In the first quarter of 2025, Warren Buffett made headlines once again—this time with a bold move in the consumer staples sector.
Berkshire Hathaway has significantly increased its position in Constellation Brands, investing an additional USD 1.2 billion to acquire 6.4 million shares, as disclosed in the latest 13-F filing. This follows a prior investment of USD 1.4 billion made in late 2024, bringing Buffett’s total stake in the beverage conglomerate to USD 2.6 billion, or 6.6% ownership.
This decision arrives at a crucial moment: Buffett has officially announced that he will step down as chairman of Berkshire Hathaway by the end of 2025, with Greg Abel set to succeed him. Although it's still uncertain how autonomous Abel will be in steering Berkshire’s investment strategy, the recent moves illustrate a characteristically Buffett-like approach—selective, value-oriented, and long-term focused.
Buying the Dip, Not the Hype
Constellation Brands, parent company of iconic labels like Robert Mondavi wines, Corona beer, and High West whiskey, has experienced a near 15% decline in stock price year-to-date, and around 25% over the past 12 months. For Buffett, this downturn signals opportunity, not retreat. The stock’s underperformance contrasts with its strong fundamentals—a classic recipe for a value investor.
The company boasts a return on equity of approximately 30%, a price-to-earnings ratio of 15x, and stable operating margins, which align with Buffett’s historic preference for resilient and cash-generating businesses. The debt-to-equity ratio is within reason for an asset-heavy industry, and the company’s recent decision to refocus on its core alcoholic beverage brands—following a less successful foray into cannabis—has been viewed as a prudent capital reallocation.
Strategic Fit for a Conservative Portfolio
Despite ten consecutive quarters where Berkshire Hathaway has been a net seller, this purchase illustrates that the firm remains alert to selective, high-conviction plays. Constellation Brands fits neatly into Buffett’s established pattern: invest in industries with stable demand, target companies undervalued by the broader market, and rely on fundamental metrics over speculative sentiment.
Market analysts have reacted cautiously, with average price targets around USD 213.43, reflecting a 14% upside. But this lack of excitement is, paradoxically, part of the appeal. Buffett has often noted that mispriced, overlooked assets offer the best long-term returns—and that seems to be the case here.
Looking Ahead: Legacy and Philosophy
As the leadership mantle passes to Greg Abel, this move may also serve as a statement of continuity. The Constellation Brands investment reinforces a conservative and patient investment philosophy, one that values long-term potential over short-term speculation. It remains to be seen whether Abel will mirror Buffett’s instinctive caution or chart a more aggressive path, but this transaction suggests that the fundamental ethos of Berkshire Hathaway is intact.
In an era of rapid rotations, market hype, and AI-fueled volatility, Buffett’s stake in Constellation Brands is a bet on durability—of both the business and the investment principles that have made him a legend.
Source: Vinetur