Constellation Brands lowers earnings forecast amid decline in beer sales 

USA – Constellation Brands has revised its earnings outlook, projecting a decline in annual beer sales and profits, citing “volatile consumer purchasing behaviour” and wider economic pressures. 

The Modelo and Pacífico brewer cut its forecast for diluted net income per share and lowered sales and operating profit guidance for its beer division in its 2026 financial year, which ends in February. 

“We continue to navigate a challenging macroeconomic environment that has dampened consumer demand and led to more volatile consumer purchasing behaviour since our first quarter of fiscal 2026,” president and CEO Bill Newlands said. 

Earlier this year, the company noted that its beer sales had been affected by weaker Hispanic consumer sentiment in the United States.  

Despite signs of improvement, Newlands explained that the group faced a reduced appetite among Hispanic consumers for higher-priced beers, which are central to Constellation’s portfolio. 

“Over the last several months, high-end beer buy rates decelerated sequentially, as both trip frequency and spend per trip declined. Notably, high-end beer buy rate declines for Hispanic consumers were more pronounced than general market declines, which has an outsized impact on our beer business compared to the broader beer category,” he said. 

Despite these challenges, Constellation Brands reported it had grown its “volume share” in 49 of the 50 U.S. states. Citing Circana data, Newlands added the group’s beer division “remained the top dollar share gainer in the total U.S. beer category with a 0.4 point increase.” 

Even so, the company now expects its beer net sales to fall by 2-4% in fiscal 2026, down from a previous forecast of flat to 3% growth. Operating profit from the beer segment is projected to decline by 7-9%, compared to an earlier estimate of flat to 2% growth. 

Overall, Constellation Brands now anticipates diluted net income per share of US$10.77 to US$11.07, down from an earlier range of US$12.07 to US$12.37. Enterprise-wide organic net sales are forecast to drop 4-6%, against a prior estimate of between a 2% decline and a 1% increase. 

The company has been reshaping its portfolio through divestments, including selling Copper & Kings to Bourdon Spirits in August, Svedka Vodka to Sazerac in January, and a significant portion of its mainstream wine brands in June. 

Constellation Brands is also facing a lawsuit in the U.S. alleging the company misled investors about the growth potential of its wine and spirits portfolio.

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.