Photo credit: www.investing.com
Constellation Brands to Divest SVEDKA Vodka to Sazerac
ROCHESTER, N.Y. – Constellation Brands (NYSE: STZ), a major player in the beverage alcohol sector with a market capitalization of $43.2 billion, has entered into a transaction to sell its SVEDKA Vodka brand to Sazerac, a globally recognized spirits company. This strategic divestiture reflects Constellation’s ongoing focus on enhancing its portfolio in line with evolving consumer preferences and market dynamics.
Over recent years, Constellation has actively restructured its offerings, shifting resources away from mainstream brands to prioritize premium wine and spirits. The company reports a robust current ratio of 1.25, alongside a 4.1% revenue increase over the past year, suggesting the effectiveness of its realignment strategy. President and CEO Bill Newlands articulated that these changes are pivotal for driving growth within the company’s wine and spirits sectors. The closure of this transaction is anticipated in the coming months, pending standard closing requirements and necessary regulatory endorsements.
Jake Wenz, CEO of Sazerac, conveyed excitement about bringing SVEDKA into their portfolio, highlighting the brand’s strong reputation for quality and flavor innovation. Wenz indicated that this acquisition would further strengthen Sazerac’s range of award-winning spirits.
More insights on the transaction will be shared today at the Morgan Stanley Global Consumer and Retail Conference in New York, featuring Garth Hankinson, Constellation Brands’ Executive Vice President and CFO. The discussion is scheduled for 2:15 p.m. ET and will be available for live streaming on Constellation’s investor relations site, with a replay accessible until January 3, 2025.
Constellation Brands, noted for its beer, wine, and spirits line-up—including prestigious beer varieties like Corona and Modelo as well as fine wines and craft spirits from brands such as The Prisoner Wine Company and High West Whiskey—has exhibited consistent financial performance. The company has increased its dividend annually for ten years and maintains a gross profit margin of 51.3%. Furthermore, it underscores its commitment to sustainable practices within its environmental, social, and governance (ESG) framework. A recent InvestingPro analysis offers deeper insights into Constellation Brands’ market driving factors and performance benchmarks with over 30 key metrics available to subscribers.
In related developments, Constellation Brands has navigated considerable shifts influenced by policy changes and market fluctuations. The announcement of substantial tariffs on Mexican imports by President-elect Donald Trump led to a decline in Constellation’s shares, posing a significant risk given the company’s reliance on imports from Mexico. Roth analysts suggested that these tariffs might serve either as a negotiation catalyst or could lead to exemptions for the company.
BMO Capital recently adjusted its price target for Constellation Brands to $305.00, maintaining an Outperform rating amid the shift. Analysts have expressed optimism regarding the company’s beer business fundamentals and expect an uptick in shareholder cash returns. Recent reports indicated nearly 6% growth in net sales and a 13% increase in operating income within the beer sector.
Conversely, TD Cowen downgraded Constellation Brands from Buy to Hold, lowering the price target to $270 due to concerns surrounding a slowdown in beer segment growth. Additionally, BofA Securities also reduced its rating from Buy to Neutral, with a new target of $255, attributing this to weak beer volume performance. Nonetheless, firms like Barclays, HSBC, Jefferies, and Truist Securities remain positive about the company’s long-term growth prospects.
In leadership updates, Constellation Brands appointed E. Yuri Hermida as the Executive Vice President, Chief Growth & Strategy Officer. Hermida, who brings extensive experience from roles at Sovos Brands and Reckitt, will oversee areas including Consumer Insights & Innovation and New Business Ventures. In tandem, Mallika Monteiro has transitioned to serve as Executive Vice President and Managing Director of the beer brand portfolio.
In summary, these strategic moves and leadership changes underscore Constellation Brands’ commitment to adapting amid evolving market conditions while positioning itself for future growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Source
www.investing.com