Constellation Brands CEO Downplays Tariff Concerns in Potential Trump Presidency
In a recent interview with CNBC’s Jim Cramer, Constellation Brands CEO Bill Newlands dismissed concerns about the possibility of higher tariffs under a potential second Trump administration. Newlands expressed confidence that the company’s operations and growth would not be significantly affected by tariffs, pointing to the company’s success during Trump’s first term and emphasizing the unique nature of their Mexican beer production.
Newlands highlighted that Constellation Brands, which imports popular Mexican beer brands like Modelo, Corona, and Pacifico, has a resilient business model. He noted that the company sources many inputs from the U.S. before brewing the beer in Mexico, adding that any potential tariff policy would likely aim to avoid harming American farmers.
Resilience Amid Tariff Threats
When asked about the potential for tariffs as high as 20% on imported goods under a second Trump administration, Newlands brushed off concerns by referencing the company’s performance during the previous Trump presidency, which saw double-digit growth.
Newlands stated, “Assuming there was a Trump administration, we already had four years of a Trump administration, and our business was up double-digit during that window of time.” He went on to underscore the importance of maintaining the authenticity of their Mexican beer production, stating, “These are authentic Mexican beers. Guess what? You have to make them in Mexico.”
Relationship with Mexico and New Brewery Expansion
During the interview, Newlands also discussed Constellation Brands’ relationship with Mexico, particularly with the country’s new president, Claudia Sheinbaum, Mexico’s first female leader. He expressed optimism about their shared commitment to “shared prosperity” and highlighted that their relationship with both federal and local governments remains strong.
As part of their ongoing collaboration with Mexico, Constellation Brands is preparing to open a new brewery in Veracruz, further strengthening its production capacity. Newlands emphasized that the company’s strategic expansion in Mexico aligns well with its long-term business goals.
Wine and Spirits Strategy
While Constellation Brands saw success with its beer division in the latest quarter, Newlands acknowledged the challenges in the company’s wine and spirits segment, which has weighed down overall performance. However, he remains optimistic about the company’s improvement efforts in this area.
“We have readjusted a lot of our marketing spend,” Newlands explained. The company is making targeted investments in key brands like The Prisoner, Kim Crawford, and Meiomi and is beginning to see positive results. “We’ve seen those businesses start to turn,” he added.
Despite the earnings beat in the latest quarter, the company posted a slight revenue miss, with Newlands assuring investors that the focus remains on strengthening the wine and spirits segment to complement the success of the beer brands.
