Shares of Constellation Brands skidded as much as 11 percent Wednesday morning as the Corona brewer tries to offset its disappointing wine and spirits business with the latest craze: cannabis.
Global alcohol consumption has been dropping as consumers find other vices — like marijuana. As a way of moving beyond its wine business, Constellation has been pushing into the cannabis industry. The company, which is the third-largest beer company in the United States, closed a $4 billion investment in the Canadian marijuana company Canopy Growth in November. It is also looking to sell some of its U.S.-based wine brands in a deal that could be worth more than $3 billion.
President and COO Bill Newlands, who will succeed Bob Sands as CEO in March, has been overseeing the wine and spirits business as the company decides on a strategy to address its disappointing performance.
"We've have been challenged by the lower end of our [wine] business, which in totality has been flat or down," Newlands told analysts on the conference call. "We continue to be slightly overweighted in that sector of the business."
Its lower end wine brands include names like Mondavi, Ravenswood and Ruffino, which sell bottles for under $11.