Constellation's 2Q to offer wine-sales insight

Constellation Brands looks for more signs of renewed wine growth in US in 2nd quarter

ROCHESTER, N.Y. (AP) -- Wine and spirits maker Constellation Brands Inc. is expected to report another quarterly increase in profit Thursday when it releases its fiscal second-quarter results before the stock market opens.

WHAT TO WATCH FOR: Signs of a sustained uptick in domestic sales of wines, spirits and imported beers through the summer season as shoppers take advantage of more discounts to trade up to higher-margin alcoholic drinks.

Analyst Tim Ramey of D.A. Davidson & Co. expects Constellation's revenue in the June-to-August period to fall about 2 percent to reflect the sale of much of its Australian and British wine business in January.

The Victor, N.Y., company sells moderately priced wines, spirits and imported beers like Robert Mondavi, Svedka and Corona.

In cost-cutting mode for five years, it has refocused on solidifying its supremacy in higher-margin, "premium-category" wines priced from $5 to $20 a bottle. It has slashed its debt from $5.3 billion to $3 billion and shrunk its payroll from 9,400 to 4,300.

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.

Constellation lost its eight-year status as the world's No. 1 winemaker when it offloaded 80 percent of a once-promising Australian wine business that had gone awry.

It dropped back to No. 2 in the vintner-by-volume rankings behind longtime leader E. & J. Gallo of Modesto, Calif. But it remains the world's biggest premium-category winemaker with an estimated 17 percent share of that segment in the United States.

Its wines include Clos du Bois, Woodbridge by Robert Mondavi, Blackstone and Ravenswood. It also sells liquors such as Black Velvet Canadian whiskey and, through a joint venture, imports such beers as Tsingtao from China and St. Pauli Girl from Germany.

WHAT'S EXPECTED: Analysts polled by FactSet, whose estimates typically exclude one-time items, expect Constellation to earn 65 cents a share on revenue of $708.6 million.

LAST YEAR'S QUARTER: Constellation earned $91.3 million, or 43 cents a share, as moderate growth in its domestic wine business was more than offset by slumping profits from its imported beers partnership. Revenue fell 2 percent to $863 million, partly because of the sale of its British cider business.