investors cheered after constellation brands inc. acquired the u.s. rights to anheuser-busch inbev nv<u+2019><u+2019>s fast-growing mexican beers in a $5 billion-plus deal in 2013. on wednesday? not so much. shares in victor, n.y.-based constellation were 8.3% lower at $152.76 in early afternoon trade on concern a donald trump presidency could hurt the largest u.s. distributor of mexican beer, including corona, the country<u+2019>s top-selling import. in addition to selling mexican brands, constellation also owns beer manufacturing in mexico and is in the midst of a $4 billion-plus expansion push south of the border. on oct. 31, it announced it would pay $600 million to acquire another brewery in mexico to meet rising u.s. demand. all of that leaves it vulnerable to a potential tightening of cross-border trade. mr. trump threatened during the presidential campaign to leave the north american free trade agreement, which connects canada, the u.s. and mexico, if mexico doesn<u+2019>t agree to renegotiate the pact. constellation booked $6.55 billion in revenue for the fiscal year ended feb. 29, 2016. of that, $3.62 billion came from beer, almost all of it from mexico. the company also sells wine and liquor and has a stock market capitalization of about $31 billion. mr. trump also vowed during his campaign to build a wall along the mexican border and deport millions of undocumented mexicans from the u.s., which could further crimp constellation sales. roughly a third of corona drinkers are hispanic, estimates vivien azer, a beverage analyst at cowen and co. modelo especial, the company<u+2019>s fast-growing no. 2 mexican import, skews about 60% hispanic, she estimates. constellation chief executive rob sands said at an investor conference wednesday in new york it is <u+201c>way too early<u+201d> to know how a trump administration will affect mexican trade and immigration. he added mr. trump<u+2019>s election won<u+2019>t affect constellation in the short term but republican control of congress and the white house should be <u+201c>good for business in general<u+201d> and for the company in areas such as taxation and repatriation of profits. some analysts said wednesday<u+2019>s selloff is overdone and that trump the president could have different policies than trump the candidate when it comes to trade. <u+201c>nafta is not going to get renegotiated in three quarters,<u+201d> said nik modi, a beverage analyst at rbc capital markets. he has a <u+201c>buy<u+201d> recommendation and $183 price target on the stock. mark swartzberg, an analyst at stifel, wrote in a research note that mr. trump<u+2019>s focus has been on manufacturing moving to mexico from the u.s., not on beer that has always been brewed in mexico. <u+201c>moreover, a tax on beer is a tax on a staple among american voters, for a president vowing to cut corporate tax rates and strengthen the u.s. economy,<u+201d> wrote mr. swartzberg. he has a ``buy<u+2019><u+2019> rating on the stock with a $189 price target. still, bank of america slashed its recommendation on constellation shares to <u+201c>underperform<u+201d> from <u+201c>neutral<u+201d> and cut the price target to $150 from $195. despite wednesday<u+2019>s selloff, constellation<u+2019>s share price has risen 16% over the past 12 months, largely fueled by rapid sales growth in its mexican beer brands, which also include pacifico and victoria. u.s. imports of beer from mexico rose 15% to 531.9 million gallons in the first nine months of 2016, according to the beer institute, an umbrella group for u.s. brewers. mexico represented 67% of u.s. beer imports, which rose 7.4% overall. dutch brewer heineken nv is the second-largest seller of mexican brands in the u.s., including dos equis and tecate. but mexican beer represents a much smaller part of heineken<u+2019>s overall business than constellation. write to mike esterl at mike.esterl@wsj.com
mexico beer importer constellation<u+2019>s shares fall on donald trump trade concerns - wsj
mike esterl