Mexican beer demand drives brewer’s sales

Constellation Brands reported fourthquarter sales and profit on Thursday above Wall Street estimates, driven by strong demand for high margin Corona and Modelo beers and expensive wines such as Meiomi.

The boost in demand for Mexican beers is a result of a growing Hispanic population, a demography the company has been focusing on to widen its consumer base. The strategy helped the company’s sales beat estimates for the third straight year.

With continued strong sales — and a 42 percent hike in the dividend — shares of Constellation popped 3.4 percent, to $227.92. They are up 40 percent in the last year.

Beer sales, which accounted for about 77 percent of the net sales in the quarter, rose nearly 12 percent, to $997.2 million.

Net sales rose 8.5 percent, to $1.77 billion, in the quarter, beating the analysts’ estimate of $1.75 billion that the maker of Robert Mondavi wines and Svedka vodka was expected to generate.

To cater to the rising demand, Constellation, which imports most of its beers from Mexico, said it would spend $900 million in 2019 to expand capacity of its breweries in Ciudad Oberon, which lies south of the border.

The company is also on a drive to “premiumize” its portfolio and has added Craft beers such as Funky Buddha and Napa Valley winery Schrader Cellars, which sells wines for as much as $250 a bottle.

Net income attributable to the company more than doubled, to $925.5 million, or $4.64 per Class A share, in the quarter ended Feb.28, helped by a $363 million gain due to changes in the US tax law.

Excluding items, the Victor, NY-based company earned $1.90 per share, beating the average analyst estimate of $1.74 per share, according to Thomson Reuters I/B/ E/S.