Constellation Brands (NYSE: STZ), maker of Modelo and Corona beer, reported struggles with low-end wine and spirits sales on Wednesday during its third quarter earnings report. The Company’s stock was promptly sent to a 52-week low closing at USD 150.94 the same day. Constellation said it expects to see continued struggles in its wine and spirits business next quarter. Both sales and operating income are expected to fall.
According to Reuters, Bill Newlands, current Chief Operating Officer said the company will review its portfolio and focus more on high-end brands that sell wine above USD 11.00. Its lower-end wine brands include Mondavi, Ravenhood and Ruffino which sell bottles for under USD 11.00.
Constellation now expects earnings per share for fiscal 2019 to be between USD 9.20 and USD 9.30. The company previously forecasted earnings per share to fall between USD 9.60 and USD 9.75.
The company also faced setbacks in its mainstay beer business, missing analysts’ growth estimates in the third quarter. Depletion growth, a measure of distributers sales to retailers, rose 8%. This fell short of the 9% rise analysts had expected.
Partly due to increased marketing, sales for Constellation’s beer business increased 16% from the previous year’s third quarter. Sales grew from USD 1.04 Billion to USD 1.21 Billion.
The Company has also been taking steps to expand its portfolio as global alcohol consumption decreases and cannabis use expands. Constellation brands closed a USD 4 Billion deal with Canadian Marijuana company Canopy Growth Corp (NYSE: CGC) back in November. The Company is yet to see results from its investment.