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The new ceo roadshow is officially underway for Constellation's Nicholas Fink. In just his 2nd day in role, Nick met with a slew of sell-side analysts in NY yesterday alongside cfo Garth Hankinson for a roundtable discussion that furthered several key themes from co's investor call last wk. In addition to a strong sense of strategic continuity (not surprising given his 5 yrs on STZ's board), Nick offered his thoughts on topics spanning marketing to M&A. "Great Businesses Get to Invest When Times are Hard" "No Step Change in Strategy with New CEO, but Sharpening Focus," headlined Wells Fargo's Chris Carey, whose report was chock-full of quotes from Constellation's new chief. "Great businesses get to invest when times are hard," Nick said, and this year STZ is looking to "supercharge momentum" with elevated marketing spend at 9.5% of net sales. While mgmt reiterated it can always reduce spend if ROI isn't there, Nick noted that over the past few years "we weren&#39;t doing less&mdash;we were just being more efficient.""The Growth Drivers are the Growth Drivers" but "We Must Address Corona" There's "a lot of room to run with the brands we have," in Nick's view. And the "growth drivers are the growth drivers," he said, pointing to distribution/awareness oppys for Modelo Especial while keeping the "foot on the gas, but not flooring it" with respect to Pacifico. However, "we must address Corona," Nick emphasized, making a point of getting that brand back on track. "He sees the brand as having immense latent brand equity" and sees "no reason that it should be declining," wrote JP Morgan's Drew Levine. "In his view, Corona Extra as a brand isn't tired/irrelevant, but may need improved activation support."Nick indicated that "Corona Extra is too large and important for STZ to accept declines, and that improving trends for the brand would be a top priority," Morgan Stanley's Dara Mohsenian recapped. Tho Dara and team "are skeptical given brand fragmentation in beer," figuring growth from the rest of STZ's portfolio "would likely come at least partially at the expense of Corona Extra." Still, while mgmt focused on long-term oppys for STZ&#39;s beer portfolio, "we came away with increased confidence that STZ&#39;s FY27 guidance is conservative."Acquisitions Possible, but Buyers Must Be Disciplined and Willing to Walk Away Nick was notably a deal man in his time with Fortune Brands, "where he was responsible for 12 acquisitions in 11 years," reminded Dara. But Nick "assured the sell-side that he views internal growth as the biggest priority for capital spending," wrote TD Cowen's Robert Moskow, taking that as a positive given STZ's "erratic" M&A track record. Robert also noted that the new ceo struck "a thoughtful tone about growth" and "segments the market in terms of drinking occasions rather than just product formats like non-alcoholic beer and RTD cocktails."While Constellation will continue to survey the M&A landscape, Nick "feels strongly that companies have to be disciplined buyers and willing to walk away from a deal," Chris recapped. That could be what happened with Long Drink, which ultimately sold to Mark Anthony. Nick "sees no glaring portfolio white spaces," according to Dara, suggesting he's in no rush to up co's RTD presence. But the RTD arms race is heating up and for now Constellation doesn't have a horse.Continuity Over Transformation an "Important" Message "Our net take is that investors should expect continuity rather than transformation," noted Needham's Gerald Pascarelli. But that's an "important message given the negative share reaction following his appointment, which we believe largely reflected uncertainty around leadership familiarity and perceived execution risk." In Gerald's view, the "clearest message from the meeting" was mgmt's focus on "sustaining momentum and unlocking incremental growth opportunities across the portfolio." Nick also "discussed plans to spend meaningful time with distributors, noting he has already engaged with the company&#39;s largest partner [Reyes] and expects additional field engagement ahead of Cinco de Mayo."

New CEO Reinforces Strategic Continuity for STZ; Corona Extra a Priority, M&A Not Necessarily

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