Constellation Brands’ Star Dims as Inflation Chokes Consumers’ Beer Budgets

Shareholders were expecting to pour one out for Constellation Brands ahead of its second-quarter earnings report on Monday. Instead, they may have found enough reason to raise a glass.

That’s because the maker of Corona and Modelo managed to ever-so-slightly beat expectations amid a broader downturn in the alcohol market. Still, there are plenty of reasons to see the pint glass as half-empty.

Drinks? In This Economy?

2025 has delivered a triple-whammy for Constellation. While its imported beer itself is exempt from tariffs, the aluminum cans it’s delivered in have been slapped with a 50% import tax (which doesn’t apply to bottled beer). Meanwhile, broader economic uncertainty has sparked a pullback in discretionary consumer spending; Latino consumers in the US, who represent about half of Constellation’s consumer base, have pulled back amid widespread immigration raids. And Gen Z, as has been much fretted over, continues to be largely disinterested in happy hour anyway. In fact, just 54% of US adults said they consume alcohol in a Gallup poll released in August, marking the lowest level in the survey’s roughly 90-year history.

In other words, trouble is brewing for Constellation. Michelob Ultra overtook Modelo as America’s top-selling beer in the 52 weeks ending in mid-September, according to Circana data seen by Bloomberg. The company’s share price is down about 37% so far this year, and it fell 17% in September alone. During the same month, Constellation lowered its full-year guidance, while Barclays analysts downgraded the company’s stock, writing that they “struggle to think of a positive catalyst for US beer trends.” Ouch.

Monday’s results showed the downturn continuing, albeit slightly more slowly than expected:

• Net sales in the quarter totaled $2.48 billion — down from $2.92 billion a year ago, but still besting, slightly, the $2.46 billion that Wall Street analysts had expected. The company overall swung to a profit of $466 million.
• Still, beer sales were down 7% overall year-over-year. In addition to that, revenue in its wine and spirits category, which includes Kim Crawford wine and Casa Noble tequila, slid 19% year-over-year, following a 21% drop in the previous quarter.

Micro Burst: It’s not just the major beer brands. The craft beer boom of the 2010s is finally giving way to a mini-bust, according to an article published by The New York Times on Monday. According to the Brewers Association, more craft breweries have closed in the past 18 months than have opened. That hasn’t happened in over 20 years. Pour one out for the IPA-loving millennial in your life.