a family-controlled company that transformed itself from a boxed-wine seller to a beverage giant that brews Corona and has bet big on marijuana, is handing the reins to an outsider for the first time.
Rob Sands, the third in his family to lead the Victor, N.Y., company, will step aside as chief executive on March 1, entrusting Constellation’s future—and the success of its beer and cannabis wagers—to one of his lieutenants, Bill Newlands.
During Mr. Sands’s 11-year tenure as CEO, Constellation’s total shareholder return surged 967% compared with a 141% return for the S&P 500 index. The 60-year-old Mr. Sands will succeed his brother Richard as executive chairman. Richard Sands, himself a former Constellation CEO, will become executive vice chairman.
“It’s good to get some fresh thinking,” said Rob Sands, an attorney who started working at the company in 1986 at age 28 and became CEO in 2007. He said he would remain involved as executive chair, particularly in seeing through Constellation’s $4 billion investment in Canadian marijuana grower
Mr. Newlands, 59, is an alcohol-industry veteran who previously held executive roles at what is now Beam Suntory Inc.,
LVMH Moët Hennessy Louis Vuitton
and wine.com, where he was CEO. He joined Constellation in 2015 as chief growth officer. He was promoted to president earlier this year.
In an interview, Mr. Sands and Mr. Newlands said the company would continue its tradition of making big bets such as those that have taken it beyond wine and into beer and cannabis. “The biggest challenge we have as a company is fighting complacency,” Mr. Sands said.
Rob Sands’s father Marvin Sands in 1945 purchased Canandaigua Industries, a company with eight employees that sold bulk wine in barrels to East Coast bottlers. Canandaigua Wine Company Inc. went public in 1973 and was renamed Constellation in 2000.
In the 1990s, the family sought to increase scale by picking up the low-margin brands—such as Almaden and Inglenook jug wines—that larger alcohol companies were looking to shed. Then the family set its sights abroad, with deals to acquire low-margin wine and spirits brands in the U.K., Australia and elsewhere.
Rob Sands now believes the international expansion was a mistake. “We thought we were doing well, but it was kind of a raft of crap, to use the vernacular,” he said. “We sold a lot of it, but we were making 25 cents a bottle.”
When he took over as CEO, he set about selling off those brands in a push toward more premium products. Constellation had bought some high-end Napa wines such as Robert Mondavi in 2004.
But it was a $5.3 billion deal in 2013 to acquire from
the U.S. rights to distribute Corona and Modelo that changed the company’s trajectory. Constellation expanded from a market value of $6.3 billion in 2012 to $43 billion today.
The Mexican imports have been a bright spot in the U.S. beer market while other big brewers have struggled with sliding volumes as consumers trade American lagers for wine and spirits. Beer accounted for 61% of Constellation’s $7.6 billion in revenue last fiscal year.
Mr. Newlands, who lives in Winnetka, Ill., with his family and travels between the company’s operations in Chicago, New York and California, said he expects that in a decade cannabis will be “a big part of the portfolio” but there is still room for its alcohol business to grow. “It’s almost betting the company on some of these things,” he said. “That is one of the biggest appeals to me.”
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