Constellation Brands’ beer division reported slowed shipment and depletion growth in Q3 2023 compared to recent quarters, with shipments up +2.7% and depletions up +5.7%.
The company’s beer portfolio – including Mexican imports Modelo, Corona, Pacifico, Victoria, and craft offerings Funky Buddha and Four Corners – reported a net sales growth of +8% year-over-year (YoY) through November 20, to more than $1.89 billion.
By comparison, in Q2 Constellation reported double-digit net sales growth for its beer portfolio (+15%), to more than $2.1 billion. Shipments increased +12.1% in that quarter, while depletions increased +8.9%.
The nearly 6% shipment increase in Q3, to about 97.8 million case equivalents (CEs), was driven by “continued growth of Modelo Especial” and “strong momentum” for the company’s Modelo Chelada brand family, according to the Q3 report.
Despite the slowed quarter, Constellation’s total beer business “continued to outpace the entire beer and high-end categories” in volume and dollar sales growth, remaining the No. 1 share gainer in IRI dollar sales for the sixth consecutive quarter (+1.5 share points in beer and +2.3 share points in high-end), according to the report.
Modelo Especial, which typically reports double-digit depletions growth (+10% in Q2), grew depletions +4% in the quarter. However, it remained the beer category’s No. 1 brand share gainer in IRI dollar sales.
Modelo Chelada and Pacifico both recorded +40% depletion growth in Q3. Modelo Chelada remains the No. 1 chelada in the U.S. beer market with a 60% share of the chelada segment. Pacifico was the No. 7 share gainer in the beer category in IRI-tracked channels in the quarter.
Corona Extra recorded +1% depletions growth and was the No. 3 share gainer in beer in IRI-tracked channels.
Constellation is projecting beer business net sales growth of +9-10% for the full-year 2023 – up slightly from its 8-10% forecast in Q2 – and +4-5% operating income growth (up from 3-5% reported in Q2).
Total Company Net Sales +5%; Investment in Mexico Capacity to Continue
Constellation Brands’ overall net sales (beer, wine and spirits) increased +5% in Q3, to nearly $2.44 billion. In Q2, the company reported a +12% increase, to $2.655 billion.
Constellation will continue to invest in its beer portfolio with increased capacity in Mexico. The company previously announced a planned capital expenditure of $5 billion-$5.5 billion over FY2023 to FY 2026, with “the majority of the spend expected to occur in the first three years of that timeframe.” The investment will support a capacity increase of more than 30 million hectoliters (nearly 25.6 million barrels), with a new brewery planned in Veracruz, and expansion at its existing facilities in Nava and Obregon.