Corona Beer Stock: Should You Invest?

Should you buy Corona beer stock? Well, that depends on who you ask. Constellation Brands (NYSE: STZ) is the producer and distributor of Corona beer, and investors can buy shares of their stock. However, the brand's ownership is less clear, with two multinational corporations responsible for its brewing, importation, and distribution. AB InBev owns Corona globally, although Constellation Brands distributes it in the US and is the exclusive licensee and sole importer in the fifty states of the US, Washington, D.C., and Guam.

Constellation Brands' performance

Constellation Brands, Inc. is a beverage company that produces and markets alcohol, including Corona beer, Woodbridge wines, and Svedka vodka. The company is based in Victor, New York, and operates in the United States and internationally. Constellation Brands is the exclusive licensee and sole importer of Corona beer in the United States, Washington, D.C., and Guam.

In terms of performance, Constellation Brands has experienced both successes and challenges. On the one hand, the company has benefited from the popularity of Corona, which is the top-selling imported beer in the United States and has been since 1998. Corona Extra sales in the U.S. grew by 5% in the four weeks ending February 16, outpacing the sales trend of the previous 52 weeks. This growth suggests that Constellation Brands' products continue to be in demand, particularly one of their flagship offerings.

However, Constellation Brands has also faced challenges, particularly due to the COVID-19 pandemic and the similarity in name between Corona and the coronavirus. Despite assurances from the company that there is no link between the virus and their business, some consumers have expressed reluctance to purchase Corona. Surveys conducted by public relations firm 5W and YouGov indicated that 38% of Americans polled would not buy Corona due to the outbreak, and 14% said they would not order it in public. Additionally, the pandemic's impact on the overall stock market, including a drop in the S&P 500, has likely affected Constellation Brands' stock performance.

Despite these challenges, Constellation Brands' CEO Bill Newlands has emphasized that the company's business performance remains strong. The company's spokesperson, Stephanie McGuane, reiterated this, stating that sales of Corona "remain very strong" and expressing appreciation for their customers' continued support.

In summary, Constellation Brands has a diverse portfolio of alcoholic beverages, including Corona, which has contributed to its performance as the top-selling imported beer in the U.S. While the COVID-19 pandemic and associated misconceptions posed a challenge, the company has maintained its strong business performance and customer base.

Corona's sales during the pandemic

Coronas Sales During the Pandemic

Constellation Brands, the producer of Corona beer, saw its stock underperform its staple peers during the pandemic. This was due, in part, to the unfortunate similarity between the brand's name and that of the virus responsible for the pandemic.

In early 2020, a CNN article claimed that 38% of Americans would not buy Corona "under any circumstances" due to its name. This claim was based on a press release by 5W Public Relations, whose customers include competitors of the maker of Corona. However, the survey question that yielded this statistic did not actually mention COVID-19 as a motivation. Nevertheless, the brand's buzz score, a metric that measures favorability, tanked since the beginning of the outbreak. Two surveys showed that Corona's brand suffered from the Corona fallout, with 14% of Americans polled saying they wouldn't order Corona in public.

Despite the negative publicity, Constellation CEO Bill Newlands indicated that the surveys did not reflect the company's business performance. He called the "misinformation" about the virus' impact on Corona beer sales "extremely unfortunate". Indeed, sales of Corona remained strong during the pandemic, with sales of Corona Extra in the US growing by 5% in the four weeks ending February 16, 2020. This was almost double the sales trend of the previous 52 weeks. Overall, sales increased by 8.9% in the first three months of 2020, with year-over-year growth of 24% in the first three weeks of March 2020. This growth was likely due to increased alcohol consumption as people stayed home during the pandemic.

However, the pandemic did cause some challenges for the brand. Constellation Brands was in the middle of launching its new Corona-branded hard seltzer with a marketing campaign that included the unfortunate timing of a tweet saying "coming ashore soon".

Corona's brand image

Coronas Brand Image

The Corona brand image is centred around the idea of a "beach state of mind". The brand's most popular variation, Corona Extra, is a pale lager that is often served with a wedge of lime or lemon, making it the perfect summer drink. This association with summer, beach parties, and a carefree, exotic paradise is what makes the brand so iconic.

The Corona Extra logo reflects this brand image with its yellow, white, and blue colour palette. The white and yellow combination evokes a sense of lightness and refreshment, while the blue colour adds a feeling of quality and royalty. The logo also features a bold gothic typeface, a yellow medallion with the words 'La Cerveza Mas Fina' (the finest beer) and a crown on top, and two griffins, which are legendary creatures with the body of a lion and the head and wings of an eagle. The griffins symbolise strength and vigilance and add an element of heritage, authenticity, and power to the brand.

The Corona brand has been described as "La cerveza más fina" (the finest beer), and its commercials typically take place on a beach with the tagline "Miles Away From Ordinary" (used from 2000 to 2007) and "Find Your Beach" (used since the early 2010s). Corona has also leveraged its brand image through sponsorships of sporting events, including boxing in Mexico and the United States, the LPGA Tour tournament Corona Championship, and the NASCAR Mexico Corona Series.

Overall, the Corona brand image evokes a sense of relaxation, fun, and a carefree lifestyle, making it a popular choice for consumers looking to escape their everyday lives and enjoy a taste of paradise.

Corona's share price

Coronas Share Price

Constellation Brands ($STZ) is the producer of Corona beer, and investors can buy shares of their stock. Constellation Brands is the largest provider of alcoholic beverages across the beer, wine, and spirits categories in the U.S., generating 80% of its revenue from Mexican beer imports under top-selling brands such as Modelo and Corona. Constellation Brands stock is underperforming its staples peers, which one analyst suggests is an opportunity.

Constellation Brands is in the middle of launching its new Corona-branded hard seltzer, at a price tag of $40 million. Part of their marketing campaign includes a tweet that says "coming ashore soon". Unfortunately, the timing of the launch coincided with the outbreak of the Coronavirus, which impacted the brand's sales. In a survey by public relations firm 5W, 38% of Americans polled reported they wouldn't buy Corona "under any circumstances" because of the outbreak. Another 14% said they wouldn't order Corona beer in public. A YouGov survey found customers' intent to buy Corona beer hit its lowest level in two years.

Constellation CEO Bill Newlands indicated that surveys don't reflect the company's business performance. He called the "misinformation" about the virus' impact on selling Corona beer "extremely unfortunate". Newlands also stated that their customers "understand there is no link between the virus and our business" and that they have "seen no impact on our people, facilities, or operations, and our business continues to perform very well".

Constellation Brands spokesperson Stephanie McGuane told CNN, "Sales of Corona remain very strong, and we appreciate the continued support from our fans". Constellation reported that Corona Extra sales in the U.S. grew by 5% in the four weeks that ended on February 16, which is close to double the sales trend of the last 52 weeks.

Final Thoughts

The outbreak of the Coronavirus and the subsequent impact on the brand's sales have hammered the stock price of Constellation Brands. However, the CEO remains confident that the business is performing well and that the negative impact is due to misinformation. The question for investors is whether the recent sell-off in the stock market presents an opportunity to buy shares of Constellation Brands at a discounted price.

Corona's shareholders

Coronas Shareholders

If you are interested in buying Corona beer stock, there are a few things to keep in mind. Firstly, it is important to understand that Corona beer is produced by Grupo Modelo and distributed by different companies in different parts of the world. In the United States, Constellation Brands ($STZ) is the exclusive licensee and sole importer of Corona, while AB InBev owns the beer in all other worldwide markets. Therefore, if you are based in the US, you would need to purchase shares of Constellation Brands to invest in Corona beer.

Constellation Brands is the largest provider of alcoholic beverages in the US, with 80% of its revenue coming from Mexican beer imports, including top-selling brands such as Corona and Modelo. The company also has a presence in the wine and spirits categories, although it has been pruning assets in these areas in recent years. Constellation Brands also owns a 36% stake in Canopy Growth, a medicinal and recreational cannabis producer in Canada, and has a joint venture with a glass manufacturer in Mexico.

When considering investing in Constellation Brands, it is worth looking at the performance of Corona beer sales. In the first quarter of 2021, net beer sales jumped 14% year-over-year, driven by 10% gains in depletions (sales to distributors and retailers). Corona Extra and Corona Premier exhibited particular strength, with overall Corona family depletions rising 7% in the quarter. However, it is important to note that the launch of Corona Hard Seltzer in 2020 may not have had the expected impact, with the brand holding only a 1.3% share of the on-premise market despite a $40 million marketing campaign.

The impact of the COVID-19 pandemic on Corona beer sales is also worth considering. Initially, there were concerns that the brand would suffer due to its similarity in name to the coronavirus. Surveys indicated that some consumers might avoid purchasing Corona beer due to the outbreak. However, sales data showed that Corona Extra sales in the US grew by 5% in the four weeks ended February 16, 2020. Constellation Brands CEO Bill Newlands attributed the discrepancy between surveys and sales performance to "misinformation" and stated that the company's customers "understand there is no link between the virus and our business."

In terms of the broader impact of the pandemic on Constellation Brands, the company raised its full-year guidance for fiscal 2021, indicating that it was able to weather the crisis relatively well. However, the stock price of Constellation Brands did take a hit during the initial months of the pandemic, along with the rest of the stock market.

When considering investing in Constellation Brands, it is also worth looking at the competitive landscape and the company's position within the market. Constellation Brands faces competition from other brewers, particularly in the hard seltzer category. Additionally, as a producer of alcoholic beverages, Constellation Brands is subject to regulatory and tax environments that can impact its business.

In summary, investing in Corona beer stock involves purchasing shares of Constellation Brands in the US or AB InBev in other worldwide markets. When making an investment decision, it is important to consider the company's financial performance, the impact of external factors such as the pandemic, and the competitive landscape within the alcoholic beverage industry.

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