It has been less than two months since Constellation Brands (STZ) re-ignited the marijuana bull market with its $4 billion investment into Canopy Growth (CGC).
The massive investment proved the wider investment world that marijuana is both real and massive.
This week we got the latest on the details of this investment when Constellation reported earnings.
The key part of the call came from Rob Sands, Constellation’s CEO, when he said:
“This will be the largest investment to date in the cannabis space, a market which is expected to reach more than $200 billion in retail sales globally within the next 15 years, and one that is opening up much more rapidly than originally anticipated.”
There are two key takeaways there.
First is the size of the cannabis market -- $200 billion.
That’s bigger than many of today’s hottest tech industries.
Second is the “opening up much more rapidly than anticipated.”
Marijuana stocks have soared over the past few years and, if they’re going to go higher, the marijuana boom will have to be both bigger and faster than most expect right now.
So all that’s good news. Especially coming from a prominent, mainstream company.
But the Seed Investor would like to cite something most investors are missing in all this.
Here it is.
Whenever Constellation Brands is cited along with the marijuana industry, it’s leading brand -- Corona -- is brought up too to show people Constellation is a major North American company.
It makes sense too. The idea of a major beer company combining with a major marijuana company to eventually create marijuana-infused beer product is a good one.
However, when it comes to Constellation, Corona is just part of the story.
When it comes to building a product with a small footprint into a major brand, Constellation has proven it can do that in a big way.
Constellation is also the owner of Modelo Especial beer and the Modelo story is a much closer to the marijuana-infused beer story than Corona.
The problem with Corona is that it’s already a major beer brand. Last year it was #5 in the US. And it has been up there for a long time.
Modelo is a much different story and also shows Constellation’s real expertise in taking a small brand and building it into a major one.
Back in 2010 Modelo shipped 2.3 million barrels. That was enough to put it right about #18 in the national beer brands.
Since then Constellation has expanded Modelo brand to 7.2 million barrels, make it the fastest-growing major beer brand of the last decade, and put it at #7 in the beer charts.
Overall, that’s a 213% growth in one of the most competitive industries where huge multi-billion dollar ad campaigns and promotions are deployed by the industry leaders just to maintain market share.
With Modelo, Constellation has proven it can take something small and make it big and there aren’t many better to have helping bring legal marijuana products to the mainstream market than a company like Constellation.
In the end, any single success will benefit most marijuana companies.