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Constellation 2Q profit falls

Constellation Brands Inc. said Wednesday that Americans brought home more wine from supermarkets and convenience stores this summer and took advantage of discounts to trade up to more expensive brands.

The world’s biggest winemaker and seller of Robert Mondavi wine and Svedka vodka said its second-quarter net income fell 8 percent as moderate growth in its domestic wine business was more than offset by slumping profits from its imported beers partnership.

But profits in the June-to-August period were better than expected, and its stock rose more than 4 percent.

“This is the second consecutive quarter that our U.S. wine business benefited from increased sales volume” even while purchases at bars and restaurants, known as “on-premise” in the industry, remain sluggish, CEO Robert Sands said.

“Obviously the economic recovery has not been particularly robust. Unemployment still remains high,” he said in a conference call with analysts. “As long as that remains the case, I think the on-premise is going to be weak for beer, wine and spirits.”

Constellation Brands draws more than 90 percent of its revenue from mostly moderate-priced wines. Among its 100-plus brands are Clos du Bois, Woodbridge by Robert Mondavi, Blackstone and Ravenswood.

The company said it earned $91.3 million, or 43 cents per share, in the quarter, down from $99.7 million, or 45 cents per share, a year earlier. Revenue fell 2 percent to $863 million, partly because of the sale of its British cider business.

Excluding $17 million in restructuring and other one-time items, the company earned 52 cents per share, beating Wall Street expectations.

Analysts, on average, expected the company to earn 49 cents per share on revenue of $855 million. But they said paying lower taxes than expected boosted its adjusted income by 2 cents per share.

Wine sales fell 1 percent to $808 million, but revenue in North America grew 5 percent to $601 million, with volume increases partially offset by higher promotion costs. Wine sales in Europe and Australia fell 14 percent to $207 million.