What happened

Shares of alcoholic beverage giant Constellation Brands (NYSE:STZ) rose 25% through the first half of 2017, according to data provided by S&P Global Market Intelligence.

STZ Chart

Data through the first six months of the year. STZ data by YCharts.

The stock has been a solid winner for long-term investors, up by over 500% in the last five years compared to a 78% rise in the broader market.

So what

Constellation Brands' 2017 rally can be traced to its market-thumping sales growth and fast-expanding profit margins. The company in early April beat management's fourth-quarter forecast thanks to a 10% spike in beer volume. The premium positioning of its portfolio, anchored by the Corona import, also allowed the beverage maker to raise prices, leading to a sharp boost in profitability. "Our beer business continues to be a powerhouse for growth," CEO Rob Sands told investors at the time.

Beer in a pint glass.

Image source: Getty Images.

Constellation Brands followed that performance up with a strong start to fiscal 2018. In late June it posted another double-digit improvement in earnings, with booming beer sales making up for soft demand on the wine side of the business to push revenue higher and help operating margin jump by 5 percentage points to 35% of sales.

Now what

Sands and his executive team believe they'll snatch significant market share in the industry this year to power healthy growth in both revenue and profits. As for the longer term, Constellation Brands is dramatically expanding its Mexican brewery network. That spending will pinch free cash flow this year, but should tail off beginning in fiscal 2019.

At that point, the company will have more than doubled its beer capacity since 2015 and the business should be generating over $2 billion in annual free cash flow.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.