How Is Constellation Brands Likely To Grow In the Next 2 Years?
Constellation Brands (NYSE: STZ), an international producer and marketer of over a hundred brands of beer, wine, and spirits, has operations in the U.S., Mexico, New Zealand, Italy, and Canada. The company is also the largest multi-category supplier (beer, wine, and spirits) of beverage alcohol in the U.S. In 2017, Constellation Brands’ stock price shot up by almost 50%, versus 20% for the S&P 500, making it one of the best performers among the S&P 500 Consumer Staples stocks. This was driven by the strong performance delivered by the company, as well as the existence of tremendous growth prospects. The company has also recently invested in Canopy Growth Corporation, the largest publicly traded cannabis supplier in the world, and a leader in the Canadian medical cannabis market, giving it a first-mover advantage in an emerging, and potentially significant field. We expect its strong performance to continue in the coming years. Consequently, we have estimated a revenue growth at a CAGR of 5.3% in the next two years for Constellation Brands. We have created an interactive dashboard which shows the forecast trends. You can modify the different revenue drivers to see how it will impact the company’s expected revenues.
Constellation Brands derives its revenues from two sources: its Beer business and the Wine & Spirits segment. STZ’s Beer business is primarily in the high-end category. The growth in this segment in FY 2018 is expected to be driven by volume and pricing growth in its Mexican business, benefiting from increased consumer demand and enhanced marketing spend. The company has also undertaken a considerable investment to increase its production capacity in Mexico to cater to the high demand, ensuring volume growth will continue in the future, as well.
The expectation of a fall in the Wine & Spirits segment revenue is the result of the divestiture of its Canadian wine business, reflecting the company’s strategy of focusing on premium, high-margin, and high-growth brands.
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