Constellation Brands Inc. (STZ - Free Report) continues its strides to retain its third position in the high-end U.S. beer market through the latest buyout of Dallas, TX-based Four Corners Brewing LLC for an undisclosed amount. The company’s previous efforts to shine in the beer space are highlighted by the acquisition of Funky Buddha Brewery in 2017, Obregon Brewery in 2016, and Ballast Point Brewing & Spirits in 2015.
The latest Four Corners acquisition will be a part of Constellation Brands’ Craft & Specialty Beer group, which includes the iconic Corona, Modelo and Pacifico brands. The addition of flagship brands like Local Buzz Honey-Rye Golden Ale and El Chingón IPA is likely to help the company to diversify its portfolio.
Founded in 2012, Four Corners’ beer portfolio aptly reflects the roots and heritage of Texas. The company produces beers that are high-performing and dynamic, with bicultural (Hispanic and American) inspired flavors and branding. The beers are refreshing and big on flavor, and complement Constellation Brands’ existing portfolio. Sales for Four Corners have improved five times since 2014, with the brewery expanding its capacity from 8,000 barrels in 2016 to 25,000 in 2017.
Following the acquisition, Constellation Brands and the Four Corners’ team will work together, with brewery owners George, Greg and Steve, carrying out daily operations. Further, Four Corners will retain its standard of brewing and will continue to serve its loyal beer customers with the same innovative and fresh flavors.
Notably, Constellation Brands is focused on expanding in the craft beer space, which has become a solid growth avenue within the beer industry. In this regard, management expects outstanding results from its Ballast Point craft beer brand that is currently placed among the top 20 craft brands nationwide. Evidently, Constellation Brands was the highest growth contributor in the U.S. beer category for the fourth straight year in fiscal 2017.
Constellation Brands has been significantly gaining from the strength in beer business over the years. In first-quarter fiscal 2019, sales at the beer business improved 11%, driven by 8.6% rise in shipment volumes and depletions growth of 8.9%. Solid portfolio depletions and market share gains mainly stemmed from the strength in Modelo and Corona brand families. The company’s Corona Premier, Familiar and Modelo Especial brands, were among the top 5 share gainers in the beer market in the fiscal first quarter. Management continues to expect high-single-digit volume growth as well as 9-11% net sales and operating income growth for the beer segment in fiscal 2019.
A glance at Constellation Brands’ share price performance shows that the stock has outperformed the industry in the past year, on the back of an excellent surprise history and constant brand-building efforts. This Zacks Rank #3 (Hold) stock has rallied 10.8% against the industry’s decline of 0.5%.
Looking for Some Promising Stocks? Check These
Some better-ranked stocks in the same space include Kirin Holdings Co. (KNBWY - Free Report) , The Boston Beer Company, Inc. (SAM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and Craft Brew Alliance, Inc. (BREW - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kirin Holdings has increased nearly 24.3% in the past year. The company has long-term earnings growth rate of 10%.
Boston Beer has rallied 43.9% in the last three months. Additionally, the company has long-term earnings growth rate of 9.5%.
Craft Brew has surged 16.6% in the past year. Moreover, the company has delivered positive earnings surprise of nearly 246.7% in the trailing four quarters.
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