Constellation Buys Corona

 

After closing a $5.3 billion dollar deal with Anheuser-Busch InBev, Constellation Brands (NYSE:STZ) is going to become the third largest beer supplier in the United States.

Constellation is purchasing the rights to Corona, which is the country’s biggest import as well as the Mexican brewery that produced Corona and some other brands, but being a larger beer company is not necessarily good.

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People are drinking less Coronas and becoming more interested in microbrews from all around the country. Craft beers are taking off as their sales rose 15 percent in past year although the industry grew by less than one percent, says the Brewers Association. In fact, craft beers now control 6.5 percent of the U.S. beer market by volume and 10 percent by revenue.

Additionally, a new law about to be passed in South Carolina is going to benefit small brewers. The law would allow these breweries to sell up to three pints per customer. In many states, small brewers are restricted to giving out tastings, so this could be a huge boost to the brewers in this state. Kentucky passed a similar law recently, so it will make a major impact if other states follow their lead.

These and similar laws being passed is one reason why the number of small breweries in the country is approaching three thousand. South Carolina is one state that surprisingly has become a microbrew mecca for many with Holy City Brewing, Westbrook Brewing, and many other options.

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Microbreweries are still facing a challenge though in getting their craft beers to stores. An excellent distribution structure is one of the few things that large companies, such as Molson Coors Brewing (NYSE:TAP), SAB Miller, and AB InBev have on their side. Due to regulation, many third parties are unwilling to deal with smaller breweries, but that may be changing. Distribution legislation will have a huge impact on these companies.

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