Constellation Brands is about to release earnings. Ponder this Bear Case Caveat:
Consumers have demonstrated little brand loyalty in the wine category. Moreover, consumers’ inclination to try new types and brands of wine within their preferred category and price range makes it difficult for wine makers to maintain pricing power. Condense that into saying Constellation wines do not hold the interest of wine drinkers unless they are priced competitively. (Cheap)
Svedka vodka and Black Velvet Canadian whiskey lack the premium price point and scale of many of its competitors. Brands are just surviving but not really thriving.
Constellation is highly leveraged. Although the business generates solid cash flows, a disruption in operations will affect ability to service debt.
George Gutowski writes from a caveat emptor perspective.