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Constellation Brands misses quarterly sales estimates on tepid wine, spirits demand

Constellation Brands misses quarterly sales estimates on tepid wine, spirits demand © Reuters. FILE PHOTO: Corona beers are pictured at a BevMo! store ahead of Constellation Brands Inc company results in Pasadena, California U.S., October 4, 2016. REUTERS/Mario Anzuoni/File Photo

(Reuters) – Corona beer maker Constellation Brands (NYSE:)’ third-quarter sales fell short of market expectations on Friday, as demand for its higher-priced spirits and wines slowed down in the face of sticky inflation.

The Victor, New York-based company is seeing inflation-hit consumers pivot towards its affordable offerings and away from Constellation’s premium products like Robert Mondavi, Svedka Vodka and Casa Noble Tequila.

Constellation, like its industry peers Molson Coors (NYSE:) and Brown-Forman, had 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.

Organic net sales in its premium wines and spirits segment fell 7% in the quarter, and the company now expects the segment to see an annual drop of 7% to 9%, compared to prior expectations of a 0.5% fall.

Constellation’s beer brands have benefited from customers increasingly preferring smaller pack sizes.

It also picked up customers as conservative backlash over a social media promotion by rival Anheuser-Busch InBev’s steered consumers away from Bud Light and Budweiser brands.

Net sales in the company’s beer business, which includes Corona Premier and Modelo Especial, rose 4% in the quarter.

The company, however, maintained its fiscal 2024 comparable profit forecast of between $12.00 and $12.20 per share.

Constellation’s shares were up marginally in volatile premarket trading. (This story has been refiled to correct a typo in paragraph 1)

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