Constellation Eyes Diverse Drinkers with La Fête du Rosé Investment

Constellation Brand (STZ) has bought a minority stake in La Fête du Rosé through its venture capital group. With the investment, the alcohol beverage company expands its footprint to cater to diverse drinkers with common interests.

Founded in 2019, La Fête du Rosé has carved a niche for itself as an exceptional liquid and brand. To date, it has donated part of its proceeds to various programs, primarily targeting the under-represented youth and organizations focused on ensuring racial justice.

Additionally, the investment affirms Constellation Brand’s push to focus on minority groups as part of the Minority Founders initiative. The company plans to invest as much as $100 million as part of the initiative that targets minority-owned businesses by 2030.

“Minority-owned businesses are under-represented in our industry and there is a real need to make it more equitable for those businesses to receive access to capital. This initiative enables us to play a role in creating greater equity within our industry and provides an opportunity for us to work with bold leaders and brands with unique value propositions that align with our premiumization strategy,” said Constellation’s CEO and President, Bill Newlands.

Constellation Brands has been on an investment spree. Early this year, it invested $10 million in the Clear Vision Impact Fund. The investment was part of the company’s push to support minority-owned businesses. (See Constellation Brands stock analysis on TipRanks).

Last month, Credit Suisse analyst Kaumil Gajrawala reiterated a Buy rating on the stock buoyed by the company’s transition away from a two-branded house.

“Capacity is unlikely an issue in the near-term to support HSD growth. We estimate capacity utilization rates touching ~90% by end of FY22 should decline to ~75% by the end of FY25 providing ample capacity breathing room,” said Gajrawala.

The analyst has a $260 price target on the stock implying 9.8% upside potential to current levels.

Consensus among analysts on Wall Street is a Strong Buy based on 8 Buy and 3 Hold ratings. The average analyst price target of $260.56 implies 10% upside potential to current levels.

STZ scores a 6 out of 10 on TipRanks’ Smart Score rating system, implying its performance is likely to align with market expectations.