Constellation Brands (NYSE:STZ) is the third largest beer seller in the U.S., but it is faring far better than established giants like Anheuser Busch InBev (NYSE:BUD) and Molson Coors. Its premium, import-focused portfolio, in fact, dramatically outperformed the industry in 2017 as customers snapped up products from the Corona and Modelo franchises. Earnings spiked higher at the same time thanks to rising prices across Constellation Brands' beer and wine portfolio.

On Friday, June 29, the company will kick off a new fiscal year that's expected to pair continued double-digit growth in its core beer segment with a significant slowdown in earnings gains. Below, we'll highlight a few of the trends investors will be watching in this report.

Friends drinking beer at a bar.

Image source: Getty Images.

Maintaining the growth pace

In the prior 12 months, Constellation Brands managed 10% sales gains in the beer segment and a 3% uptick in the spirits and wine division, after accounting for brand divestments. That second number was a slight disappointment, but it didn't detract from a surging beer unit that was responsible for most of the beer industry's growth last year. Budweiser owner InBev saw its revenue slip in the U.S. in 2017, after all, and Molson Coors posted reduced volumes. 

Constellation Brands is aiming to match last year's growth pace in both of its core alcoholic beverage divisions, which would translate into another year of significant market share growth. On the wine and spirits side, look for modest gains that are driven by its focus on premium products like the new Deranged wine brand selling for over $100 per bottle.

Significant growth in the beer segment will be harder to achieve, but management thinks they can stay in the low double-digits, mainly by adding more sales points like convenience stores and by introducing innovative products, including the new Corona Premier brand.

Marketing costs

The profit outlook isn't as bright since Constellation Brands is expecting to significantly increase marketing spending around the Corona Premier launch and in support of its other core brands this year. That expense boost is the main reason CEO Rob Sands and his team believe operating income will closely track revenue growth in 2018 even though it has been outperforming that result for years.

Two men holding bottled beers in a club.

Image source: Getty Images.

Overall, Constellation Brands is targeting a 10% earnings increase this year despite having boosted profits by 20% or better in each of the last five fiscal years.

Capital spending

Soaring demand brings its own set of challenges, particularly around capacity and logistics. That's why the company has been pouring resources into upgrading its Mexican brewery network. Constellation Brands is taking over more of its production process at the same time, including by partnering with glass giant Owens-Illinois to build the largest glass container factory in the world.   

These capital investments should reduce costs over time, if you believe the management team's outlook. They'll be necessary to satisfy the booming demand that Constellation Brands is expecting in its imported beer portfolio in the coming years, too.

The best news for investors is that this spending surge is both affordable and likely to slow toward the end of this fiscal year. As a result, Constellation Brands should generate about $1.2 billion of free cash flow in fiscal 2019, compared to $874 million last year. Those funds are supporting higher dividend payments, but they'll likely play an even bigger role in the company's aggressive acquisition plans.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV. The Motley Fool owns shares of Molson Coors Brewing. The Motley Fool has a disclosure policy.