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Constellation Brands' profit plunges

Thursday, October 02, 2014 - 01:27

A beer recall hurt Constellation Brands quarterly profit. The beverage giant says it's buying a glass plant in Mexico and boosting capacity. Fred Katayama reports.

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Constellation Brands losing some of its fizz in early trading. The alcoholic beverage producer behind the Modelo and Corona beer brands saw its income plunge in the latest quarter. Its August recall due to glass particles found in some beer bottles robbed the company of $37 million in net sales. Constellation said it expects to replace that lost volume in the current quarter. And so it's sticking to its profit target for the full year. That aside, strong consumer demand for its Mexican beers, Modelo Especial and Corona Extra, drove sales higher. Many investors have been betting big time on more consolidation in the beer market. Last month, Heineken said it said no when SABMiller approached it about a takeover. That move by SAB was seen as a way to defend itself from a potential takeover by AB InBev. Constellation, which bought the U.S. beer business of Grupo Modelo from AB last year, said today it's buying AB's glass plant in Mexico and expanding capacity at its brewery there. Its stock, which has risen 50 percent over the past year, shed some of those gains at the market open. RBC analyst Nik Modi said, "All the dynamics that have created uncertainty over the stock such as glass buying, more capacity, impact from the beer recall and long-term targets have now been put on the table... we see no reason to lower our long-term forecasts."

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Constellation Brands' profit plunges

Thursday, October 02, 2014 - 01:27