Constellation Brands has received keen interest from black-owned startups entering the alcohol industry after the company announced its racial justice efforts this summer, CEO Bill Newlands told CNBC’s Jim Cramer on Thursday.
Constellation Brands, whose beer and alcohol portfolio includes Corona, Modelo and Svedka, pledged in late June to invest $ 100 million in black and other minority companies involved in alcoholic beverages this decade.
“It’s a sector that has not received the right amount of capital over time,” Newlands said in a Mad Money interview. “We think we can help change that.”
As part of the Focus on Minority Founders program, which runs through 2030, Constellation will provide entrepreneurs with expertise in sales, marketing, operations and finance.
Constellation Brands is one of a rolling list of companies who took action and spent billions of dollars on social justice issues highlighted in a summer of race reckoning. Netflix, Apple, Google’s YouTube, and SoftBank are just a few of the companies that have each donated $ 100 million to black businesses and causes.
Access to capital is one of the main reasons black entrepreneurs struggle to get their business off the ground, and impact investing offers one way to address the problem. However, it’s underutilized for color entrepreneurs, according to William Towns, an additional social impact lecturer at Northwestern University.
“How much does an entrepreneur with color cost from an impact investing perspective? It’s relatively small.” Cities said in a study.
According to Rate My Investor only 1% of entrepreneurs supported by venture capital between 2013 and 2017 were black.
In the past, black communities were denied access to government and financial resources, and the effects are still evident today in differences in housing, education, and pay, along with a long list of other problems. Black Americans not only contracted the coronavirus and died disproportionately from Covid-19. White Americans and other minority-owned businesses have also been hit by the economic crisis that accompanied the pandemic.
The number of black and brown owned companies decreased by 41% and 32%between February and April. In comparison, white companies fell 17%.
There were also differences in the distribution of rescue loans.
“We need to reflect the communities we serve,” Newlands said.
Newlands compared Constellation’s $ 100 million plan to invest in black companies to its $ 100 million commitment to women-owned companies in late 2018. More than half of the companies in Constellation’s risk portfolio are now women-owned or -owned companies led by women.
Although it didn’t provide details on potential companies, Newlands is considering a number of investment opportunities, according to Conlandsation, based in Victor, New York.
“We believe we can do the same for African American and minority companies in the future,” he said. “We are very excited about the opportunity.”