Revenue
Earnings
The consensus estimate is for EPS of $1.82 in Q4 2023, which compares to EPS of $2.37 reported in the year-ago quarter. In Q3 2023, EPS fell 9% YoY to $2.83.
Points to note
Constellation continues to benefit from strength in its beer business, driven by strong performances from brands like Modelo Especial and Modelo Chelada. This momentum is likely to have continued in the fourth quarter as well. In Q3, the beer business recorded depletion growth of almost 6%, driven by growth in these two brands.
Product innovation and portfolio revamping has also driven growth for the beer business. On its Q3 conference call, the company said that within its beer portfolio, SKUs introduced over the past three years have driven 20% of the growth delivered by the business since the start of FY2020. A significant part of this growth has come from the Modelo Chelada brands. In Q3, the Modelo Chelada and Pacifico brands each delivered depletion growth of over 40%.
However, margins in the beer business have been hurt by higher raw materials, logistics and packaging costs, incremental operating costs from brewery capacity expansions, as well as higher marketing spend.
Within the wine and spirits business, Constellation’s higher-end brands delivered strong performance in Q3. The Aspira portfolio delivered depletion growth of 8.5% in Q3. The Prisoner brand family delivered depletion growth of 7% while brands such as High West Whiskey and Casa Noble Tequila also delivered double-digit depletion growth. Despite this, net sales and overall depletions for this segment were down in the third quarter.
Margins in this segment were hurt by decreased shipment volumes, increased cost of goods sold, and higher compensation and benefit expenses related mainly to DTC investments. The headwinds faced by the wine and spirits segment are likely to have continued through the fourth quarter as well.