What Drove Constellation Brands’ Q3 Operating Margin Expansion?

Constellation Brands’ (STZ) gross margin contracted in the third quarter of fiscal 2019, while its operating margin expanded. The beer business’s gross margin contracted 80 basis points to 53.8% as the impact of higher pricing in select beer markets was offset by the higher cost of products associated with its Mexican beer portfolio and costs arising from a temporary raw materials supply issue in its glass production plant joint venture. The gross margin of the wine and spirits business contracted 70 basis points to 44.7% due to the impact of an unfavorable product mix.