What’s a Better Omen for Beer Sales Than Constellation Brands’ Earnings? The World Cup

Scotland soccer fans may have drunk Boston dry recently, but beer enthusiasts in general don’t seem to have regained their old buzz. 

At least, that’s what Constellation Brands’ latest earnings would lead you to believe. The alcohol giant, which is the US importer of the popular Modelo and Corona beers, reported net sales of $2.43 billion in its fiscal first quarter, below the $2.52 billion from a year earlier (but higher than the $2.39 billion analysts had expected). However, its profit was $653.8 million, up from $516.1 million a year earlier. 

Is a Comeback Brewing? 

Constellation Brands’ results offer insight not only into the US beer industry at large but, more specifically, premium imported beer. Its Mexican beer portfolio accounts for most of its revenue. While Constellation experienced weaker demand last year from its Hispanic customers, those figures started to rebound in the fiscal fourth quarter, the company said in April. 

But its business model means that sales aren’t all that matters. Aluminum prices recently hit a four-year high amid the war in the Middle East, causing headaches for manufacturers of cars, building materials and, of course, beer. Investors and analysts will likely be listening for any comments from company leaders during this morning’s post-earnings call on margins and whether the popularity of brands like Modelo will be able to offset pressures. 

The alcohol industry could use some good news. It’s been a bad few years for bars as demand for alcohol took a dive (pun intended). Last year, a Gallup survey found that the percentage of adults who say they consume alcohol hit an all-time low of 54% amid health concerns, higher costs of living and a generational shift that has younger generations less interested in drinking. 

But when it’s time to celebrate (or commiserate), people still make it to the bar. The World Cup proves that: 

• As of the week ending June 20, which includes the first 21 US-hosted matches, on-premise beer sales are up 5.5% nationally as people gather, according to data the Beer Institute shared with The Daily Upside. (The dataset captures 88.1% of total US beer industry volume.) 
• On-premise beer sales specifically in World Cup host markets have climbed 15.4% year-over-year. 

Gas or Beer? Constellation CEO Nicholas Fink and CFO Garth Hankinson suggested that the sharp surge in gas prices could be keeping Americans from the beer aisle. “While we saw a resurgence of purchasing behavior amidst a more normalized start to the quarter, these financial pressures then drove a more discerning and value-conscious consumer mindset, most notably within lower-income households, contributing to a deceleration in retail food and beverage volume trends as the quarter progressed,” they said.