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Constellation Brands could be the best investment opportunity in consumer staples over the next three to five years, but it needs better capital discipline for that to happen. Constellation Brands is unique in that it has a beer, wine, and spirits business, however, there are few real operational synergies from being in all three categories. Two years ago, Constellation Brands made an investment in cannabis in which there are even fewer cross benefits. This was both a financial and operational mistake, but one that should no longer drive the near-term results. As the beer business continues its dependable growth, the transitions being made in the other businesses will be smaller detractors.
We will drill down on the demographics of beer, wine, spirits, and cannabis to understand the long-term drivers. We will look into the Hard Seltzer category to understand the biggest competitive threat the beer business is facing. We will analyze the latest transitions in the wine and cannabis businesses and assess whether they are positioned to succeed. We will do a deep dive into the sales and margin drivers of each business to build a bottom-up understanding of the company's future growth. We will have all the facts and figures needed to make a diverse company understandable. Finally, we will project what the future three to five years out could look like.
The shortsighted mistake made by investors who did not own Constellation Brands since the transformative purchase of the Crown beer business was to look only one or two years ahead, as opposed to the next five years. They missed one of the best performing consumer stocks over that time frame driven by long-tailed trends for fear of difficult comparisons. The current pandemic/recession presents another opportunity to purchase shares at an attractive entry point. Constellation Brands is a rare combination of a growth company and a consumer staple company with strong returns. A company that can hit its growth targets in a recession and a pandemic deserves a premium multiple.
We will present our case for STZ as a Best Idea Long next tomorrow May 26 at 2PM, and address the questions facing the business:
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