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Sales of beers rose 8.3% to $1.31 billion in the third quarter ended Nov. 30.

Mario Anzuoni/Reuters

Constellation Brands Inc. beat Wall Street estimates for quarterly sales and profit on Wednesday as it sold more of its beers such as Corona Premier and Modelo Especial, prompting the company to raise its full-year earnings forecast.

The brewer has been bolstering its U.S. beer portfolio through launches of variants such as Modelo Chelada Limon y Sal and Corona Refresca to woo consumers switching to trendier alternatives such as Boston Beer’s Truly and White Claw hard seltzers from high-calorie beers and spirits.

Constellation plans to add a hard seltzer to its Corona portfolio this year, looking to tap into the surging popularity of the alcoholic carbonated drink among millennials.

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However, the company recorded another decrease in the fair value of its more than US$4-billion investment in Canadian cannabis producer Canopy Growth in the third quarter.

Constellation was one of the first major alcohol producers to enter the expanding cannabis industry when it took the stake in 2017, but Canadian pot producers have struggled because of a slower rollout of legal cannabis.

The company said on Wednesday it wrote down the fair value of the investment by US$534-million in the third quarter, after reducing it by US$839-million in the prior quarter.

“This was a complicated/messy quarter so we think investors will need cleaner results and some input on the company’s outlook for FY21 before they can get back on board with the story,” SunTrust Robinson Humphrey analyst Bill Chappell said.

The brewer now expects to earn US$9.45 to US$9.55 a share for its fiscal 2020, excluding the impact from its investment in Canopy on a comparable basis, up from its prior forecast of US$9 to US$9.20.

Sales of beers, its biggest and more profitable unit, rose 8.3 per cent to US$1.31-billion in the three months ended Nov. 30.

Operating margin in the unit rose 200 basis points to 39.3 per cent as higher pricing countered a jump in marketing expenses.

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Sales in its struggling wines and spirits segment fell for the fourth consecutive quarter, dropping 9.7 per cent to US$688.8-million.

Net sales climbed 1.4 per cent to US$2-billion in the third quarter, beating the average analyst estimate of US$1.95-billion, according to IBES data from Refinitiv.

Excluding one-time items, Constellation earned US$2.14 a share, beating estimates of US$1.83.

Shares of the company rose 1 per cent in early trading. They had gained about 18 per cent in 2019.

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