Americans still love Mexican beers Corona and Modelo

Posted at 6:58 AM, Jun 28, 2019
and last updated 2019-06-28 09:38:03-04

Beer drinkers are still fantasizing about sitting back in a beach chair and enjoying a Corona with lime. And that’s fantastic news for alcoholic beverage giant Constellation Brands.

Shares of Constellation soared 7% in early trading Friday after the company reported earnings and sales that topped forecasts and also issued a solid outlook for the rest of this fiscal year.

Constellation, which imports the Corona and Modelo brands from Mexico, posted a more than 7% jump in beer sales and nearly 12% increase in operating profits from its beer unit compared to a year ago.

“Our iconic beer portfolio continues to be a cornerstone of growth in the U.S. beer industry,” said Constellation CEO Bill Newlands in a statement.

The solid beer performance helped offset a decline in revenue and earnings from its wine and spirits business, which owns the Kim Crawford wine and Svedka vodka brands. Constellation reached a deal earlier in April to sell some struggling wine brands.

Constellation shares are now up about 25% this year. The stock briefly plunged in May due to concerns that President Donald Trump would impose higher tariffs on products from Mexico unless the country took a harder stance on illegal immigration to the United States.

But Trump dropped the threat earlier this month after the two countries came to an agreement on border enforcement.

Constellation is also poised to benefit from the boom in legal marijuana sales in Canada and some US states as well as increased demand for products derived from CBD — the non-psychoactive component of cannabis — following the passage of the Farm Bill. That’s because Constellation owns about a 37% stake in Canadian cannabis firm Canopy Growth.