Constellation Brands (STZ -1.41%) is a different business than it was just a decade ago. Its 2012 purchase of hit imported beer brands including Corona have helped it supercharge sales growth while adding over 10 percentage points to its bottom-line profitability.

The alcoholic beverage giant has been nearly as busy transforming its portfolio in recent years, by cutting many wine brands while making increasingly bold investments into the recreational marijuana niche.

So, where might this high-performing business end up by 2025? Let's peer into our crystal ball.

A group of young adults toasting with alcoholic beverages at a bar.

Image source: Getty Images.

More premium, less beer

It was clear even before Constellation announced a major divestment of its lower-tier wine brands that the company has committed itself to the premium side of the alcoholic beverage market. CEO Bill Newlands and his team like the fact that this niche is outgrowing the value brands that have held back growth at rivals like Anheuser-Busch InBev (BUD -2.31%) and Molson Coors (TAP -0.56%). That was a key factor behind its market-thumping 8% sales increase in fiscal 2020 compared to modest declines for each of these global giants.

The next few years should see Constellation move further into the premium categories, especially nontraditional drinks like hard seltzer. Boston Beer (SAM -2.30%) is currently dominating this space, but the latest Corona Seltzer launch has had a good start by reaching 6% market share in its first few months. Investors can expect that franchise to expand in the next few years even as Constellation makes more margin boosting moves like tweaking its packaging and delving deeper into convenience store channels. The way to judge success for these projects is by following the company's overall market share and its operating margin, which has recently set an industry high.

STZ Operating Margin (TTM) Chart

STZ Operating Margin (TTM) data by YCharts.

The pot question

There are huge questions around the timing of its growth and the overall size of the recreational pot industry. But there's no doubt that Constellation Brands will be a major player in this emerging industry by 2025.

Its Canopy Growth (CGC -9.80%) investment gives it access to a piece of an industry that management estimates will be over $250 billion by 2035, including a $100 billion addressable market of annual sales just in the United States. Executives like this deal for many reasons, including the pot giant's ample intellectual property in research areas like genetics and medical marijuana; its portfolio of popular cannabis brands in markets as varied as Canada, Brazil, and Australia; and its rights to sell CBD consumer products in the U.S.

By 2025, depending on how the regulatory landscape develops, it's not a stretch to say that Constellation Brands might be getting enough of a contribution from the Canopy Growth business to make it its third reportable operating line, right alongside the spirits and wine and the beer divisions.

In just a few years

The big financial question is whether these moves will help Constellation Brands return to the double-digit sales growth rates (plus rising margins) that investors enjoyed through 2019. Fiscal 2020 was a departure from that positive trend, and fiscal 2021's pandemic-influenced beginning suggests that this will be another building year for the consumer staples business.

Constellation is still outgrowing its value-based peers while making inroads in the niche that has made Boston Beer the fastest grower in the industry. Those assets, in addition to the promising marijuana bets management has made, suggest this would be a good stock to own to 2025 and beyond.