Donald Trump won’t be inaugurated until January, but news of his presidential election victory has already shaken up the Mexican beer industry with the New York businessman's proposal to build a southern border wall looming closer.
Shares of Constellation Brands, Corona’s parent company, dropped eight percent on Wednesday as analysts touted concerns that a Trump presidency could hurt America’s largest Mexican beer distributor. Trump has also suggested imposing higher taxes on imported products.
According to Fortune, however, Constellation doesn’t seem to be too concerned about the short term drop because it’s unlikely Trump’s policies will go into effect immediately. But Constellation's CEO Rob Sands told shareholders that they’re keeping an eye on the changing environment and policy proposals to "respond accordingly and engage with government accordingly.”
Added the CEO, “We’ve had a long history of working with our representatives from all levels of the U.S. government from both political parties. As Trump develops his plans, we will continue to engage with them.”
Constellation’s bestseller in the U.S. is Corona but it also owns major brands like Pacifico and Negro Modelo. Its massive Mexican beer-manufacturing operation is currently the undergoing a nearl $4.5 billion expansion, too.
On Thursday, Sands also announced a potentially lucrative new arm of Constellation as marijuana was legalized in several states—including California, Maine, Massachusetts and Nevada-- on Tuesday.
Sands told Bloomberg that the company is exploring weed-infused beverages noting, “There are going to be alcoholic beverages that will also contain cannabis.” The CEO says the company sees legalization as an important business opportunity. In the U.S., the marijuana industry is expected to grow from $6 billion in 2015 to $50 billion by 2026, according to data from financial services group Cowen & Co. But marijuana is still illegal under federal law so the company faces an uphill battle.
On the campaign trail, Trump touted a dramatic revision of U.S. trade policies and, if implemented, hey will likely have significant consequences for the food industry. Tariffs would increase the cost of importing to the U.S. and the U.S.-produced barley upon which many breweries depend could wind up costing a lot more.
According to NPR, Moody’s Analytics predict that tariffs would hurt a variety of U.S. industries, with a particular emphasis felt by the automobile, oil and technology industries. Those industries significantly rely on international supply chains. But, Moody’s said, “it would be positive for industries facing severe import competition such as steel and manufacturing subsectors.”