Modelo seller Constellation Brands lowers sales forecast as US consumers buy less beer

Key Points

• Constellation Brands has lowered its full-year sales and profit outlook, citing a decline in beer purchases among Hispanic consumers, who represent about half of the company's business.
• The company predicts net sales of beer to decrease by 2% to 4% for its 2026 fiscal year, a significant shift from the earlier forecast of up to a 3% increase.
• Concerns over higher prices, immigration issues, and job market stability are contributing to decreased spending, particularly in categories like beer.
• Following the announcement, Constellation's shares dropped by more than 6% in morning trading on the day of the report.

Constellation Brands, which owns the Modelo and Corona beers in the U.S., lowered its full-year sales and profit outlook Tuesday, citing falling demand among Hispanic customers in particular.

Constellation President and CEO Bill Newlands said U.S. purchases of high-end beers have declined over the past few months. Consumers are making fewer trips to buy beer and are spending less per trip, Newlands said.

The trend is most pronounced among Hispanic consumers, Newlands said. The company said in a recent conference call with investors that Hispanic buyers account for about half of Constellation’s business.

So far this year, Modelo Especial is the top-selling beer brand by dollar sales at U.S. retail stores, according to NIQ data compiled by Bump Williams Consulting. Modelo overtook Bud Light in 2023 after Bud Light was criticized for sending a commemorative can to a transgender influencer.

Constellation has been licensed to sell Modelo and Corona in the U.S. since 2013 as part of an agreement with antitrust regulators after Bud Light parent AB InBev bought Mexico’s Grupo Modelo. Constellation also owns wine brands like Robert Mondavi and Kim Crawford, and spirits like Casa Noble tequila.

Constellation warned in April that Hispanic consumers were under pressure. At the time, Newlands said research indicated two-thirds of Hispanic buyers were concerned about higher prices on food and other essentials and half were concerned about immigration issues. Many were also worried about the job market, he said.

“That has tended to mean that the consumer has pulled back on spending on a number of categories,” Newlands said during a conference call with investors. “Beer is quite a ways down the list, but it’s certainly on the list because things like social gatherings, an area where the Hispanic consumer often consumes beer, are declining today as part of these overarching concerns that they have.”

Rochester, New York-based Constellation said Tuesday it now expects its net sales of beer to fall between 2% and 4% in its 2026 fiscal year, compared to its previous forecast of up to a 3% increase. Constellation’s fiscal year ends Feb. 28, 2006.

The company also expects adjusted earnings per share of $11.30 to $11.60 for the year, compared to its previous forecast of $12.60 to $12.90.

Constellation’s shares fell more than 6% in afternoon trading Tuesday.