Constellation Brands Projects 10-Cent Hit To Earnings From Canopy Growth Investment

Constellation Brands, Inc. STZ shares dropped Wednesday after the alcoholic beverage maker commented on its beverage growth expectations at an industry conference.

The company said it expects to see a 10-cent-per-share hit to fourth-quarter earnings from its investment in cannabis company Canopy Growth Corp. CGC.

Constellation, likely best known as the maker of Corona beer, said that it expects the cannabis market to be worth $200 billion over the next decade, and said it expects earnings per share to rise by 10 percent over the next three years.

When the beverage maker reported third-quarter earnings in January, it cut earnings per share guidance to to reflect the financing of the Canopy deal.

Constellation invested $4 billion in the cannabis company in 2018 for a total stake of 38 percent. 

In a Wednesday presentation at CAGNY, a food and consumer products conference in Florida, Constellation also said it was planning to sell lower-end wine brands and concentrate on more profitable upmarket brands, according to a report by Reuters.

“Everything that’s not a power brand, you can assume that we’re either going to sell it, discontinue it or milk it very quickly over the next year or so,” said Constellation Brands Chief Financial Officer David Klein, according to the report.

Constellation said it sees high single-digit sales growth in beer over the next three to five years, but low- to mid-single digit growth in sales of wine and spirits.

Constellation shares were down 4.43 percent at $166.98 at the closing bell. 

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