Categories Analysis, Consumer

A peek into how Constellation (STZ) has maintained a strong position in the beer market

The company is looking to expand its production capacity in Mexico to around 44 million hectoliters

Everybody loves a good drink after a hard day, and that is the basic tenet the beverages industry thrives on. Among these, beer remains one of the most popular choices. Constellation Brands (NYSE: STZ) is a major brewer and seller of imported beer in the US market and a leader in the high-end segment. Let’s delve into how the company has retained its position in this space over the years.


Constellation operates in the US, Mexico, New Zealand, and Italy and owns popular brands like Corona Extra, Modelo Especial, and Robert Mondavi. Among beverage alcohol suppliers in the US, the company is one of the top growth contributors to retail. It is also a leader in imported beer and owns eight of the 15 best-selling imported beer brands.

Beer business performance

In 2017, beer sales totaled $4.2 billion, making up nearly 58% of total sales. This number has consistently increased over the past three years to reach $5.6 billion in sales and 67.3% of total sales in 2020. Beer sales increased 8% in 2020 compared to 2019, benefiting from volume growth and favorable pricing impacts from its Mexican beer portfolio. Volume growth was driven by consumer demand, higher marketing spend and new product introductions.

Constellation has more than tripled its production capacity at its Nava and Obregon breweries in Mexico from 10 million hectoliters to around 34 million hectoliters since 2013. The company is expanding its Obregon brewery by another 5 million hectoliters and is looking to expand its production capacity in Mexico to around 44 million hectoliters in the future.

Over the past seven years, Constellation has invested around $4 billion in its Mexico Beer Expansion Projects, with around $520 million in 2020. New product launches also play a key part in the company’s strong performance. In 2019, Constellation introduced Corona Premier, which is now one of the top contributors to growth in the high-end segment of the US beer market.

The company launched Corona Refresca in fiscal year 2020 and Corona Hard Seltzer in early FY2021. Constellation is looking to cash in on the growth of the high-end alternative beverage alcohol category through these launches.

In addition, Constellation has made strategic acquisitions and divestments which has helped reshape its beer portfolio. Its 2018 acquisition of Four Corners provided it with a portfolio of Texas-based craft beers which helped it solidify its position in the high-end segment of the US beer market.

In March 2020, the company sold its Ballast Point craft beer business in order to focus more on its high-performing import portfolio and new product launches. Constellation’s strategy is focused on maintaining its leadership position in the high-end segment of the US beer market, distribution expansion for key brands and product innovation.


In its beer business, Constellation competes mainly with the Belgium-based Anheuser-Busch InBev, Molson Coors (NYSE: TAP) and the Dutch company Heineken. Molson Coors generated $10.6 billion in net sales in fiscal year 2019.

Market share

Based on data from NBWA, over the 10-year period from 2009 to 2019, Constellation has increased its market share in the US beer market as opposed to its rivals whose shares have declined. Constellation’s share of the market has increased from 5% to 10.6% over the decade while Anheuser-Busch’s share has dropped from 48.8% to 39.9%. Heineken’s share has fallen from 4% to 3.3%.

According to a report by Allied Market Research, the global beer market is projected to reach $685.3 billion by 2025, growing at a CAGR of 1.8% from 2019 to 2025.


Constellation’s shares have gained 48% over the past three months. The stock is currently trading 13% below its 52-week high of $212.00. The majority of analysts have rated the stock Buy with an average 12-month price target of $186.38.

Constellation will report its first quarter 2021 earnings results on July 1, 2020 before the markets open.

Click here to read the full transcript of Constellation Brands Q4 2020 earnings conference call

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