SAVE THE DATE!

In a challenging moment, Constellation Brands Beer Division prexy Jim Sabia focused most of his talk at the Gold Network Summit on Constellation's enduring strengths and several "tailwinds." That includes co's long-term growth and "runway," especially since STZ is 76% of biggest growth segment, imports. It also sells 3 of top 4 SKUs in biz and has "top loyalty" among Hispanics. But Jim began by discussing the Trump administration's just-implemented tariffs (briefly), noting "we will continue to evaluate the levers we possess in terms of inventory, pricing and availability." Beer Is Not "Hopeless" and has "Weathered Many Storms" "We know the industry is soft and sales over the past few months have not been good," acknowledged Jim. But he placed that in historical context, noting other periods over decades when the industry declined. "This industry is powerful and dynamic, tough and resilient," Jim emphasized. "I don't buy into the narrative that beer is hopeless, or that the hope lies in beyond beer alone. We have come together to weather many storms over time and now is no different&hellip;. Our number one job is to grow beer," said Jim. "We have to unite this industry. Together we have faced ups and downs, and we have leveraged our strong history and strength of these three-tier networks to get us through these tough times. That is what is so unique to our business." Then Jim made a thinly veiled reference to AB's recent "American" campaign (without mentioning AB). "We don't need to create any new problems for ourselves within the industry. We don't need to debate terminology or seek to divide ourselves by labels. We need to fight for this business."Worth Fighting For; $13 Bil in Distrib Revs; Imports Gained 10 Share in 12 Yrs; 3 SKUs $2.7 Bil in Revs The Constellation portfolio alone provides $13 bil in annual distrib revenues "just from our portfolio," pointed out Jim. "That is worth fighting for." It has provided "consistent, reliable growth." Since 2012, imports climbed from 12 to 22 share of volume (and 25 share of $$), as Constellation grew to 93% of Mexican imports, which are 80% of all imports. STZ now has 3 of top 4 SKUs in this biz in Circana data. The Modelo 12-pack can is #1 at $1.1 bil, Corona 12-pack bottle is #2 at $900 mil and the Modelo 12-pack bottle is #4 at $700 mil. So 3 SKUs are now up to $2.7 bil in revs in Circana data."Greatest Increase in Loyalty" Among Hispanics; 31 States Over 3 Mil Cases; Growth Spreading Constellation Brands also saw "greatest increase in loyalty" in recent yrs, up 18%. It has 41% loyalty from Hispanics, more than any other supplier, said Jim. "Competitors say they are focused on the Hispanic consumer. That may be true. But is the Hispanic consumer focused on them," Jim asked. "The data would show otherwise," noting that top supplier loyalty from Hispanics is down 10% in last 5 yrs.To show how growth of Constellation spread across the country over time, Jim noted that 9 yrs ago, in 2016, 16 states sold over 3 mil cases of Constellation Brands. By 2019, it was 23 states and last yr that was up to 31 states. This "confirms the runway is there," according to Jim, and highlights portfolio growth in the middle part of the country. Meanwhile, here are some of its highest share mkts: In CA, STZ has 38 share, NJ and NV at 28 share, and TX and FL, 22 and 21 respectively. In 2024, 49 out of 50 states grew share.Runway for Modelo Especial; On Premise Oppys "How much runway" does Modelo Especial have? Turns out household penetration is still below the brand's natl avg in 38 states. Then too, while Corona Extra general awareness at 84%, Modelo Especial at 74% and only 69% among Gen Z and millennials. And tho it's #1 brand, Especial still trails Corona Extra 12-pack bottles in distribution. In the on-premise, Modelo only in two thirds of the # of accounts of Corona Extra. And it is the #4 brand on draft, with only 41% of accounts buying today. "This is a major opportunity." Especial is underdeveloped in several states, Jim concluded, "relative to share, awareness and household penetration." And distribution remains an oppy, especially on premise.

Constellation Prexy Jim Sabia on Tariffs, Toughness, Terminology and Tailwinds

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