Our growth drivers across categories represent a steady evolution to the higher-end, which is why we continue to focus on higher-value products in our beer, wine and spirits portfolio.
The proof is in the product. We have best-in-class growth and operating margins in our beer business—and we expect to maintain this profile. Our state-of-the-art Nava brewery and Obregon brewery in Mexico boast increased and industry-leading capacities. We are also taking advantage of the consumer-led premiumization trends that have accelerated in the U.S. wine market, with growth in the principally priced $11 retail and above category. Spirits are likewise seeing an evolution to the higher-end, and Casa Noble Tequila and High West Whiskey are in line with this trend.
At Constellation Brands, we believe that what people desire should drive what we offer. We know that our past and future success will be based on how well we understand consumers and more importantly, how we act on those insights. We all win when people reach for our products and it’s why the consumer is at the heart of everything we do.
Today, we see a new generation of legal drinking age (LDA) consumers, and our job is to ensure that our brands are relevant and meaningful to them. We’re constantly thinking about what’s important to this group—their values, needs and wants from brands. We’ve learned that this generation of consumers has a new lens when evaluating the value of products. We know quality is more important than quantity and that taking care of themselves is priority one. We are perfectly positioned to offer products across TBA categories that speak to this new mindset.
Drilling down further, our key audience segments are LDA Hispanics, Millennials, and LDA Gen Z. The U.S. Hispanic population is critical to our business; we over-index with this audience, whose top two most-loved beer brands are Corona Extra and Modelo Especial. Millennials continue to prefer higher-end beverages, drink across categories, and seek brands that offer authentic experiences that connect them to a unique story or heritage. Gen Z is more diverse than any generation before them, and they have grown up accustomed to rapidly shifting circumstances—social, digital, political and economical. Gen Z are relatively discerning drinkers, and are making premium purchases in the category much earlier than past generations of drinkers.
As an organization focused on building brands that people love, we invest in continually building our understanding of people to uncover insights in every aspect of their life—universal truths, shifting values, psychographics, demographics, behavior, media habits, and more. This knowledge has led us to define and activate on five key attributes about today’s consumer:
Understanding consumers and executing against their needs, today and tomorrow, is critical to our ongoing success and our TBA growth leadership position. Unrivaled knowledge about the consumer who drinks across all categories—and who prefers high-end beer, and higher-end wine and spirits—helps us make the right portfolio investments, build the best teams, and deliver shopper-centric plans that drive growth.
“What excites me about showing up to work every day is the opportunity to impact the business. Figuring out the next big thing in the beer category is incredibly challenging and exciting!”
Our consumer insights help us meet the trend toward premiumization and scale, and our intellectual property has enabled our leading position with consumers.
In beer, the ShopperFirst Shelf is a physical manifestation of knowing our audience. It’s a proven approach to help retailers maximize beer sales and ease the consumer shopping experience by optimizing shelf flow, space, and assortment based on how consumers shop for beer. The stores that have implemented this process have seen up to 10% lift or more from reorganizing the shelf and utilizing our consumer research.
The Constellation Brands Sensory Initiative is how we fine-tune our winemaking efforts using sensory data and consumer insights to more effectively link our blends to consumer taste perceptions and key trends. The Institute of Food Technologists has outlined the advantages of utilizing sensory evaluation. It reduces uncertainty and risks in decision making, it ensures the cost-efficient delivery of new products with high consumer acceptability, and it delivers valuable measurement and feedback through human observation.
CHANGING CONSUMER PROFILE
U.S. consumers who drink across categories spend six times more on their average beverage alcohol purchases than consumers who drink in one category.