- Constellation Brands, the company behind brands like Corona beer, recently bought up a massive stake in the marijuana company Canopy Growth.
- Canopy Growth shares have climbed more than 285% since November, when Constellation first announced an investment into the company.
- In its first earnings report since the investment, Constellation said it has already seen more than $1 billion in unrealised gains, or nearly R15 billion in rand terms.
Constellation Brand's investment in the world's largest publicly traded marijuana companies is already paying off.
In its earnings report Thursday morning, the company behind Corona beer, Svedka vodka, and other alcoholic beverages said its two investments into Canopy Growth Corporation has already netted it more than $1 billion in unrealised gains thanks to the marijuana producers surging stock.
That is nearly R15 billion.
"Reported basis results reflect $639 million unrealized gain for an increase in fair value of the initial investment in Canopy Growth Corporation; $1.3 billion unrealized gain has been recognized since investment in November 2017," Constellation Brands said in its earnings release.
Canopy Growth shares have climbed more than 285% since November, when Constellation first announced an investment into the company. It followed up its initial stake with plans to invest $4 billion more by the end of the this month. When all is said and done, Constellation will own roughly 38% of Canopy Growth.
"Our $4 billion investment in Canopy Growth provides us with a strong foothold in the emerging global cannabis market, which could be one of the most significant growth opportunities of the next decade," Rob Sands, Constellation's chief executive, said in a press release.
See also: The US dagga industry grew insanely fast after decriminalisation — it now has more legal cannabis workers than dental hygienists
Bruce Linton, Canopy Growth's chief executive, explained to Business Insider in July why alcohol brands and cannabis companies were a perfect match.
"We believe people should have a choice in how they wish to improve or alter their socialization," he said.
"Why are you having a beverage on a Friday night? It's about a social lubricant. I think [Constellation] didn't view themselves as a beverage company so much as an entity that provides those occasions with some kind of lift if you will - and that's an easy way to look at cannabis, not as a threat, but as an alternative or additional."
Receive a single WhatsApp every morning with all our latest news: click here.
Also from Business Insider South Africa:
- There's a huge new update to Windows 10 that's going out — here are the 9 best new features and upgrades
- This is how far R100 in petrol will get you in some of SA’s most popular cars – the winner surprised us
- 14 things you say that will automatically ruin your chances in a job interview
- SA’s advertising authority files for liquidation – and promises an immediate replacement
- Buy a new car - government’s top tip to beat the fuel hike