This story was originally published on Food Dive. To receive daily news and insights, subscribe to our free daily Food Dive newsletter. Sazerac has acquired small batch spirits company Western Son Vodka and Distillery for an undisclosed amount. Texas-based Western Son produces a range of flavored vodkas in addition to distilling a gin. The deal builds on Sazerac’s vodka offerings following the purchase of Svedka Vodka from Constellation Brands last year.  “The company has created a strong brand, and it pro ...

Company Overview - Constellation Brands, Inc. (STZ) is a leading beverage alcohol company with a market cap of $25.8 billion, known for brands like Corona, Modelo, Robert Mondavi, and Svedka Vodka [1] - The company is classified as a large-cap stock, emphasizing its size and influence in the beverages - brewers industry [2] Financial Performance - STZ's revenue for Q1 2026 declined by 5.5% year-over-year to $2.5 billion, missing consensus estimates by 1.9% [5] - Adjusted EPS for the same quarter was $3.22, down 9.8% from the prior year and 3.6% below Wall Street estimates [5] Stock Performance - STZ shares have decreased 44% from their 52-week high of $261.06, reached on September 30, 2024 [3] - Over the past three months, STZ shares declined by 14.5%, underperforming the First Trust Nasdaq Food & Beverage ETF (FTXG), which saw a 1.3% loss [3] - In the last 52 weeks, STZ has fallen 41.7%, significantly lagging behind FTXG's 13.9% decline [4] - Year-to-date, STZ shares are down 33.8%, compared to FTXG's 3.6% drop [4] Market Trends - STZ has been trading below its 200-day moving average since early October 2024 and below its 50-day moving average since late May, indicating a bearish trend [4] - The company has underperformed its rival, Anheuser-Busch InBev SA/NV (BUD), which declined by 5.4% over the past 52 weeks but gained 18.7% year-to-date [6]

Core Viewpoint - Constellation Brands, a major player in the alcoholic beverages market, is facing significant challenges that have led to a nearly 30% decline in its stock over the past year, contrasting with a 17% rise in the S&P 500 [1] Group 1: Red Flags - The first red flag is the declining alcohol consumption among younger Americans, with a Gallup poll indicating a drop from 72% to 59% in the last two decades, and a NielsenIQ survey revealing that 45% of Gen Z consumers over 21 do not consume alcoholic drinks [2][4] - The second red flag involves lower discretionary spending among Hispanic consumers, who account for about half of Constellation's beer sales. CEO Bill Newlands noted that these consumers are reducing spending due to immigration issues and the impact of tariffs [6][7] - The third red flag is the impact of Trump's tariffs on aluminum, which have increased from 25% to 50%, affecting the margins on Constellation's canned imported beers. Approximately 39% of beer shipments from Mexico still come in aluminum cans, leading to an expected decline in comparable EPS by 6% to 9% for the full year [9][10] Group 2: Green Flag - A positive aspect is Constellation's divestment of weaker wine and spirit brands, which supports its "premiumization" strategy aimed at attracting affluent customers and generating higher-margin revenues. The company has sold off dozens of cheaper wine brands and divested its mid-tier Svedka Vodka brand to focus on premium offerings [12]

Core Viewpoint - Constellation Brands and Altria are both considered stable blue chip stocks, but Altria has outperformed Constellation significantly over the past three years, raising questions about future investment potential [1][2]. Constellation Brands - Constellation Brands generates most of its revenue from its beer business, with popular brands like Modelo and Corona, and a smaller portion from wine and spirits [4]. - The company faces three major challenges: declining beer consumption among younger consumers, decreasing sales of lower-end wines, and increased costs due to tariffs on imported Mexican beers [5][6]. - Analysts expect Constellation's revenue to decline from $10.2 billion in 2024 to $9.9 billion in 2027, while its earnings per share (EPS) is projected to grow at a compound annual growth rate (CAGR) of 7% [8]. - Despite a low valuation at 14 times forward earnings and a forward yield of 2.5%, the lack of near-term catalysts makes it an unappealing investment [9]. Altria - Altria primarily generates revenue from its Marlboro cigarettes and has a strong domestic focus, which protects it from tariffs and foreign-exchange issues [10][11]. - The company has been countering declining smoking rates by raising cigarette prices, cutting costs, and expanding its smokeless product portfolio through investments and acquisitions [12]. - Following a setback with its investment in Juul, Altria acquired Njoy for $2.8 billion in 2023, which is expected to boost EPS starting in 2026 [13]. - Analysts predict Altria's revenue will dip slightly from $20.4 billion in 2024 to $20.2 billion in 2027, but its EPS is expected to grow at a steady CAGR of 5% from 2025 to 2027 [14][15]. - Altria's stock is considered cheap at 12 times forward earnings, with a substantial forward yield of nearly 7%, making it a more stable investment compared to Constellation [15]. Investment Recommendation - Altria is viewed as the better investment option due to its more stable business model, larger dividend, and lower valuation multiple compared to Constellation Brands [16].