Morningstar

Constellation Brands: Tepid Margins, but Outlook Intact

The brand assets that underpin the narrow-moat beverage producer's competitive edge remain healthy.

Sonia Vora Jun 29, 2018

Securities In This Article

Constellation Brands Inc Class A

Narrow-moat

From our perspective, Constellation's strengthened marketing investments, which increased 110 basis points to 11% of sales is a prudent choice, as we contend this spending will be needed to support the launches of new products like Corona Premier (a lower-calorie, lower-carbohydrate offering) in an intensely competitive domestic beer market. Management indicated that it was able to quickly gain distribution and grow velocities for this product, which we view as evidence the brand assets that underpin its competitive edge remain healthy.

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About the Author

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Sonia Vora

Equity Analyst

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Sonia Vora is an equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers beverage stocks in the consumer sector. She joined Morningstar in 2014.

Vora holds a bachelor’s degree in economics from the University of Chicago.

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