(Bloomberg) -- Constellation Brands Inc. isn’t discouraged by a trend away from wine drinking, as Chief Executive Officer Bill Newlands said he’s confident it can improve performance in that area — with a search for a new division leader underway. 

“Broader category deceleration” in the wine industry was the main reason the company lowered guidance for its wine and spirits category during its third-quarter results Friday, Newlands said in a conference call. “We’re certainly not happy about it.”

A Gallup Poll last year showed the portion of 18-to-34-year-olds who say they drink has declined over the past two decades. Wine in particular is less favored by Gen Z, according to a recent study that found 35% of 21–to-29-year-old consumers drink alcohol, but not wine.

Constellation now expects wine and spirits organic sales for the year ending Feb. 29 to shrink 7% to 9%, compared to a previous guidance range of negative 0.5% to 0.5% growth.

Beer sales by contrast were strong, accelerating in the last week of November as stores restocked after a beery Thanksgiving holiday. Constellation shares rose as much as 4.4% Friday. 

Newlands remained optimistic that Constellation, which owns wine brands The Prisoner, Kim Crawford and Woodbridge, can combat the broad-based slowing of interest in wine. It’s already revised its portfolio to appeal to consumers who want higher-end brands, and now intends to focus on improving distribution. 

The company is “committed to improving the performance of this business,” Newlands said. With the announcement Thursday that division President Robert Hanson will step down at the end of February, Newlands will take over the unit while Constellation searches for new leadership.

“We think there’s going to be continuing opportunities to perform very well in DTC and international channels,” Newlands said, referring to direct-to-consumer business. “All those things I would argue are well within our control.” 

Maintaining an appropriate inventory level for wine and spirits through fiscal year-end is “setting ourselves in good position to see sequential improvement in fiscal ’25,” Newlands said. Direct-to-consumer sales grew by 24% in the quarter, while international sales dropped 10%.

The company lowered its fiscal 2024 earnings per share guidance to $9.15 to $9.35, from $9.60 to $9.80 previously, though it maintained its comparable fiscal 2024 earnings per share guidance at $12 to $12.20.

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