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Constellation Brands CEO says there's 'huge' untapped upside for his alcohol giant's top products

  • "Mad Money" host Jim Cramer sits down with Constellation Brands President and CEO Rob Sands to hear about the next leg of the alcohol producer's journey.
  • Sands says that there is "huge upside" in the company's best performing brands when it comes down to retail exposure.
  • The CEO also responds to Diageo's lofty $1 billion purchase of George Clooney's tequila brand.

It may not seem like Constellation Brands, the owner of Corona beer and Svedka vodka, could do much to meaningfully improve its already robust business, but CEO Rob Sands says there is even more to be done.

Between sips of the company's top-of-the-line wines and liquors, Sands and "Mad Money" host Jim Cramer discussed one tactic that could still boost Constellation's business: getting retailers to prioritize its products.

"We call that category management, where we go in and we give advice, objective advice, to retailers about how they should, for instance, set their shelves," Sands told Cramer on Tuesday. "And obviously, they should be allocating more shelf space to the higher-margin, faster-moving premium items. So, again, our portfolio — Corona, Modelo Especial, Pacifico — these are very high-margin beers, very fast-moving items, and they actually are under-allocated shelf space."

Constellation Brands' stock is up over 26 percent year to date thanks in part to its iconic beer brands and its growing liquor category.

Watch the full segment here:

"We've had dramatic success with Corona, Modelo Especial has now become the No. 2 import in the United States, and Pacifico is coming up right behind it. It's going to be a fantastic, fantastic growth driver," Sands said. "The demographics are in our favor, so it's all great."

But the next step is getting retailers to recognize that, the CEO said. While giant alcohol producers like Constellation do sell some of their higher-end products directly to consumers, retailers like liquor stores and alcohol distributors conduct most of the sales.

"It is the next leg, which really goes to the fact that there's huge upside, even in this portfolio, because as we are able to expand shelf space, we get more pack sizes in there," Sands told Cramer. "As retailers start realizing that they're over-allocated to low-margin, low-growth brands and they need to allocate more space to higher-margin, their go-to is going to be the Constellation portfolio. Period."

The shelving shuffle would give even more exposure to Constellation's red-hot Corona and Modelo Especial brands, a clear boon to the company's already stellar bottom line.

When it comes to consumer loyalty, however, Sands could not quite define what makes customers favor his company's beers above others.

"How does a beer get hot? First of all, if anybody had the answer to that, we probably wouldn't be sitting here even having this chat," he told Cramer. "But it's really about consumers voting with their feet, OK? It's the consumer who makes any product, really in any industry, but in particular beer. It's what makes a beer hot. It's consumers. They like the product, it's an image thing, it makes them feel good when they drink it, it fits their image of themselves when they hold it in their hand. It's a whole variety of things that are really hard to capture."

Beer aside, Constellation Brands is expanding its liquor and wine portfolio as well, adding bourbon brand High West, high-end tequila Casa Noble and Ruffino wine to its mix.

Enjoying a taste of Casa Noble's $1,500-a-bottle Alta Belleza tequila, Sands mused on Constellation's rival, Diageo, purchasing George Clooney's Casamigos tequila brand for $1 billion.

"I thought it was a big price," he told Cramer. "And Casamigos is a hot brand and, you know, it's got Clooney and Rande Gerber and Mike Meldman behind it, so they're good guys. Hey, we wish them all the luck in the world. There's enough room for everybody in this particular category."

But the message was clear: when it comes to the rest of the categories in alcohol, keep a close eye on Constellation Brands.

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