USA: Constellation Brands slashes sales and earnings outlook for the coming years

The alcohol industry’s troubles continue as Constellation Brands slashed on April 9 its sales and earnings outlook for the coming years.

The distributor of beer brands such as Modelo Especial gave weaker-than-expected forecasts for fiscal 2026 and announced plans to sell some of its underperforming wine brands as it repositions its portfolio.

The stock tumbled more than 4% in after-hours trading after the report on April 9. Shares were down 0.4% in Thursday, April 10 trading, while the S&P 500 was down 3.9%.

For fiscal 2026, Constellation anticipates adjusted earnings of between $12.60 and $12.90 a share, well below the $13.78 a share it reported for fiscal 2025. The company cited the anticipated impact of the tariffs.

The company also cut the range of its projection for organic net sales, now seeing a fall of 2% to a gain of 1%. Earlier, it anticipated net sales to rise 2% to 4%.

The medium-term outlook isn’t much rosier. Constellation now projects sales to rise between 2% and 4% in fiscal 2027 and 2028, down from the prior expectation of 6% to 8% growth. Capital expenditures are now expected to fall 40% in fiscal 2027 from the previous year and 35% in fiscal 2028.

The weaker forecast came after Constellation posted a strong quarter. For the fiscal fourth-quarter ended in February, the company posted adjusted earnings of $2.63 a share, beating Wall Street’s expectation of $2.27, according to analysts polled by FactSet. Revenue was $2.16 billion, also higher than the $2.13 billion expected.

While both numbers came ahead of analyst expectations, investors have a lot to worry about. Constellation Brands imports beer brands such as Modelo and Corona from Mexico and distributes them in the U.S. Beer accounted for 78% of its revenue in the latest quarter.

Last week, the Trump administration slapped a 25% tariff on all imported canned beer. While the president has paused the so-called reciprocal tariffs on imports from dozens of countries except China, that doesn’t apply to duties targeting specific products, such as aluminum.

Mexico is also subject to a separate 25% tariff, with exemptions for goods that are already compliant with the U.S.-Mexico-Canada Agreement.

The tariffs could make Mexican beers more expensive in the U.S., forcing Constellation either to absorb the costs or raise prices, a move that could hurt sales because consumers are already squeezed by tight budgets amid inflation pressure.

Still, CEO Bill Newlands said on the earnings call that Constellation’s brand health remains strong and Hispanic consumers remain loyal.

The company’s wine and spirits segment has also been struggling with weak sales as consumers are increasingly lured by other recreational options like marijuana. In fiscal 2025, net wine and spirits sales tumbled 7% from a year ago.

Constellation said on April 9 it plans to sell from some of its low-end wine brands and focus on brands priced at $15 or above. The company already sold its Svedka vodka brand in December.

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