No doubt you’ve heard of Corona, Corona Extra, Corona Light, Modelo Especial, Modelo Negra and Pacifico – all familiar high-end labels favored by discerning beer drinkers.
Now meet Constellation Brands, the $7 billion Fortune 500 firm that distributes those popular brands. It’s the world’s largest beer distribution company and the third largest beer company in the U.S.
Constellation just made a $192 million investment in Canopy Growth Corporation, a leading producer of medicinal cannabis products in Canada. The deal becomes the first — and thus the largest — investment of a major beer and alcohol company into the fast-evolving business of legal marijuana.
Surprised? Don’t be.
As Constellation CEO Rob Sands told Bloomberg, “Why wouldn’t big business, so to speak, be acutely interested in a category of that magnitude? If there’s a lot of money involved, it’s not going to be left to small mom-and-pops.”
The reason is simple: Not only is Canada poised to legalize recreational marijuana – Prime Minister Justin Trudeau has promised to legalize marijuana by next July — companies such as Constellation have the distribution and marketing muscle to make it highly profitable.
In the U.S., of course, eight states and Washington D.C. have legalized the use of recreational marijuana.
Huge profits anticipated next year and beyond
To be clear, Constellation emphasized that it has no plans to sell cannabis products in the U.S. or in any other market – including provinces in Canada — unless (or until) such sales become legal.
Legalities aside, it’s clear that two mega-giants of their respective industries have teamed up, poised for huge profits that are anticipated next year and beyond. The sheer numbers have caught the rapt attention of investment gurus as well as casual beer drinkers and pot users.
Let’s compare each company’s financials:
- Constellation Brands is a listed on the S&P 500 and posted record net sales of $7.3 billion for its fiscal 2017 results.
- Canopy Growth is the world’s largest publicly traded cannabis company, with a market valuation of 2.2 billion Canadian dollars. It is listed on the Toronto Stock Exchange.
Meanwhile, as part of the Constellation agreement, the two companies said they plan to develop cannabis-based beverages that will be sold as adult products just a few short years from now.
No doubt Canadians will drink to that, as well.
- Business Insider, Oct. 30, 2017: Constellation Brands becomes the first major beer and spirits company to invest in legal marijuana
- CBS News, Oct. 30, 2017: Constellation buys stake in cannabis company
- Chicago Tribune, Oct. 30, 2017: Corona owner, medical marijuana company will introduce cannabis-infused beverage
- Huffington Post, Oct. 30, 2017: Cannabis drinks in the works as global alcohol giant buys stake in Canadian pot firm
- Fortune, Oct. 30, 2017: The company behind Corona beer just bought into the marijuana business