Constellation Brands’ plan for the future: Less wine, more weed?

The  producer of Corona, Constellation Brands, are possibly looking to expand their presence in the cannabis industry and sell off their US wine brands as a part of that plan.

Constellation Brands is ‘only’ the third-largest brewer in the United States behind Anheuser-Busch NV and Miller Coors, and it’s looking to have an even smaller presence in the wine industry.

Constellation also announced that their chief executive of 11 years, Rob Sands, will be stepping down in March.

He will be replaced by the current President and Chief Operating Officer Bill Newlands.

Constellation is considering selling brands Clos du Bois, Mark West, Arbor Mist and Cook as a part of their strategy moving forward.

The company’s wine business has somewhat dropped. It generated 44.7% of net sales two years ago and only 38.6 % of the $7.6 billion in the 12 months to the end of February.

This would not be the first time Constellation Brands has divested from the wine business, as they sold their Canadian wine business to Ontario Teachers’ Pension Plan for about C$1.03 billion in 2016.

More investments in the cannabis sector?

Seeing how Constellation invested in the Canadian cannabis sector a year ago, only to double down on that investment a few months later, this comes as no surprise.

The decision to sell their wine brands and possibly move more closely towards the cannabis sector is definitely a good one.

According to their sources, their investment in Canopy Growth already gave them over $1 billion back as Canopy Growth shares have climbed more than 285% since November.

The beer business, on the other hand, keeps growing day by day, which is also a good sign for the infused-drinks market which is projected to be huge.

Given that cannabis will most likely be legalized in the United States as well in a few years, this seems like a logical step for the brewing giant.

However, this doesn’t necessarily mean that Constellation will invest in Canopy Growth again. In fact, they may even partner up with another licensed producer.

Imagine if Constellation managed to grab a controlling share in Aphria or Aurora or some other multi-billion market cap company such as those two.

That combination of industry experts on the Canadian side and an extremely skilled management team on the Constellation side would quickly turn the cannabis sector upside down.

“We are also considering a variety of potential actions to optimize value at the low end of our portfolio, so we can direct our growth efforts and investment dollars more fully towards our focus brands,” a Constellation spokesman said.

It is not clear which focus brands they had in mind at the time, however, this sounds like something every PR officer would say—if you were going ahead and trying to hide the fact that you’re getting deeply involved in the cannabis sector.

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