delivered double-digit volume growth and continued to extend its position as the #1 beer in U.S. tracked channel dollar sales," Constellation CEO Bill Newlands said in a statement accompanying the results. "Our other core beer brands, Corona Extra and Pacifico, also delivered solid growth and were top 10 share gainers across the U.S. beer category."
Constellation, like its industry peers Molson Coors and Brown-Forman, has undertaken price hikes to navigate rising costs of production, which have now come off their peaks.
This helped the company post a quarterly comparable profit of $3.19, topping estimates of $3, according to LSEG data.
The Clos du Bois wine-maker's quarterly sales came in at $2.47 billion, compared with analysts' average estimate of $2.54 billion.
Net sales in the company's beer business, which includes Corona Premier and Modelo Especial, rose 4% in the quarter.
"This outstanding performance has reinforced our conviction in our Fiscal 2024 enterprise outlook, despite an adjustment to our Wine and Spirits Business guidance due to near-term market headwinds in the wine market," Newlands said.
The company is maintaining its fiscal 2024 comparable profit forecast of between $12 and $12.20 per share.
Bud Light cans are seen in a store in Montreal, Canada, on June 16, 2023. (Jakub Porzycki/NurPhoto via Getty Images / Getty Images)
Constellation's beer brands have benefited from customers increasingly preferring smaller pack sizes. It also picked up customers after Bud Light's social media promotion with Mulvaney and comments from Bud Light's previous marketing vice president last year, which sparked a boycott against Anheuser-Busch brands in the U.S.
Reuters contributed to this report.