Rob Sands, 49, is replacing his brother, Richard Sands, 56, at the helm of the Fairport, N.Y.-based alcohol giant, whose stable of 250-plus brands includes names such as Robert Mondavi, Ravenswood and Kim Crawford, as well as spirit brands including Svedka vodka and U.S. import rights for Corona beer.
The younger Mr. Sands was previously Constellation's chief operating officer; his brother will become chairman of the company's board, where he's expected to focus on overseas acquisitions. The Sands family continues to control the publicly held company through a special class of shares with magnified voting rights.
"Rob's 21 years with the company; his proven knowledge, experience and leadership abilities; established track record in having already served as Constellation's general counsel, chief operating officer and president; collectively give the board full confidence in his capabilities to lead the company," said James A. Locke III, head of the board's governance committee.
Wall Street seemed to take the news as a positive, as Constellation's shares rose more than 4%, to $25.19, in heavy morning trading, despite the 65% decline in net income reported by the company for the just-completed quarter that was also announced today. (Constellation's results have been negatively affected by its ongoing attempt to let distributors draw down an inventory glut by shipping less to them.)
While the wine and spirits categories have generally boomed in recent years due to the trading-up phenomenon among consumers, Constellation has not been able to fully take advantage because of a portfolio that tends to skew toward lower-end brands. It has tried to remedy that in recent years with a series of premium-wine and -spirit acquisitions, including Svedka and Australian wine conglomerate BRL Hardy.
Must absorb Corona
The marketer's other issues, analysts said, include a disproportionate exposure to the weak U.K. retail market and potential challenges in absorbing all of Corona's East Coast U.S. distribution –- it formerly handled just the western U.S. -- and increased competition in the import-beer category.
"We believe Rob has the opportunity to improve investor perception of STZ's growth outlook," wrote UBS analyst Kaumil Gajrawala in a report issued this morning. "That said, STZ continues to face several challenges."