Coronavirus Closings Work “To Our Advantage”: Constellation Brands CEO

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The coronavirus pandemic has caused the closure of many restaurants and bars across the country, but a brewer continues to see an opportunity in the market.

Bill Newlands, President and CEO of Constellation Brands, producer and distributor of beer, wine and spirits, told Jim Cramer of CNBC that its commercial makeup would limit the impact of a downturn on the business.

“You see a lot of channel change, and you see it in many recessionary environments,” he said in a Mad Money interview on Friday. “This one, of course, is a bit unexplored because a room is really closed, which is on site [consumption], as you know, but you see a change of chain and you see people buying more and you see them consuming it at home. “

Although consumers cannot open a beer at their favorite local bar due to closures, they can still buy alcohol and drink it at home, since the drinks were deemed essential by governments.

“Since 85% to 90% of our activities in all three sectors are off-site, it really works to our advantage, to some extent,” said Newlands.

Off-premises, as Newlands mentioned, means direct sales to consumers that allow products to be used outside of a bar or restaurant. Constellation Brands products are sold in bars, supermarkets and liquor stores. The company’s brands include, among others, Corona, Modelo and Svedka Vodka.

These comments came after Constellation announced better-than-expected results for the quarter ended in February. The fourth quarter report was the last for Constellation’s 2020 fiscal year. The company reported earnings per share of $ 2.06 on revenue of $ 1.9 billion, beating FactSet estimates of $ 1.64 EPS and $ 1.8 billion in revenue.

While Newlands expects strong sales for March, the company decided it was too “risky” to offer an annual outlook due to the uncertainty of the coronaviruses.

“When you look at our march, our march has been great, but part of that is obviously a load of pantries and you really don’t know where it’s going to land,” said Newlands regarding orientation. “We know what’s going on in recessions, but these are unexplored waters and … we better give advice later when we have a much better understanding of how things will go. “

Production of Corona beer, made by Grupo Modelo in Mexico and exported to 180 countries, was halted Thursday after the Mexican government said breweries were non-essential businesses.

However, Newlands has assured that Constellation Brands has enough of its products to meet demand.

“In this country, alcoholic beverages are considered essential,” he said. “The opportunity to continue to sell and meet consumer demand is there, and we have the supply to do so. “

Constellation shares rose 0.7% during the session to close at $ 132.17, even though they were close to $ 3 from their highest level of intraday trading, as the broader market slipped by more than 1%.

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