USA: Constellation Brands not expecting big change in Corona and Modelo Especial pricing strategy later this year

Constellation Brands Inc has not yet decided whether to raise prices on beers like Corona Extra and Modelo Especial later this year, but its chief financial officer said the pricing strategy should be no different than before despite the change in ownership, Reuters reported on May, 3.

"We'll see what happens with market share and commodity costs and all that kind of stuff. But we don't really see a big change in the beer-pricing strategy from history," CFO Robert Ryder said.

Constellation is taking over the U.S. business of Grupo Modelo in a $4.75 billion deal required as part of Anheuser-Busch InBev's $20.1 billion takeover of Mexico's largest brewer. U.S. regulators were very concerned that if AB InBev owned Modelo in the United States, it would raise prices for consumers more aggressively than Modelo's U.S. importer, Crown Imports, had in the past.

Crown is a joint venture between Constellation and Modelo and Constellation is buying out its partner. Ryder noted that the management team that made pricing decisions before will stay the same.

Corona is the top-selling imported beer in the United States. Its sales have been helped by the fact that Crown often has not raised prices as much as its larger rivals, AB InBev and MillerCoors, the combined U.S. operations of SABMiller and Molson Coors.

Following closure of the deal, Ryder said Constellation will be focused on paying down debt. Once its target leverage ratio is reached, which should take about two years, the company will consider a dividend for the first time, and expects to buy back more stock.

Constellation is less focused on buying more assets, Ryder said. Instead, the company is putting more attention on growing its beers organically, and is testing new products, like Modelo Especial Light, and working to expand the availability of Modelo beers on draught at bars.

08 May, 2013