By Tiffany Kary | Bloomberg
Constellation Brands, the maker of alcoholic beverages including Corona and Modelo, said it expects beer prices to rise more than its usual 1% to 2% this year due to rising commodity costs and a shortage of brown glass.
CFO Garth Hankinson said during the company’s third quarter earnings call on Thursday that beer margins could suffer in the next fiscal year in part due to raw material price inflation. . He still expects operating margins in the beer business to be between 39% and 40% over the long term.
The glass shortage is the latest hit from beer makers, who have spent the past year talking about a shortage of aluminum cans as people shifted from drinking in bars and keg parties to drinking at home. or outside.
MKM Partners analyst Bill Kirk said in a November research note that while Constellation’s most affected brand appears to be Pacifico, Modelo Negra beers are also available in brown glass and the greatest risk would be that the Glass availability becomes so severe that it limits sales of Corona or Special Model.
“We are working diligently to address the shortage of brown glass which is acting like a headwind,†CEO Bill Newlands said on the call. Constellation also cited higher freight and warehousing costs among supply chain changes brought on by the coronavirus pandemic.
Shares of the Victor, New York-based company fell as much as 4.2% before declining. The stock has risen 12% in the past 12 months, behind an 18% gain in the S&P 500 Consumer Staples Index.