The US beer industry has long been dominated by just two players: Anheuser-Busch InBev, maker of the Budweiser brand, and MillersCoors of Miller beer. A third player has now entered the scene: a lesser-known New York wine company that recently bought exclusive rights to distribute Corona Extra, America’s top imported beer.
That company, Constellation Brands, today reported a 109% increase in sales to $1.46 billion for the second quarter. The jump is largely because of its June acquisition of Crown imports, a joint venture it had been part of to distribute Corona and other beers made by Mexico’s Grupo Modelo in the US. Today was the company’s first earnings report since the $4.75 billion purchase of the entire operation.
The deal and Constellation’s recent sales boost reflects America’s changing booze scene. Cheap, watery beer—once a mainstay for US drinkers—is being replaced by craft or imported beers, like Corona and other Modelo beers. That’s because, as we’ve written, Americans between the ages of 20 and 30 are trading up and drinking more premium beer, wine and liquor. According to its latest earnings, Constellation’s net beer sales were up 3.4% to $815 million.
Constellation’s acquisition of Modelo’s US operation is also part of a recent effort by US officials and smaller breweries to curtail the dominance of a few companies in the US beer market. Constellation gained control of the entire Crown venture because authorities required Grupo Modelo and Anheuser-Busch InBev, which purchased Modelo in June, to divest the operation. Otherwise, AB InBev and Grupo Modelo would have too much freedom to raise prices, US authorities said. Small craft breweries are also chipping away at the beer giants’ standing. Sales of craft beers were up 12% last year, faster than the overall beer industry, which grew only 0.9%.
Constellation, already the world’s largest maker of branded wine, is now the third largest beer distributor in the US. It also bought Grupo Modelo’s giant brewery in Piedras Negras, Texas.