It’s a marriage between one of the fastest-growing industries and one of the largest booze distributors. Over the weekend, the Wall Street Journal reported that Constellation Brands, makers of Corona beer, agreed to take a 9.9 percent stake in Canopy Growth Corp., a Canadian marijuana company.
According the Journal scoop, the alcohol-distribution giant will work with one of the Canadian cannabis grower to develop and market cannabis-infused beverages. The investment will cost about $245 million Canadian dollar, or about $191 million US. The deal, which is expected to be finalized in 2018, gives Constellation Brands the option to buy a larger share of the ownership in the future.
Constellation Brands own many Mexican beer brands, including Corona, and is the world’s largest wine company. According to a press release:
This investment and relationship is consistent with Constellation Brands’ long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics, while maintaining focus on its core total beverage alcohol business. Constellation has no plans to sell any cannabis products in the U.S. or any other market unless or until it is legally permissible to do so at all government levels.
In other words, the company sees that cannabis has a stronger growth curve than alcohol. And the company will be aggressive in staying ahead of its competition. Or as Constellation Brands President and Chief Executive Officer, Rob Sands says:
“Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future. Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”
Constellation Brands is a Fortune 500 company and is a listed on the S&P 500. In fiscal 2017, the company announced record net sales of $7.3 billion. Canopy Growth, based in Ontario, is the world’s largest publicly traded cannabis company and is listed on the Toronto Stock Exchange under the symbol “WEED”. According to the latest filings, the company has a market valuation of 2.2 billion Canadian dollars, or $1.7 billion US.
Constellation said the transaction is expected to close during the Company’s third quarter of fiscal 2018. Bruce Linton, Chairman and Chief Executive Officer, Canopy Growth Corporation, said in the press release:
“We are thrilled to have the backing of such a well-established and respected organization such as Constellation Brands. We look forward to working with the Constellation Brands team to access their deep knowledge and experience in growing brands as we continue to expand our business.”