Constellation Brands Inc. STZ has successfully closed its previously announced acquisition of luxury wine brand – Meiomi. The company had inked a $315 million deal to buy Meiomi from Copper Cane LLC in July this year.
Through this acquisition the company gained the rights to the Meiomi trademark and associated stock of pinot noir and chardonnay. We note that Meiomi’s pinot noir has been regarded as the best in terms of sales growth across all pinot noir price points over the last 3 months.
The integration of Meiomi is likely to enhance Constellation Brands’ robust brand portfolio, given the former’s high-growth, large-scale and high-margin business. Further, the addition of Meiomi is anticipated to augment the company’s fiscal 2016 earnings per share by 3–4 cents.
Constellation Brands has a strong portfolio of well-known brands like Robert Mondavi, Clos du Bois, Arbor Mist and Blackstone. Alongside these premium wine brands, the company boasts of spirits, imported beer and other select beverage alcohol products.
Apart from this, the company, which shares space with Ambev S.A. ABEV and Castle Brands Inc. ROX, is focused on expanding its operations in order to achieve business growth. The company has been entering into agreements and joint ventures to support this strategy. Before the Meiomi wine brand acquisition, the company entered into a joint venture with Owens-Illinois to gain possession and operational rights of a glass plant. With this transaction, Constellation Brands intends to supply for more than 50% of the glass demand and tap significant opportunities in its U.S. beer business.
Constellation Brands began fiscal 2016 on a solid note as the company’s top and bottom-line results for the first quarter exceeded expectations and improved year over year. Moreover, its sturdy performance encouraged management to raise its fiscal 2016 outlook. This Zacks Rank #2 (Buy) company now envisions adjusted earnings in the range of $4.80–$5.00 per share, up from $4.70–$4.90 expected earlier. Moreover, the company expects its beer segment’s net sales for the fiscal to grow nearly 10%, with mid-to-high single-digit volume growth.
Another favorably placed stock in the beverages-alcohol industry is Brown-Forman Corp. BF.B, carrying a Zacks Rank #2.
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