Donald Trump a danger to Constellation Brands' beer growth - analyst
Donald Trump has promised to deport illegal immigrants
A Donald Trump presidency could strip out Constellation Brands' core beer base if the current White House hopeful made good on a promise to deport unauthorised immigrants, an analyst has said.
Deportations, if effected in the wake of a Trump win in November's presidential elections, could force out as many as 8m Hispanics from the US, SIG analyst Pablo Zuanic said yesterday. Zuanic estimates this equates to up to 25% of the consumer base for Constellation's Mexican beer brands such as Corona Extra and Modelo Especial.
"Based on his policy pronouncements, we believe a Trump presidency would have a meaningful and negative effect on Constellation, with the company potentially losing a good chunk of its consumer base," Zuanic said.
The analyst, who admitted that a Trump presidency may only be as likely as "a meteor hitting the earth", said the businessman-turned-politician could also harm "brand Mexico" if elected. Mass deportations would be "a rather traumatic and divisive event" on a scale above and beyond the internment of people of Japanese descent during World War II. "In that context, it is hard to envision 'taco trucks' being as inviting, or for that matter Mexican beer brands," Zuanic said.
The analyst said Constellation's sales volumes could drop as much as 40% in the worst-case scenario, with shares in the company falling 30%.
The note of caution follows strong stock price gains for Constellation over the past few years in the wake of the company's acquisition of the Modelo beer portfolio from Anheuser-Busch InBev in 2012. Since June that year, Constellation shares have jumped more than eight-fold, mainly because of the strength of Mexican beer consumption in the US.
Trump, who will run against Hillary Clinton in the 8 November election, has repeatedly promised to deport unauthorised immigrants if elected. He also wants to build a wall on the Mexican border to halt unauthorised crossings.
According to Zuanic, the consumer base for Constellation's beer portfolio is heavily skewed towards Hispanics. He estimates Hispanics make up 35% to 45% of Corona buyers, 75% of Modelo Especial, and 90% of the rest.
This month, just-drinks' beer commentator, Stephen Beaumont, uses his regular column to look at the fruit-flavoured beer segment, and spies a red flag....
Constellation Brands is the world’s second largest vintner and the leading player in the US premium lager segment. This profile analyses the company’s premiumisation strategy across its wine, beer and...
Earlier today, Constellation Brands reported a double-digit sales lift for fiscal-2017, with last year's Canadian wine sale boosting the bottom line. Here, just-drinks takes a closer look at the compa...
Wine is an alcoholic drink produced by the fermentation of grapes or other fruits. It has various health benefits, if consumed in adequate amounts....
The 2016 Global Brewer Analyzer Report is an indispensable reference guide to the world’s leading brewing groups. As well as providing global volume and ranking of the world’s top 20 leading brewers,...
Earlier this week, US trade body The Brewers Association released its annual chart listing the largest brewers in the country in volume terms in 2016. Here is the top 50....
Vodka is an alcoholic beverage that comprises water and ethanol and contains 35%-40% alcohol by volume....
- Have spirits companies forgotten the mainstream?
- Does alcohol accelerate the onset of dementia?
- Pernod's mood darkens over India - Analysis
- Why Scotch must drop the 'malts good, blends bad'
- Ashwagandha - The next functional drinks trend?
- Moet Hennessy unaffected by LVMH Dior buy
- Diageo to cut 105 jobs in Scotland, 50 in Italy
- Distell acquires majority stake in Cruz Vodka
- Portman Group heads to Tesco for new chief exec
- William Grant names Europe & NA Travel Retail head
- Global Scotch insights - market forecasts, product innovation and consumer trends
- Global Champagne and sparkling wine insights - market forecasts, product innovation and consumer trends
- Battle of the Generations - The fight for iGen, Millennial, Gen X and Baby Boomer consumers
- Myanmar - ISA Country Report
- Global vodka insights - market forecasts, product innovation and consumer trends