Constellation Brands looks for signs of renewed wine growth in North America

ROCHESTER, N.Y. (AP) - Constellation Brands Inc., which sells Robert Mondavi wine, Svedka vodka and Corona beer, reports its fiscal fourth-quarter results before the stock market opens Thursday.

WHAT TO WATCH FOR: Signs of an uptick in North American sales of wines and spirits through the holiday season as shoppers gain more confidence in the economic recovery and trade up to more expensive alcoholic drinks.

Constellation Brands recently lost its eight-year-long status as the world's No. 1 winemaker when it sold most of its Australian and British wine business. It has been shifting its focus to higher-priced brands and remains the biggest seller by volume of premium-category wines priced between $5 and $15.

Analyst Tim Ramey of D.A. Davidson & Co. predicts a 3 percent rise in the company's North American wine sales over the previous December-to-February quarter, and an 8 percent jump in spirits sales. Ramey also expects to see a lift in "on-premise" sales of wine and spirits at U.S. restaurants and bars. Restaurant purchases account for roughly a quarter of wine sales in North America.

Constellation Brands' overall revenue fell 2 percent in the third quarter, driven by a 12 percent slump in wine sales in Europe and Australia and a weaker-than-expected 1 percent rise in the U.S. amid a drop in the volume of wine sold there.

WHY IT MATTERS: Constellation Brands' results could provide fresh insight into the spending habits of Americans who have been buying less alcohol when dining out.

Based in Victor, N.Y., 20 miles southeast of Rochester, its wine brands include Clos du Bois, Blackstone and Ravenswood. It also sells liquors such as Black Velvet Canadian whiskey. And through a joint venture, its beer imports include Corona from Mexico, Tsingtao from China and St. Pauli Girl from Germany.

In January, it offloaded 80 percent of its Australian and British wine business to an Australian private equity firm for $230 million. The sale returned it to No. 2 in the global winemaker rankings behind E. & J. Gallo Winery of Modesto, Calif. Wine sales still account for more than 90 percent of its revenue. In recent years, the company has sold unprofitable brands and cut its payroll to 6,000 from 8,200 in 2008.

WHAT'S EXPECTED: Analysts polled by FactSet, whose estimates typically exclude one-time items, expect Constellation Brands to earn 26 cents a share on sales of $723 million.

LAST YEAR'S QUARTER: Losses narrowed to $51 million, or 23 cents a share, on sliding sales of spirits and beer and lingering weakness in the key North American wine market. Sales fell 3.6 percent to $708.7 million.