‘Right time’: Constellation Brands wine, spirits leader stepping down

Constellation Brands, one of the largest U.S. wine, beer and spirits makers whose local brands include Robert Mondavi and The Prisoner, said the leader of its Wine + Spirit Division plans to step down.

Robert Hanson, executive vice president and division president, joined the upstate New York-based company (NYSE: STZ) four and a half years ago and is set to leave on Feb. 29 in a “mutually agreed” decision, according to the announcement Thursday. Bill Newlands, company president and CEO, will take over division oversight until a replacement is found.

“Robert has been instrumental in leading the charge to reposition our Wine & Spirits business to a higher-end portfolio of brands more aligned with consumer trends, with an expanded focus to include global, omni-channel distribution, with more robust and targeted international and direct-to-consumer sales channels,” Newlands said in the news release.

Key to that repositioning — a two-decade wine industry trend called “premiumization” — was Constellation’s $810 million sale of 32 lower-priced brands to E. & J. Gallo Winery in 2021. The company credited Hanson with such divestitures plus several smaller-scale acquisitions of higher-end fine wine and craft spirits brands and focusing innovations on consumer preferences.

Hanson in a statement on his pending departure said the keys to this company shift are now in place.

“With the strategic, operational and capability transformation of the company’s Wine & Spirits business in place, this is the right time for me to transition leadership and to step down from my role with the company and pursue my future career goals. I look forward to the continued success of the team in the years ahead,” Hanson said.

Hanson had served on Constellation’s board of directors from 2013 to 2019 then came on board in June of that year. He had previously been in top management positions at John Hardy Global Limited, American Eagle Outfitters, and Levi Strauss & Co.

On Friday the company reported results from its fiscal third quarter, ended Nov. 30, 2023. Net income was $509 million, up 9% annually, on net sales of $2.47 billion, up 1% from a year before.

Keeping that growth in the black was the beer division, which produces the Corona, Modelo and Pacifico brands.

The division’s quarterly earnings grew 7% over 12 months to $757.3 million, driven by annual growth of 3.4% in brewery shipments and 8.2% in depletions from wholesaler inventories. Modelo Especial continued to be the No. 1 selling beer in the U.S. market, after surpassing Anheuser-Busch InBev’s Bud Light following a controversy over a brand influencer. A-B InBev sold U.S. rights to the Modelo brand to Constellation in 2013.

Constellation’s wine and spirits division, however, continued to have hits and misses in the fiscal third quarter. Excluding brands no longer in the portfolio, quarterly shipments fell 10.3% over 12 months, to the equivalent of 6.1 million 9-liter cases, and depletions were down 10%.

But offsetting those results was 6% depletion growth in the period, per Circana store scan data, for the largest fine-wine brand in the portfolio, The Prisoner, the company said. Quarterly depletions for the company’s second-largest craft spirits brand, Mi Campo tequila, soared 80% annually.

Divisional earnings were $127.6 million for the quarter, down 5%, on net sales of $502.4 million, off by 7%.

Constellation expects to end this fiscal year with wine and spirits net sales down 7%–9% from last fiscal year and operating income down 6%–8%, “primarily due to broadermarketplace deceleration and U.S. wholesale underperformance.” Beer division net sales are expected to be up 8%–9% for the fiscal year.