Is Warren Buffett Becoming A Beer Baron? Berkshire Hathaway Invests $1.2 Billion In Beer Conglomerate That Imports Modelo and Corona

Warren Buffett is famous for backing strong consumer stocks like Coca-Cola (NYSE KO), but his latest investment indicates he may be on the verge of becoming a beer baron. Public filings show Buffett’s Berkshire Hathaway (NYSE BRK.A, BRK.B) bought $1.24 billion worth of stock in Constellation Brands (NYSE STZ). Although you may not be familiar with that name, you're probably very familiar with their most popular products, which include the Modelo, Corona, and Pacifico beer brands.

According to Fortune, Buffett's sizable investment means Constellation now accounts for roughly 0.5% of Berkshire-Hathaway's portfolio. This indicates that Buffett is very bullish on the company despite Constellation's stock being down by more than 25% this year. Although Buffett's investment in a company whose stock is plummeting might seem counterintuitive to a casual market observer, this move dovetails perfectly with his investment philosophy.

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First, buying companies with strong market share and a loyal customer base has long been a guiding principle for Buffett. This explains Berkshire's major stakes in big companies like Coca-Cola. Constellation certainly fits that bill. Second, Buffett loves good value, and the chance to buy shares in a company like Constellation at a discount may have been too good to pass up.

Filippo Falorni, who is a lead beverage analyst for Citibank, told Fortune that Buffett's aggressive purchase of Constellation shares is "a perfect example of value investing." Falorni believes that Buffett is banking on Constellation to rebound, and Buffett's big move indicates Falorni's analysis is on the money.

He expanded on that idea by saying, “The stock has been very weak, mainly due to concerns about [Trump] tariffs on its Mexican beer imports. However, looking past the near-term issue of tariffs, the long-term business remains very attractive with growth in the fastest-growing part of the beer category." Falorni also said the rapidly growing Hispanic population in the U.S.  will mean increased market share and distribution opportunities for Constellation.

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All of Constellation's brands carry loyal followings and strong name recognition in the U.S. According to Forbes, Constellation's Modelo Especial has been the best-selling beer brand in the U.S. since 2023, when it knocked Anheuser-Busch InBev's (NYSE BUD) Bud Light out of the top spot. Forbes also reports that InBev tried to purchase  Grupo Modelo in 2012, but the Justice Department moved to block the deal, arguing it would have given InBev almost full control of the beer industry.

The deal was eventually completed after InBev reached a settlement agreement with the Justice Department. InBev bought Grupo Modelo and retained global distribution rights but sold the American distribution rights as a condition of Justice Department approval . That's when Constellation Brands stepped in and took control of the American distribution of Grupo Modelo's brands, which include Modelo, Corona, and Pacifico.

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Constellation has steadily eaten into InBev's market share ever since. It's not an accident that happened. Constellation accomplished this through an expertly run series of marketing campaigns for all its products that featured stars like Bad Bunny and Snoop Dogg. These campaigns resonated with both young people and America's Hispanic population. Constellation and its core brands appear to have made lasting inroads with both demographics.

This begs the question of why Constellation Brands’ stock is down this year. The short answer is tariffs.  Falorni told Fortune he estimates Trump's proposed tariffs on Mexican imports could knock 28% off Constellation's earnings per share. However, Buffett remains undeterred. Falorni said, “Warren Buffett is looking at the value of the business in the long term and believes the stock is undervalued due to those external concerns.”

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