Did you hear what Constellation Brands just did? They are the owners of Corona Beer, Robert Mondavi Wine and Svedka Vodka. Long live Libations. This is just the start of large corporations leveraging the ability to control the market at the same time bringing cannabis to the main stream. It would be interesting to see the company’s vision and understand what they believe they can bring to the table.
What Corona Owner’s $4 Billion Bet on a Marijuana Firm Says About Pot’s Future
By Michael J. de la Merced
What does a beer company do to hedge against slowing growth in its main business? In the case of the parent company of Corona, the answer is to invest heavily in the marijuana industry.
Constellation Brands, which also makes Robert Mondavi wine and Svedka vodka, announced on Wednesday that it had invested $4 billion in Canopy Growth, a publicly traded Canadian cannabis producer. The deal comes nearly 10 months after Constellation first took a 10 percent stake in Canopy to help create nonalcoholic cannabis-infused drinks and other products.
Constellation’s investment in Canopy, the biggest known deal in the marijuana industry, shows just how far traditional alcoholic beverage companies are willing to go to find growth. As sales of beer fall in the United States, brewers have begun to bet that legalization of marijuana around the globe, especially the United States, will continue to build momentum and sales of cannabis products will take off.
The research firm Euromonitor estimates that the American market for legal marijuana products will reach $20 billion by 2020, up from $5.4 billion in 2015.
While a number of states have legalized the recreational use of marijuana in recent years, purchasing or possessing it remains a federal crime. Constellation said in November that it does not plan to sell cannabis products in the United States while it remains illegal on the federal level.
But as cannabis becomes legal in more countries — in Canada, for example, recreational use will become legal on Oct. 17 — alcoholic beverage companies are trying to buy into the cannabis industry before they become disrupted by it.
How concerned are beer companies? Molson Coors listed legal cannabis among the biggest possible risks to its business in its annual shareholder report earlier this year: Read more.
H/T: NY Times