Corona-Light Beer (or, the Betelgeuse in the Constellation)…?

Ladies and Gents,

On February 14th, restauranteurs were focusing on the biggest night of the year. Valentine’s Day brings out the romantic in all of us, whether it be forced or real. Chocolates, dinner for two, maybe someone gets lucky at the end of it all.

The luckiest got theirs earlier that day. Constellation Brands, the largest (or second largest to E.J. Gallo, depending on who you ask, and what year it is), saw their shares in the NYSE jump 38%, the largest in 27 years, to $43.97 a share. Why? Because after a battle with Grupo Modelo and InBev Anheuser-Busch (the big daddy of beer companies), Constellation Brands procured the rights to U.S. distribution of Corona for 2.9 billion dollars. Read the full article below:

http://www.sfgate.com/default/article/Constellation-Brands-Gains-Most-in-27-Years-on-4280137.php”

Constellation Brands does a nice job with many of its wines, but is considered by many, along with Gallo, as the 800lb gorilla in the enology china shop. This tidbit of news, however, reminds us of how small the wine industry is compared to the sheer power and scope of the beer business. With brands like Svedka vodka, the diversification of beverages under the Constellation Brands umbrella is continuing to grow. This business model is not new; liquor companies have done it for years. Some have done the wines justice; others have failed miserably, at least from the position of increasing quality with the wineries in their care. It is interesting to see these acquisitions occur from the other side. Gallo has, in the past 3 years, created a spirits portfolio with brands that are on fire. Svedka less than 10 years ago was a blip on the vodka screen. Now, they are spoken in the same breath as Smirnoff.

I have long accepted the incestuous nature of this business, even though we look at the consumers of beer, wine, and spirits as decidedly unique and different from one another. With last weeks’ events, the bean counters have spoken.

Let’s hope that the wine star shines through…

Cheers,
William

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