If you thought Trump’s presidency wouldn’t affect your beer-drinking habits, think again: Stocks for the largest producer of beer, wine, and spirits in the U.S., Constellation Brands, are already plummeting, according to Fortune.
On Wednesday, November 9, the same day the world learned that Trump will be the next president of the United States, shares of Constellation Brands — the nation’s third largest beer producer and parent company of Mexican beer brands such as Corona, Modelo, and Pacifico — saw shares drop 8 percent.
At Constellation Brands’ institutional investor meeting in New York on Wednesday, the company’s first in three years, CEO Rob Sands immediately addressed these concerns, saying he does not expect the brands to be affected by the election in the short term.
He pointed out recent successes, like the acquisition of the Corona Extra, Modelo Especial, and Pacifico brands from Grupo Modelo, a subsidiary of Anheuser-Busch, which contributed to the company becoming the top contributor to growth in the U.S. beer market. In addition, Constellation Brands recently added Ballast Point Brewing & Spirits, Casa Noble tequila, and High West Distillery to its craft portfolio.
“I don’t expect [the election] to affect our business in the short term, and as these policies develop, we will respond accordingly and engage with government accordingly,” Sands said. “And I would add: We’ve had a long history of working with our representatives from all levels of the U.S. government from both political parties. As Trump develops his plans, we will continue to engage with them,” Fortune reported.
Yet, despite acquisitions, sales growth (net sales increased 17 percent in the latest quarter, with particular growth in beer brands, Fortune reported), and a company belief that more millennials will be reached with the company’s wine and spirits brands, Constellation’s close ties with the Mexican market can’t be denied: According to the company’s annual report from the United States Securities and Exchange Commission, Constellation plans to expand capacity at Nava Brewery in Coahuila, Mexico, and it’s slated to build a new brewery near the California border, with both projects’ expenditures expected to reach $4.5 billion by the end of 2021. The company additionally spent $600 million to buy Obregon Brewery from Grupo Modelo in October.
Although Constellation Brands is headquartered in Victor, New York, analysts believe Trump’s proposal to renegotiate the North American Free Trade Agreement (namely, his threats toward Mexican firms producing products sold on U.S. soil) could hurt the beer marketer threefold: Many of Constellation’s products are produced in Mexico; it is the largest distributor of Mexican beer in the U.S.; and a large portion of the company’s consumer base is Mexican.
According to Bloomberg, Mexican imports account for more than half of Constellation Brands’ net sales, and Hispanic consumers make up 40 percent of its customer base.
Overall, the future of Constellation Brands and its many recognizable beer brands is difficult to predict, but the news isn’t all bad: Apparently, Sands also told Bloomberg he is seriously considering adding marijuana-infused booze to the Constellation Brands portfolio. Keep your hopes high.