Constellation Brands Inc.

The company has also faced some temporary supply chain disruptions because of the pandemic, including reduced manufacturing capacity at its Mexican breweries from April to May after the Mexican government deemed alcoholic beverages nonessential in early April. However, its breweries returned to full capacity by June and we expect its capacity utilization to normalize in the second half of fiscal year 2021. Therefore, we do not believe the disruption will materially weaken Constellation's performance on a full-year basis. We also believe the company will reduce its promotional and marketing expenditure (based on the delay/cancellation of most sporting and sponsored events) and travel and other general administrative expenses, which will help offset some of its increased operational costs, such as higher

...Constellation's overall portfolio is fairly well insulated from the coronavirus pandemic despite the temporary supply chain disruptions it is experiencing, which we expect to slowly rebound in the second half of fiscal year 2021. The company's portfolio is relatively well positioned given its strong beer brands, such as Modelo, Corona, and Corona Extra, and power brands that continue to sell well in the retail channel. Constellation derives the majority of its sales from the U.S., where the on-premise channel (primarily bars and restaurants) accounts for a relatively lower percentage of sales than in other geographies. Therefore, the company's on-premise business accounts for less than 15% of its sales. Although Constellation's very high off-premise sales volume at the onset of the pandemic will likely decline, its beer portfolio is well positioned in the premium import category. In addition, its beer brands resonate with the younger and Hispanic demographics that are more likely to consume...

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