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Corona Hard Seltzer Lifts Constellation Brands' Q2 Sales

By Demitri Kalogeropoulos – Oct 1, 2020 at 10:03AM

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The brand has been popular as alcohol consumption shifts away from bars and restaurants.

Constellation Brands (STZ 0.22%) still has a solid portfolio on its hands. The alcoholic beverage giant on Thursday announced that beer sales grew in the fiscal second quarter despite continued plunging demand from restaurant and bar customers.

The recently launched Corona brand hard seltzer was a key factor behind that success. That product maintained its 6% market share in a competitive niche in Q2, keeping it in fourth place on the sales charts.

Overall, the Corona franchise posted double-digit sales gains and the Modelo and Pacifico brands contributed to the company's 5% depletion rate (an industry metric for sales) for the period. Constellation's beer business grew by about 7% in the prior quarter.

A man shops for beer.

Image source: Getty Images.

Constellation's wine and spirits business also saw modestly positive results. Depletions declined 3%, but profitability took a big step toward management's ambitious long-term goals thanks to a focus on products at the higher-priced competitive tiers.

The broader business might continue to see pressure from weak bar demand through COVID-19 challenges. But rising profits and surging cash flows are allowing Constellation Brands to reduce its debt. That financial strength means management can take advantage of attractive small and medium-sized acquisitions in the premium beer, wine, and spirits niches.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.

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