Constellation Brands Inc
Guye Phillips, Kristen Deal
ME 342: Financial Management
Professor Maddox
January 23, 2020
2
Table of Contents
Introduction ………………………………………………………………………………………………………….. 2
Swot Analysis ………………………………………………………………………………………………………… 4
Strengths ………………………………………………………………………………………………………………………4
Weaknesses …………………………………………………………………………………………………………………..6
Opportunities ………………………………………………………………………………………………………………..6
Threats …………………………………………………………………………………………………………………………7
Trend Analysis ………………………………………………………………………………………………………. 8
Quick Ratio …………………………………………………………………………………………………………………..8
Debt-Equity Ratio ………………………………………………………………………………………………………….9
Total Asset Turnover …………………………………………………………………………………………………… 10
Return on Equity ………………………………………………………………………………………………………… 11
Price-To-Earnings Ratio ……………………………………………………….……………………………………… 12
Dupont Analysis ………………………………………………………………………………………………………….. 14
Stock Price Analysis …………………………..…………………………………………………………………. 16
Recommendations ………………………………………………………………………………………………… 18
References ………………………………………………………………………………………………………….. 19
3
Company Overview
Constellation Brands Inc. was founded in 1945 by the young Marvin Sands at the age of
21 in upstate New York. In 1945, Sands purchased a wine distribution company called
Canandaigua Industries. By 1973, Canandaigua Industries growth was evident and went through
a name change to the Canandaigua Wine Company Inc. and went public to trade on the New
York Stock Exchange. Their rapid growth in the 50’s and 60’s was attributed to brand
acquisitions and unique franchising deals with popular wine brands in that time. Those deals
allowed Canandaugua Wine company to develop their own facilities for wine production. By
1980, Canandaigua Wine company reached net was of over 50 million making them the eighth
largest United States Wine producer. As their Brand acquisitions and wine classifications
increased, Canadaigua decided to venture into the Imported and distilled spirits category in 1993.
This made them the only company to be involved in all three of those market categories and that
is still true to this day. Following the death of founder Marvin Sands in 1999, Richard Sands
converts the company name to Constellations Brands Inc to better reflect their diversity across
the alcoholic beverage industry. By 2005, Constellation Brands found themselves a spot on the
S&P 500 index (Constellation Brands, 2021). This great milestone is attributed their success with
focusing primarily on the premium category of wine at that time. In addition, they also were
involved in premium beer and spirits. All through the 2000’s and 2010’s Constellation has gone
through many series of acquisitions pushing their premium brands to max potential. They
currently have 40 business locations in nine different countries that consist of breweries,
wineries, distilleries, and even glass manufacturing (Reuters, 2021).
4
Swot Analysis
SWOT analysis’s can play a pivotal role in a company’s strategic planning techniques,
including the understanding of internal and external factors that are used to evaluate an
organization’s current strengths (S), weaknesses (W), opportunities (O), and threats (T). The
following analysis is a comprehensive breakdown of circumstances surrounding the company,
also known as external factors, in conjunction with how the company responds to those
circumstances and operates moving forward, or internal factors and development.
Strengths
As mentioned previously, “Constellation Brands” became the new name of the
distribution-based company on the verge of the 21st century in order to better reflect their
diversity across the alcoholic beverage industry. Mr. Sands likely was unaware just how much
that statement would foreshadow. In 2020, one of the brand’s leading companies, Corona,
launched a competitive new line of hard seltzers. In addition to this, Constellation invested a
minority stake in a new and upcoming contender in the seltzer market, Press Premium Alcohol
Seltzer. This major investment allows Constellation Brands to break into two new markets:
entering a new product category of seltzers, as well as satisfying consumer demand in
premiumization and health consideration. Premiumization is a recent trend defined as, “the
action or process of attempting to make a brand or product appeal to consumers by emphasizing
its superior quality and exclusivity” (Oxford Language, 2021). In 2020, the volatile market
became extremely sensitive to consumer demands and preferences. Analytics show that
consumers are favoring the “luxury” or high-end products as a result of the cultural shift to a
self-care, “treat yourself” mentality. Amidst the current conditions of the economy, consumers
are drinking alcohol at substantially higher rates than previously, and in the process developing
5
preferences of premiumization that didn’t previously hold as much value in the beverage
industry, such as visual aesthetic, calorie count, natural and healthy ingredients, etc. By investing
in the consumer-led premiumization concept early on, Constellation Brands holds a competitive
advantage of maintaining status as a leading mature beverage distribution company.
Additionally, showcasing the strength of the company’s brand portfolio opens the door for
Constellation Brands to enter new product categories with ease in future trends. Constellation
Brands has proven itself as a well-earned leading contender in their industry.
The company is not only strategically planning its product vitality in consumer markets;
it is also carefully navigating its position as an entity in society. In 2020, Constellation Brands
published a Company Profile that detailed the company’s four key focus areas: “serving as a
model for responsible water stewardship, being a champion for the professional development and
