Cramer’s remarks about Diageo PLC (NYSE:DEO) and Constellation Brands, Inc. (NYSE:STZ) marked somewhat of a shift in opinion compared to his statements in 2025. Last year, he was mostly bearish about the alcoholic beverage sector in particularly primarily due to shifting trends in the younger generation. However, in this appearance, while he maintained that Diageo PLC (NYSE:DEO) might find it difficult to grow, his shift on STZ was clear:
“They have fired so many people. The liquor business is a really interesting business. Because it turns out you just don’t do that, if you have good brands, you really don’t need as many people as you’d thought. But remember that company’s been hurt by the decline in both the clears and the browns. As we call them. That’s whisky, scotch, and also vodka and gin.
“I like growth, they don’t have it, Diageo doesn’t have, remember these are not growth vehicles. The one that I think is eventually going to have growth, will be Constellation. And that’s because, you have a very, very good new CEO there. Ned Fink. . .he comes from Jim Beam, and he did a great job at Jim Beam. And he’s back. And I think that he’s going to lead that company back out of the wilderness to good things.”
The weakness in Diageo PLC (NYSE:DEO)’s performance is, as Cramer has been saying for more than a year, partly attributed to generational drinking shifts. Data from IWSR shows that the total value of alcoholic and non-alocholic beverages market was $13 billion across 2024, out of which non-alcoholic products accounted for 72%. Additionally, some of the troubles are the firm’s own doing with volumes in Latin America and Carribean suffering from supply and inventory mismanagement. Yet, with the stock down by 52% over the past five years, all weakness might be priced in. However, Diageo PLC (NYSE:DEO)’s troubles in China, with sales falling 34.9% in fiscal 2026, $20.5 billion of net debt and North America net sales down 8.4%, the firm has to fire on multiple fronts to regain confidence.
On the other hand, Constellation Brands, Inc. (NYSE:STZ) grew beer sales by 2% to $2.28 billion in fiscal Q1 and beat analyst earnings expectations. Yet, at the same time, the firm’s beer depletion dropped by 0.3% in the same quarter, which could spell trouble in terms of demand. Additionally, the pressure on the beer business is high as it has to account for a 10% dip in wine and spirit sales, as well as an operating income plunge of 33%. Constellation Brands, Inc. (NYSE:STZ)’s wine and spirit shipments also dropped by 11% in the quarter. As a result, the new CEO has his work cut out for him.
Like Cramer, the hedge funds also appear to have more faith in Constellation Brands, Inc. (NYSE:STZ). During Q1 2026, 56 funds covered by Insider Monkey had held a stake in the firm, which was higher than the 35 for DEO. Yet, at the same time, 6.13% of Constellation Brands, Inc. (NYSE:STZ)’s float was short, while the figure was 0.71% for DEO. DEO is also valued slightly better through its forward P/E ratio of 14.41 (11.36 for STZ).
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Disclosure: None.
