Buffett’s Bet on Booze, Why He’s Doubling Down

Warren Buffett has never been one to chase fads. While he’s adapted over time, buying Apple and even dabbling in tech disruptors like Snowflake, his compass still points due value.

At its heart, value investing comes down to a deceptively simple idea, buy businesses trading below what they’re really worth. But pulling that off consistently? That’s a whole different story.

And one of his latest buys is turning heads—because it flies in the face of prevailing sentiment.

Key Points

• Berkshire invested over $1.2B in Constellation despite industry declining alcohol use and tariffs.

• Constellation has pricing power, and the stock trades at just 15x forward earnings with a 5.6% FCF yield.

• Non-alcoholic drinks and cannabis are increasingly larger pieces of the STZ pie.

Buffett’s Bold Bet on Booze

In Q4 of 2024, Buffett’s Berkshire opened a $1.2 billion position in Constellation Brands (NYSE: STZ). Then, in Q1 of 2025, they doubled down and boosted the stake by another 114%. That’s not a hedge. It’s a statement.

Why now? It’s down more than 11% in 2025 and has lagged the S&P 500 badly for some time. And the headwinds aren’t minor. Americans are drinking less, and Constellation’s bread and butter are being swapped out for cheaper alternatives.

To make matters worse, politics just turned up the pressure by slapping Mexican imports with tariffs, a big problem for Constellation, which produces most of its beer south of the border.

So… Why Is Buffett Buying?

For one, Constellation controls some of the best known beverage brands in the world. Modelo is now America’s best-selling beer, and Corona has worldwide appeal. That kind of brand equity is hard to replicate and it gives the company pricing power even in a soft consumer environment.

What’s more, Buffett has a history of betting on “boring” sectors others ignore. And his bets are paying off. He may see opportunity in booze because while tastes change, drinking isn’t going away.

In addition, Constellation has been quietly diversifying, holding a stake in Canadian cannabis company Canopy Growth, and it’s investing in non-alcoholic and functional beverages, like health-focused drinks and adaptogen-based tonics.

A Classic Buffett Setup

Despite its troubles, Constellation is still a cash machine with a dividend of 2%. Management is also planning to return as much as $8 billion to shareholders through buybacks and dividends from fiscal 2026 to 2028.

Plus, the stock trades at just 14.5x forward earnings, well below its historical average and cheaper than many slower-growing consumer staples stocks. To Buffett, that likely screams “margin of safety.”

What’s the Takeaway?

Constellation Brands is unloved, undervalued, and still oozing cash flow. Add to that iconic brands, pricing power, and a shareholder-friendly capital return strategy, and you’ve got the kind of setup that’s right out of the Berkshire playbook.