Wow
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Well bless their hearts.
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Too early to tell if this will come to fruition, but Iâm sure they are âscared to deathâ with the current trends in the industry.
Hope we donât see this happening - unless those brands get spread around.
Cheers
Interesting that Warren Buffet recently took a position in Constellation despite the slowdown in wine. He usually doesnât make mistakes, so I have to think this is probably something Constellation has to do for its bottom line.
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Iâm sure Buffet would be the first to admit that heâs made a lot of bad calls. He just makes a lot more good ones than bad ones. Anyone whoâs never made a bad call has never invested in the market.
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Facts
Hopefully theyâre looking at the various brands, as Iâm sure market downturn isnât the same from brand to brand. Lower end stuff is still probably doing ok relative to higher end stuff. I would think the recent acquisition of Sea Smoke came at the worst possible time.
Activist investing, maybe?
The article doesnât mention Constellationâs cannabis investment. I wonder what the status is of that.
Constellation is no longer a wine company, it is a beer company. Morningstarâs current summary of their stock says that beer revenue is over 80% of total sales these days.
As a beer company, they have to be worried about their COGS for their main product suddenly going up 25%.
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This is inline with the industry sentiment. They tried to offload all of their value brands in the Gallo deal but the FTC nixed a handful of them like J. Roget and Paul Masson Brandy. They also just sold Svedka to Sazerac leaving them with only premium spirits brands of which none are doing particularly well. They must have seen the lack of quick success with the high end wineries they bought and just decided it was time to cut bait with the category to satisfy investors. Whoever gets Meiomi is the real winner and whoever buys the low end brands is probably a short term loser as I would anticipate quick price increases to start recouping the investment will cause further loss of share.
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Buffett indeed has made numerous unsuccessful calls including the original investment of Berkshire Hathaway (a textile company.) The success of Berkshire under Buffett and Munger really comes down to a few big winners such as Geico, and not upon making more good than âbadâ investments.
I put bad in quotes because there are multiple ways to define it in regards to investments.
Total write off. They ceded their board seats and exchanged their voting stock for non-voting.
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This may have been true once, though it sounds like an overstatement, but it hasnât been true for a long time. BH has made numbers of large market moves over the years and their stock regularly increases. I bought BH2 for ca170 within the last five years or so and it is now ca500. I have stocks that have done better, but many more that have not done as well. And Geicoâs period of large growth is a long time in the past.
Constellationâs money makers are its beer plants and sales. Modelo is the no 1 selling brand in America (since May of 2023). Anheuser Busch was required to sell their Corona interest years ago to Constellation when they were bought out by InBev. That was a gold mine waiting to be tapped!
Not quite. AB InBev still owns Grupo Modelo, which brews Corona. But as part of the anti-trust clearance (not when InBev bought AB, but when AB InBev bought the rest of GM after previously owning 50%), AB InBev sold US distribution rights to the GM beers to Constellation. So Constellation doesnât own any breweries (at least not that brew Modelo or Corona). They have exclusive US import and distribution rights to the Modelo beers, including Corona.
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correct, itâs a joint venture called Crown Imports
Constellation Brands has breweries in Mexico that produce Corona beer for the United States. Constellation also owns the brand licenses for Corona and Modelo in the U.S.
Explanation
Constellation Brands has breweries in Nava, Coahuila and Ciudad ObregĂłn, Sonora, Mexico
My main point was wine sales havenât contributed all that much to STZ (Constellation) in quite some time. They made a big pivot to beer and have profited handsomely. Their stock has been a decent performer as well.
No question about that. One might even say that they are no longer a wine company, they are a beer company. 
Itâs in keeping with Diageo and Fosters existing the wine business many years ago.
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