Constellation Brands, Inc.’s STZ premiumization strategy has been encouraging, as demonstrated by the accelerated growth of its Power Brands. The company has been seeing strength in the beer business for a while now. 

In the latest announcement, STZ unveiled an agreement with a global spirits company, Sazerac, to divest its SVEDKA brand. However, the financial terms of the deal have been kept under wraps.

More on STZ’s Latest News

This agreement is built on Constellation Brands’ strategic initiatives to align its wine and spirits portfolio to resonate well with the changing consumer preferences and increasing market sectors. Hence, the company remains focused on higher-end wine and spirits brands and products. 

In recent years, STZ sold most of its mainstream wine and spirits brands across its portfolio, thus aggressively concentrating on premium and wine and craft spirits segments. Such moves are expected to meet the company’s growth goals and bolster its overall performance.

The SVEDKA brand is popular for its premium vodka-making traditions, liquid standards and flavor innovation. This transaction is likely to conclude in the upcoming months and is subject to customary closing conditions, along with the receipt of regulatory approvals.

Constellation Brands’ Other Efforts

Constellation Brands has been transitioning its wine and spirits portfolio toward higher-end brands that align better with consumer-led premiumization trends. Key growth drivers include the company's high-end Power Brands, such as The Prisoner Brand Family, Kim Crawford and Meiomi. 

The beer segment also experienced gains from premiumization, driven by growth in traditional beer and flavored categories, including seltzers, flavored beer, RTD spirits and flavored malt beverages. The company is investing in its Power Brands through innovation and capitalizing on priority consumer trends with successful product introductions.

Constellation Brands is also on track with its plans to invest in the next phase of capacity expansion in Mexico. This will help meet the potential demand for the high-end Mexican beer portfolio, including the emerging Alternative Beverage Alcohol sub-space, which includes hard seltzers.

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Shares of this Zacks Rank #3 (Hold) company have gained 1.9% in the past year against the industry’s 14.3% decline.

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The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings per share (EPS) indicates growth of 27.3% and 224.3%, respectively, from the prior-year levels.

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VITL has a trailing four-quarter average earnings surprise of 48.5%.

McCormick & Company MKC, manufacturer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2 (Buy). MKC has a trailing four-quarter average earnings surprise of 13.8%.

The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS indicates growth of 0.6% and 8.2%, respectively, from the year-ago figures.

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