Constellation Brands reports 22 percent profit thanks to Meiomi wine growth

Constellation Brands reported on Thursday a 22 percent increase in profits for the third quarter. The rise was driven in part by strong sales in the Meiomi wine brand that Constellation acquired for $315 million last year from Napa vintner Joe Wagner.

The Victor, N.Y., company said its profit of $271 million for the previous three months compared to the same period in 2014 was primarily driven by growth of its Mexican beer sales. ?The continued popularity of Mexican beer brands Corona and Modelo, which Constellation imports into the U.S., helped increase its beer sales by 8 percent over the same period from the previous year.

Constellation reported along with its earnings announcement that it will build a new brewery in Mexicali, Mexico, near the U.S. border and the lucrative California market, to keep up with the demand for those imports.

While it has been riding the wave of growth for Mexican beer, Constellation’s purchase last summer of Meiomi, whose sweet pinot noir has been a best-seller in the premium market, was the major domestic winery sale of 2015. The beverage giant made waves by paying a large sum for a brand without assets, reflecting a big bet on the market for premium pinot noir priced at $20 and above. That market has been a central target of Santa Rosa’s Jackson Family Wines, though others have entered it as well, as seen when Modesto’s E&J Gallo Winery increased its purchase of brands and vineyards in the North Coast last year.

Constellation reported Meiomi’s sales increased more than 80 percent in large retail chains for the quarter, as it used its considerable distribution resources to push more product into the market and into those large retailers. Sales of wine at $15 a bottle and above are more profitable for such large chains.

CEO Rob Sands said Meiomi’s “strong margin profile helped drive the quarterly margin improvement for our wine and spirits business.”

Locally, Constellation, the country’s third largest wine company, owns Ravenswood, Simi Winery and Robert Mondavi wineries and such high-end labels as Opus One. The company’s net wine sales rose 5 percent for the quarter, to $719 million.

It remains bullish on the wine sector, as Sands noted such sales grew 6 percent for the previous 12 weeks at large retailers and 11.2 percent for bottles of $8 or more.

“The high end of the wine industry is growing probably better” than it has ever been, he said.