I'll drink to that! Constellation Brands (NYSE:STZ) just reported comparable earnings that fell from last year, as expected, but still beat the forecasts of analysts who expected the wine and liquor distributor to be crying in its beer.

The usual suspects held down the distributor of Robert Mondavi wines and Corona beer: The U.K. wine industry has been drunk on a flood of cheap Australian imports that have hurt pricing, and the company's own inventory-reduction program here in the U.S. has not helped, either. Shrinking distributor inventories ended up denting an otherwise strong performance in Canada, so that overall branded wine net sales in North America were drained by 4% year over year.

Net sales for the quarter, which include the costs of excise taxes, fell 37% to $892.6 million, while profits spiked the keg at $0.35 a share, excluding one-time profits, down from $0.43 a year ago.

Although the report seems to suggest that Constellation has straightened its racks to make for a better future display, it also underscores why fellow Foolish commentator Ryan Fuhrman suggested that this was no elegant fluted glass that one could easily grasp. He recommended that investors sip elsewhere until the wine business shows more clarity.

As a cellar -- er, seller -- of popular wine brands including Mondavi and Ravenswood, Constellation has also been expanding its portfolio to include premium liquors such as SVEDKA vodka and Corona beer. While both have generated lots of sales (SVEDKA, for instance, helped total net sales for spirits rise 25% in the quarter), they weren't enough to offset the costs of Constellation's Crown Imports and Matthew Clark acquisitions. Couple that with competitive pressures in its wine division, and you have an explanation for why performance has appeared inebriated.

Branching out, though, might not be enough to gain market share from its rivals. Diageo (NYSE:DEO), Fortune Brands (NYSE:FO), Anheuser-Busch (NYSE:BUD), and Molson-Coors (NYSE:TAP) all have leading brands in areas where Constellation is attempting to make inroads. Moreover, Constellation might end up cannibalizing its own sales.

According to marketing trade publication Brandweek, beer sales for the year ended June 2 had grown 1.1% -- faster than the negligible 0.3% for spirits, but lower than the 2.7% seen in wine. Trends seem to suggest a move toward high-end names such as Corona and Boston Beer's (NYSE:SAM) Samuel Adams, and if so, they might just end up taking away from SVEDKA. Even more troublingly, with wine sales spiking as they have, Constellation's inventory-reduction program may have cost the company an opportunity to gain greater mind and market share here.

The current quarter's results were worth a toast, but we may still find it advantageous to stay on the wagon a while longer.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.