Although they’re down for the year, shares of Constellation Brands have bounced 7% over the last 6 months. Just this week the company revealed that it’s overhauling its operations in Australia, selling three wineries and 23 vineyards and eliminating 350 jobs as it switches focus to more profitable, higher-end wines.
The overhaul was triggered by a variety of setbacks: a drought that undercut the last two Australian wine harvests, a strong Australian dollar and heightened competition in Britain, the largest export market for Australian wines.
This is just one of the many initiatives that Constellation Brands has taken to increase profits. And CEO Rob Sands appears committed to getting them higher. “We do expect some margin lift this year,” he says on Fast Money. “We think there will be an increase by a couple hundred basis points.”
Constellation's 300-plus brands run from jug wines to coveted California reds, beer imports such as Corona and St. Pauli Girl and liquors such as Fleischmann's vodka and Black Velvet Canadian whiskey. Among its best-known Australian brands are Hardys and Banrock Station.
His overall outlook is also quite positive. “In general people are drinking better. The premium end of the business is growing fastest but the entire business looks pretty healthy.”
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Trader disclosure: On Aug 15, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (BTU), (MSFT), (NUE); Najarian Owns (AAPL) And Is Short (AAPL) Calls; Najarian Owns (CSCO) Calls, (NVDA) Calls: Najarian Owns (HCBK) Puts; Finerman Owns (GS); Finerman's Firm Owns (JCP), (MO), (NOK), (SUN), (TSO), (VLO); Finerman's Firm And Finerman Own (GLNG); Finerman's Firm And Finerman Own (C) Leaps
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