Constellation Brands lower hard seltzer expectations
Constellation Brands Inc has lowered its growth expectations for Corona Hard Seltzer as fears continue about a slowdown of the sector.
Molson Coors Beverage Company halted production of its Coors-brand seltzer in July, while Boston Beer saw its share price plummet 10% after a weak demand for hard seltzer saw the brand pull its earnings guidance.
Now Constellation Brands warned that the hard seltzer landscape has changed, but beer will continue to be its main driver.
The company reported a Q2 earnings miss this week, although its sales beat expectations.
Its beer business, which includes Corona and Modelo Especial, was up 14% to $1.861 billion. Total sales were $2.565 billion.
“As it relates to our hard seltzer business […] we’re unique in our position versus our competitors in this space, as our primary growth is coming from our core beer portfolio and we’re not reliant on the growth of hard seltzers and ABAs [alternative beverage alcohol] to achieve the medium-term growth goals of our beer business,” said Constellation Chief Executive William Newlands on the earnings call, according to FactSet.
“The hard seltzer landscape has shifted considerably in recent months. Therefore, we’ve lowered our growth expectations for Corona Hard Seltzer, resulting in a sizable obsolescence charge taken for Q2.”