Constellation Brands Stock Sinks On Wine And Cannabis Worries

 

Shares of Constellation Brands a leading international producer and marketer of beer, wine and spirits, dropped after the company disappointed Wall Street with its 2019 fiscal outlook.

Here’s the deal…

In spite of handily beating Wall Street’s third-quarter expectations, shares of Constellation Brands, dropped 11 percent Wednesday morning as the company lowered its expectations for 2019 based on a disappointing wine and spirits outlook as well as its investment in a cannabis business that is still in its early stages…

As a way of buffering declining global alcohol consumption, the  Victor, NY-based drinks giants has been aggressively moving into the into the cannabis industry having closed a $4 billion deal with Canopy Growth, major Canadian pot producer last year.

The third largest brewer in the US behind AB InBev and MillerCoors. Constellation Brands’ portfolio includes names like Corona, Modelo, Pacifico, Ballast Point and Funky Buddha, as well as a full roster of wine and spirit offerings.

According to CNBC Constellation’s beer holdings’ “grew to $1.21 billion, up 16 percent from the previous year’s third-quarter sales of $1.04 billion…. in part due to the Constellation’s increased spending in marketing for its beers.”

With craft beer’s once double-digit growth now slowing, some industry analysts still question Constellation Brand’s $1billion acquisition of Ballast Point in 2015. But in spite of the company’s struggles to build a new mega-brewery in Baja, Mexico, its Mexican beer division continues to show healthy growth.

Constellation’s wine and spirits sales were virtually flat in the third quarter, up only 0.4 percent from the previous year.