Will the Corona Flow Fast Enough to Meet U.S. Demand?

Jun 18, 2015

(MSN) - Here at the Nava Brewery just over the border from Texas and south of thirsty beer country, robotic cranes hoist bottles of Corona Extra into cases a robot stacks onto pallets for pickup by driverless vehicles.

This is as state-of-the-art as it gets in the North American beer industry, and the plant’s about to get much bigger. Outside, 3,000 construction workers are scrambling to more than double the plant’s size so that Constellation Brands Inc., the New York-based owner, can pour even more beer into the U.S.

Constellation’s brands, which include Corona, Modelo Especial and Pacifico, have grown at retail by 12% over the past year—much faster than the industry’s 0.4% for the 52-week period through May 16, according to U.S. market research data from Nielsen cited by Citi.

That’s pretty good for a company that wasn’t even trying to be a beer company. Until 2013, Constellation was just an obscure winemaker with $2.8 billion in sales and a toehold in the beer business. It made Robert Mondavi and Clos du Bois and sold Corona in the U.S. through a joint venture called Crown Imports LLC.

It might still be doing that if Anheuser-Busch InBev NV didn’t takeover Grupo Modelo for $20.1 billion in 2012, which required shedding some assets to satisfy regulators. Since Crown Imports was a joint venture with Grupo Modelo, Constellation was the logical beneficiary.

Initially, AB InBev struck a deal to sell Constellation the 10-year rights to Modelo’s U.S. importing business. After regulators intervened, Constellation received a bigger windfall—the Nava Brewery, 10 beer brands and rights to peddle Modelo beers in the U.S. The assets were valued at $5.3 billion.

Overnight, Constellation became the U.S.’s third-largest beer company by volume.

“I never saw that coming,” said Bill Hackett, president of Constellation’s beer division.

Since that deal, Constellation’s market cap has more than doubled to $22.79 billion from $10.43 billion.


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