Source: BofA/Merrill Lynch 4Q19 earnings preview - 040119)
via John Heflebower, Napa

"STZ’s wine & spirits margins improved post STZ divestiture of Canadian wine assets. In addition, operating margins have benefited from on-going premiumization efforts (i.e. rationalizing lower margin value SKUs), COGS has increased due to transportation costs and higher marketing spend on brands such as Kim Crawford, Ruffino and Charles Smith.

"Management has indicated that it plans to divest some of lower end (<$11/bottle) brands to focus on their higher end portfolio. Once complete, we would look for W&S margins to approach 30%."

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