Constellation Brands Inc (NYSE: STZ) took a massive hit due to the Coronavirus pandemic as it shuttered restaurants and bars last year. At one point, the stock traded at $120 a share versus $224 a share at the time of writing.
CEO Bill Newlands’ remarks on CNBC’s “Squawk Box”
Despite a massive recovery, Constellation Brands reported marginally lower than expected adjusted EPS in the fiscal first quarter – a miss that didn’t shake CEO Bill Newlands’ confidence, who now says the on-premise demand has been strong lately.
“We saw double-digit growth in the top and bottom line in Q1. The opening of the on-premise has been a boon to us. We saw a 250% increase in the first quarter in our on-premise business. So, we’re seeing lots of on-premise demand,” he said on CNBC’s “Squawk Box”.
Constellation Brands’ Hard Seltzer sales climbed by a massive 130% amidst the pandemic. While people still buy it at bars, Newlands confirmed that traditional beer now makes up for the “strongest growth play”.
The chief executive also lauded Modelo for being another bright spot for the Fortune 500 company. With a history of double-digit growth in the past three decades, it is now the United States’ number 2 selling beer.
Constellation Brands is well-positioned to benefit from the premiumization
According to Newlands, Constellation Brands is well-positioned to benefit from the premiumization that has been occurring. During his interview with CNBC, he said:
“The wines and spirits business saw a lot of channel shifting amidst the pandemic. People changed how they bought. So, you saw much more Amazon, Instacart, and Drizly. The dynamic is still a lot different in terms of how people buy and how they’ll buy longer-term. But that doesn’t change the dimension of premiumization that’s occurring, and we are in a great position to take advantage of that growth.”
The announcement comes a month after RBC’s Modi said Constellation Brands has an upside to $300.
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Wajeeh Khan
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