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Wednesday, June 22, 2016

Constellation Brands Moving in a New Direction?

Maybe you haven't heard of Constellation Brands, but they would have been a great stock pick when the economy started its recovery several years ago. That is, if you're okay with buying something for about $22 five years ago and have it be worth over $150 now.

Just because they are doing well doesn't mean they are sitting still.

Constellation is in the adult beverages business and I guess booze is booming! In Sonoma and Napa they own Clos du Bois, Franciscan, Mondavi, Mount Veeder, Ravenswood, Simi, and others. They also are in the wine business in Canada, Australia, and South America.

Recently they made the local news by buying a popular Pinot Noir label, Meiomi, because all they got was a label for their $315 million -- no vineyards or winery. They made a similar acquisition of a popular premium label, The Prisoner. So this is one change in direction for Constellation -- buying labels or brands instead of actual wineries.

In the beer world they own the rights to distribute Corona, Modelo, and Pacifico. A few months ago they jumped into the craft beer biz buying up a long established and highly regarded brewery and distillery, Ballast Point, for $1 billion. They will expand Ballast Point by building an East Coast brewery.

It sounds like they are about to sell off their Canadian will business. This was never a big piece of the business and their profits are cut more with the Canadian dollar's weakness against the American dollar. Another change for Constellation appears to be a larger focus on craft beer. More acquisitions may be coming.