TLDR: Greedy when others are fearful

Sticking to your convictions is hard: in investing and everywhere else.

You worry you’re drinking your Kool-Aid or looking at information with confirmation bias.

More investors are buying into the spirits and the alcohol sector every week through this newsletter, and I feel a responsiblity to steward that trust.

As close as I am to the industry, I should be one of the first to notice when the fundamentals have turned and it’s time to sell.

I like to believe I’ll gladly sound the horn and turn this newsletter into a discussion of additive-free tequila cocktail recipes.

I’m still sold out for the category and now I’ve got the Oracle of Omaha on my side.

Buffett Invests $1B into Constellation Brands

Constellation Brands (NYSE: STZ) is a portfolio of beer, wine, and spirits brands.

The anchor of their portfolio and the large majority of their sales comes from the beer brand Modelo, the #1 beer in America.

I wrote about it a few weeks ago, but Constellation recently divested it’s ownership in one of the largest Vodka brands in the world: Svedka.

I’m not on the Berkshire Investment committee, but I’ll speculate on what drove the move.

Greedy when others are fearful

There is plenty of fear in the market when it comes to alcohol.

Are newer generations not going to drink? Is alcohol a dying industry? Will tarrifs eliminate profitability?

The media is loud with voices about the impending death of the industry, and stock prices have taken a hit.

But I’ll trumpet it from the rooftops over and over: Data > Speculation.

Yes, white Californian Gen Z’s aren’t drinking warm Keystone in alleys like the olden days.

I would be ready to sound the alarm with you if it weren’t for a few minor, statistically insignificant demographics like, I don’t know…

Women - Drinking more than ever before…

Hispanic Americans - Fastest growing population and purchasing power in the US with a deep cultural connection to alcohol. Modelo didn’t get to #1 because Budweiser’s marketing team made the flop of the century (though it for sure accelerated it).

Math

When considering investments, I like to evaluate through an extremely nuanced and technical decision framework:

Buy Low and then…

Wait for it…

Sell High.

Buy Low: Constellation stock price has been beaten up by PR and alcohol’s first bad year in a few decades. Check.

Sell High: People are buying the product and the company is making lots of money. Check.

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Just kidding. I’m cool.