Constellation Brands’ wine and spirits net sales fell 26% in the first half of its fiscal year, although organic net sales rose 12% after excluding the impact of divested businesses.
Second-quarter net sales increased 17%, and the division returned to an operating profit. However, the U.S. drinks group expects wine shipments to decline in the second half and maintained its full-year organic net sales growth forecast of between a 1% decline and a 1% increase.
For the six months ended Aug. 31, 2026, the first half of its fiscal 2027, Constellation reported group net sales of $5.066 billion, up 1% from $4.996 billion a year earlier. Net income attributable to the company rose 24% to $1.220 billion from $982.1 million.
Beer remained the group’s main source of revenue, with first-half net sales rising 4% to $4.757 billion. Wine and spirits net sales fell 26% to $308.6 million, largely reflecting the inclusion of subsequently divested businesses in the prior-year comparison.
Wine Brand Disposals Weigh on Reported Sales
Constellation said wine businesses sold in 2025 had contributed $142 million in net sales between March 1 and June 1 that year. The absence of those sales affected the division’s reported comparisons for both the first quarter and first half of fiscal 2027.
The company sold a portfolio of mainstream wine brands, along with associated wineries, vineyards and production facilities, to U.S. producer The Wine Group in 2025. The brands included Woodbridge, Meiomi, Cook’s, Robert Mondavi Private Selection, SIMI and J. Rogét.
While reported first-half wine and spirits net sales fell 26%, organic net sales – which exclude the effect of those disposals -increased 12%, indicating growth in the retained business.
Citing U.S. retail channels tracked by market research firm Circana, Constellation said its wine and spirits portfolio outperformed the broader category in both sales value and volume. Its wine portfolio ranked third in U.S. dollar share gains.
The division’s first-half gross margin rose to 53.6% from 51.6%, an increase of 2 percentage points. Constellation attributed the improvement partly to the disposal of lower-margin brands and lower product costs.
Second-Quarter Wine and Spirits Sales Rise 17%
The wine and spirits division returned to reported sales growth in the second quarter, with net sales rising 17%, driven primarily by a 15.4% increase in shipment volumes.
Its operating margin rose to 3.8%. The company said recoveries from claims related to U.S. tariffs reduced the cost of goods sold, while restructuring and cost-saving measures lowered marketing and other selling, general and administrative expenses.
Sales through the distribution channel also improved. Second-quarter depletions – sales by distributors to retailers and other licensed outlets — rose 10.2%. Kim Crawford and Mi CAMPO were among the main drivers, with depletion growth of approximately 11% and 51%, respectively.
Shipments Expected to Decline in Second Half
For fiscal 2027, Constellation forecasts changes of between a 1% decline and a 1% increase in each of three measures: group organic net sales, beer net sales, and wine and spirits organic net sales.
Management said wine and spirits shipments were expected to decline in the second half, partly because the company was working with major distributors on mutually agreed plans to reduce finished-goods inventories. Its quarterly report also cited continuing pressure on sales from economic uncertainty and socioeconomic factors.
Despite the second-quarter rebound, management remains cautious about the full year. Distributor inventory reductions are expected to weigh on second-half shipments, although the company did not identify them as the sole factor shaping its sales outlook.
Discover more from Vino Joy News
Subscribe to get the latest posts sent to your email.
