- By Ben Reynolds
Consumers are often willing to pay more for the
brands they know and trust, giving companies that have well-known
brands pricing power. Better pricing power often leads to better
financial performance, which in turn can lead to higher share
prices.
Companies in the alcohol sector with well-known
brands often offer attractive returns. One of our favorites among
alcohol stocks is Constellation Brands Inc. (STZ) because of its strong brands and dividend
growth.
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- announced on April 3 that it would be selling
approximately 30 brands from its wine and spirits portfolio to E.
& J. Gallo Winery. The deal will net the company $1.7 billion,
which it will use to pay down debt. The wine and spirits brands
being sold include Clos du Bois, Black Box and Mark West. These
brands are priced at $11 retail and under. This divestiture will
give Constellation Brands a cash infusion while allowing it to
focus on its premium wine and spirits brands.