This Beer Company’s Down 23%... And Warren Buffett Just Dropped $1.24 Billion On It’s Recovery

For months, everyone and their stock-trading uncle has been screaming about Warren Buffett’s record-breaking cash pile. "What does he know that we don’t? Is a market crash coming? Should we all be stuffing our savings under the mattress and hoarding gold like Goldman Sachs?" Turns out, the Oracle of Omaha wasn’t sitting on his billions for fun. He was waiting for the right moment to drop $1.24 billion on a company that knows how to make money the old-fashioned way: by keeping America well-hydrated… with beer.

Buffett’s Berkshire Hathaway just revealed in its latest 13F filing that it scooped up 5.6 million shares of Constellation Brands… the company behind Corona, Modelo, and Pacifico. If you thought Buffett was all about cherry Cokes and McDonald’s, guess again.

We all know that Buffett doesn’t make impulsive trades. He’s the guy who sits on investments longer than most families spend in one house. So, what does he see in Constellation Brands? First off, Modelo has officially taken the crown as America’s best-selling beer after Bud Light’s… let’s call it a marketing disaster in 2023 (we all know what I’m talking about). Constellation owns the U.S. distribution rights to Modelo, meaning it’s cashing in big on this consumer shift, and given the continued momentum, that payday isn’t slowing down anytime soon.

(Source: New York Post)

Beyond that, Mexican beer is selling like hot cakes. While the broader beer market struggles with declining sales (because apparently, thanks to RFK, people want to be healthy now?), Mexican imports are swimming in money. Constellation controls the premium segment, and it’s not slowing down anytime soon. The Hispanic population in the U.S. is growing rapidly, and guess what they drink? Mexican beer. 

Demographics alone suggest Constellation will keep winning. And speaking of winning, the trend of "premiumization" is in full force… meaning people are willing to spend more for perceived quality. Modelo, Pacifico, and Corona all fit that bill for the best premium beer you can buy.

The only real problem I see on the horizon is (you guessed it) Trump’s tariffs. Trump has hinted at slapping tariffs on Mexican imports, which would be bad news for Constellation since 100% of its beer is brewed south of the border. Citi’s Filippo Falorni estimates tariffs could wipe out 28% of Constellation’s earnings per share. But Buffett’s $1.24 billion bet shows he isn’t losing sleep over short-term noise. 

Back in the 1980s, people thought Coke had hit its peak. The brand was everywhere, and skeptics worried that growth had nowhere to go. Worse, the infamous "New Coke" disaster in 1985 made everyone question whether the company even knew what it was doing.

But Buffett saw past the hysteria and recognized what really mattered: Coca-Cola had one of the world’s strongest brands, an addictive (literally) product, and an international expansion strategy that would keep sales flowing for decades. He loaded up on more than $1 billion worth of shares, and today, those shares are now worth $25 billion. If tariffs don’t materialize (or aren’t as brutal as feared), Constellation could be wildly undervalued at these levels.

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Stock.News has positions in Coca-Cola and McDonald’s.