(Reuters) - Corona beer maker Constellation Brands (NYSE:STZ)' third-quarter sales fell short of market expectations on Friday, as demand for its higher-priced spirits and wines slowed down in the face of sticky inflation.
The Victor, New York-based company is seeing inflation-hit consumers pivot towards its affordable offerings and away from Constellation's premium products like Robert Mondavi, Svedka Vodka and Casa Noble Tequila.
Constellation, like its industry peers Molson Coors (NYSE:TAP) and Brown-Forman, had undertaken price hikes to navigate rising costs of production, which have now come off their peaks.
This helped the company post a quarterly comparable profit of $3.19, topping estimates of $3, according to LSEG data.
The Clos du Bois wine-maker's quarterly sales came in at $2.47 billion, compared with analysts' average estimate of $2.54 billion.
Organic net sales in its premium wines and spirits segment fell 7% in the quarter, and the company now expects the segment to see an annual drop of 7% to 9%, compared to prior expectations of a 0.5% fall.
Constellation's beer brands have benefited from customers increasingly preferring smaller pack sizes.
It also picked up customers as conservative backlash over a social media promotion by rival Anheuser-Busch InBev's steered consumers away from Bud Light and Budweiser brands.
Net sales in the company's beer business, which includes Corona Premier and Modelo Especial, rose 4% in the quarter.
The company, however, maintained its fiscal 2024 comparable profit forecast of between $12.00 and $12.20 per share.
Constellation's shares were up marginally in volatile premarket trading. (This story has been refiled to correct a typo in paragraph 1)