Constellation chief to step down in March, COO to assume top post
- Constellation Brands said Bill Newlands will become the company's chief executive officer on March 1, 2019. He will succeed current CEO Rob Sands.
- Newlands had other executive roles in the alcohol industry before joining Constellation. He held positions at what is now Beam Suntory, LVMH Moët Hennessy Louis Vuitton and wine.com, according to The Wall Street Journal. Newlands has worked his way up through the executive ranks since joining Constellation three years ago. In 2017, he became the company’s chief operating officer. He assumed the role of president earlier this year.
- “Since joining Constellation Brands in 2015, Bill has made a significant impact on our company, finding ways to leverage our unique capabilities as a leading total beverage alcohol provider to meet consumers’ evolving needs and accelerate growth,” Sands said in a statement. “Bill understands what it takes to succeed in this rapidly evolving market and he’s the right person to lead our company going forward.”
Constellation's executive change comes as the alcoholic beverage company makes a bet on the marijuana business following its $4 billion investment in Canopy Growth in August. While large companies such as AB InBev and MillerCoors have struggled amid growing competition from craft brewers and rising demand for wine and spirits, Constellation, best known for its Corona and Modelo Especial beers, has benefited from its dominant position in Mexican beers that remain immensely popular with consumers.
Constellation, which controls 90% of the premium beer market, posted robust volume growth of 8.9% in 2017, its fourth straight year leading the industry. At the same time, total beer shipments declined 1.3% in 2017, led by sharp drops among flagship products including Budweiser (-6.8%), Coors Light (-4.1%), Miller Lite (-2.8%) and the most popular U.S. brand, Bud Light (-5.7%).
“If you look at the marketing job that Constellation has done, it has really been phenomenal in terms of differentiating their brands and getting people to buy those particular beers that tend to be lagers," Robert Ottenstein, senior managing director at Evercore ISI, said in April at the Beverage Forum in Chicago. "This is really great marketing, and I don’t think we should sell short marketing with these companies.”
Similar to its winning bet on Mexican beers, Constellation is hoping for similar success in marijuana as more U.S. states legalize it. Canada on Wednesday legalized the use of recrational marijuana.
While Sands is stepping down as CEO, he's not going away entirely. Sands told The Wall Street Journal that he will stay on as executive chair, focusing on the recent investment in Canopy Growth. That could be a smart move. Even though alcohol and cannabis are often mentioned in the same breath, beer is much more established than marijuana so having Sands focus more of his attention on this segment could take some of the burden off the new CEO.
In picking Newlands, Constellation is tapping an insider who knows the company well, likely has the same long-term thinking as Sands and brings extensive experience in the alcohol space. Sands and Newlands told The Wall Street Journal Constellation will continue making forward-thinking bets like it has in beer and cannabis.
"While the timing of the announcement was a bit earlier than we expected, the decision for CEO Rob Sands to step aside and hand over the reins to Bill Newlands wasn’t a surprise to us," Bonnie Herzog, a managing director with Wells Fargo Securities, said in a note to clients. "We believe Newlands is a highly capable and highly regarded executive who has been 'groomed' over a long period of time as part of STZ’s succession plan. As such, we anticipate a seamless transition and don’t expect significant change in the company’s strategy with Newlands at the helm."
For now, Constellation remains ideally positioned to weather the changes taking place throughout the alcohol space. Earlier this month, Constellation raised its profit forecast and beat estimates for second-quarter earnings as net sales increased 10% compared to a year ago. With Newlands picked as the successor, it's unlikely that the party will come to an end at Constellation anytime soon — whether it's with a beer or marijuana.
- Constellation Brands Constellation Brands Names Bill Newlands Next CEO
- The Wall Street Journal Constellation CEO Rob Sands to Step Down From Corona Brewer
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