Constellation Brands' (STZ) reported fiscal second quarter earning that topped analyst estimates on both the top and bottom lines. The beverage company's results got a boost from beer sales, especially, its Modelo and Corona brands. Roth Capital Partners Senior Research Analyst Bill Kirk tells Yahoo Finance Live that when it comes to the beer unit, "the demographics are squarely in their [Constellation Brands] favor. People want lighter, more refreshing beers, especially during the summer months of this reported period, and they play directly into that tailwind." Watch the video above to find out what Kirk says Constellation Brands is doing that few others in the sector are not.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

BRAD SMITH: Let's talk about beer. Beer is the big winner from Constellation Brands' second quarter results. The owner of Modelo and Corona brands raised its guidance for fiscal 2024, with its beer portfolio posting 12% sales growth. So, hold on, where are all the wine drinkers?

Related Videos

Joining us now, perhaps one of them. Bill Kirk, Roth Capital Partners senior research analyst. Bill, you know, I don't want to falsely report whether or not you're a wine aficionado or, you know, a grand sommelier, but all that considered here, what's your takeaway, the big breakdown here from Constellation Brands, and where particularly does this kind of lean into your own evaluation of the company?

BILL KIRK: Yeah, I mean, I think your intro was completely right. So you saw the consolidated operational beat despite the softness in wine. So wine shipments were down in the mid-teens, wine depletions down about 9%, and yet here's a company that is able to raise guidance on the strength of Modelo, on the strength of Corona, and on the strength of Pacifico.

What you have here is a consumer staples company that's accelerating through the year, and that's a bit rare within this broader segment. 2Q here for them was better than 1Q. 3Q should again be better than 2Q, and that is on both top line shipments for beer and for beer profitability.

SEANA SMITH: Well digging into that a little bit more here, Bill, because when you take a look at some of the momentum that we saw from the quarter, some of that being attributed to the benefits that Constellation, that the Modelo brand has seen from the boycott of Bud Light. When we talk about the stickiness of that consumer and the market share gain, what's your read on that?

BILL KIRK: We think it's going to be very sticky. So these results of beer accelerating happen before retailers are resetting their shelf space. So right now in the fall, retailers are allocating more space to Constellation's product, and they're taking space away from Bud Light. And so what we think that does is twofold.