Bill Newlands on the ‘bold moves’ of Constellation Brands

29th January, 2018 by Amy Hopkins

Constellation Brands’ acquisition of a minority stake in cannabis producer Canopy Growth Corporation is consistent with the group’s “history of identifying early-stage consumer trends and taking action”, COO Bill Newlands says.

Bill Newlands is the chief operating officer for Constellation Brands

*This interview was first published in the December 2017 issue of The Spirits Business magazine

As a wave of cannabis legalisation has gathered pace across the globe in recent years, so too has the debate over whether the drug can complement or obstruct the growth of the alcohol industry. The discussion was cranked up a notch last year when a number of US states legalised the recreational use of cannabis – including California, the country’s largest territory by population.

When Spiros Malandrakis, senior alcoholic drinks analyst at market-intelligence publisher Euromonitor, predicted that cannabis-based beverages would become the “biggest disruptor that ever was” in the US drinks market, there were surely a few raised eyebrows at what may have been seen as hyperbole.

However, one of the world’s biggest alcoholic drinks groups recently added significant clout to the statement when it made a jaw-dropping investment. At the end of October, New York-headquartered Constellation Brands, maker of Svedka vodka and Casa Noble Tequila, spent CA$245 million (US$191m) on acquiring a 9.9% stake in Canada-based Canopy Growth Corporation, the world’s largest provider of medicinal-cannabis products, with a market cap of US$1.55bn. The deal, which gives Constellation the opportunity to purchase additional ownership in the future, is set to be completed in the third quarter of the group’s fiscal 2018 period.

Both companies will “exchange knowledge and expertise” to make cannabis-based drinks, which Constellation has indicated will most likely be non-alcoholic. However, no products will be launched in the US until they are legal at a federal level. According to Canopy Growth’s chairman and CEO, Bruce Linton, 2018 “will see unprecedented growth in medical and adult-use opportunities” for cannabis. Under the partnership, Canopy will exercise its expertise on cannabis regulation, while Constellation will concentrate on new-product development.

Appropriate move

The move was not a knee-jerk reaction to a fleeting trend – Constellation had its “eye on the [cannabis] market for quite some time”, says the company’s chief operating officer, Bill Newlands. “Given the consumer trends that are evolving, and the relaxation of governmental restrictions in many jurisdictions, Canada being one of them, we felt it was an appropriate time to take a step in that direction.”

Speaking to me shortly after the acquisition was announced, Newlands notes that “the weighting of the overall tenor of what’s happening is toward legalisation and additional usage” in the US. Indeed, 30 states have legalised medicinal cannabis use, and of those, eight have legalised recreational use.

The deal may have shocked some in the industry – and inevitably solidified the growing importance of the cannabis-based drinks trend – but, for Newlands, it was indicative of the way Constellation has done business from day one. “If you look at the history of our company, one of the hallmarks of our success has been identifying early-stage consumer trends and taking action,” he says. “That is really what this move is about – it’s consistent with who we have always been and how we operate. And it puts us in a position if and when this trend emerges to be able to take a leadership position with a very well-established and well-respected partner to help us learn.”

Newlands joined Constellation in January 2015 from Beam, where he served as president of North America. He was Constellation’s chief growth officer and later took on additional responsibility as president of the group’s wine and spirits division, before stepping into the COO role at the start of 2017. In just three years, he has played a central role in the continued evolution of the company.

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