Constellation Brands Inc A STZ
Q2 2012 Earnings Call Transcript

Transcript Call Date 10/06/2011

Operator: Good morning. My name is Jacky and I will be your conference operator today. At this time, I would like to welcome everyone to the Constellation Brands' Second Quarter 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

I would now like to turn the call over to Patty Yahn-Urlaub, Vice President of Investor Relations. Please go ahead.

Patty Yahn-Urlaub - VP, IR: Thank you, Jacky. Good morning, everyone, and welcome to Constellation's second quarter fiscal 2012 conference call. I'm here this morning with Rob Sands, our President and Chief Executive Officer; and Bob Ryder, our Chief Financial Officer; and Bob Ryder, our Chief Financial Officer. This call complements our news release which has also been furnished to the SEC.

During this call, we may discuss financial information on a GAAP comparable, organic, and constant currency basis. However, discussions will generally focus on comparable financial results. Reconciliations between the most directly comparable GAAP measure and these and other non-GAAP financial measures are included in the news release or otherwise available on the Company's website at under the Investors section in Financial History.

Please also be aware that we may make forward-looking statements during this call. While those statements represent our best estimates and expectations, actual results could differ materially from our estimates and expectations. For a detailed list of risk factors that may impact the Company's estimates, please refer to the news release and Constellation's SEC filings.

Now, I'd like to turn the call over to Rob.

Robert Sands - President and CEO: Thanks, Patty, and good morning, everyone. Welcome to our discussion of Constellation's second quarter fiscal 2012 sales and earnings results. Now, before we get started, I would like to take a few moments to discuss this morning's announcement of Constellation's purchase of the remaining portion of the Ruffino Wine business.

Ruffino is an iconic old world wine brand that fills a vital niche for Constellation in the Italian imported premium wine category. Our relationship with Ruffino began in 2004 when we purchased a 40% stake in the Company and became the U.S. importer of the brand. In May 2010, we increased our ownership interest to almost 50% and since that time the Ruffino brand has become one of Constellation U.S.'s focused brands.

Working together with Ruffino during the past several years, we've accomplished a great deal, driving the Ruffino brand to become the number three Italian super premium wine brand in SymphonyIRI channels and the number two U.S. Chianti brand with a 50% market share of the Chianti market in the greater than $20 per bottle price point at retail. According to SymphonyIRI industry data for the last 52 weeks, Ruffino is experiencing 8% growth in U.S. dollar sales with Ruffino's year-to-date global sales growing 9%.

Ruffino annually produces about 1.3 million cases of wine more than half of which were sold by Constellation in the U.S. last year with the next most important markets, including Canada and Italy. In fiscal 2013, we expect to realize incremental sales and slightly accretive earnings resulting from Constellation's 100% ownership of the Ruffino portfolio.

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