After months of avoiding a concrete answer on how tariffs could impact Constellation Brands’ Mexican beer import business, the company has now lowered its medium-term projections due to economic expectations.
Constellation announced its adjusted projections after the stock market closed Wednesday, along with the release of its Q4 and full-year 2025 financial results. The company is now projecting total enterprise net sales growth between 2% and 4% for FY27 through FY28, well below the company’s previous medium-term outlook of 6% to 7% net sales growth.
Similarly, medium-term beer net sales projections have been lowered from between +7% and +9%, to between +2% and +4%. Wine and spirits’ projections were adjusted slightly, from between +1% to and +3%, to between flat and +3%.
For FY26, the fiscal year Constellation is now operating in, the company is expecting enterprise net sales growth between -2% and +1%. Beer net sales are projected to be between flat and +3%, while wine and spirits net sales are expected to decline between 17% and 20%.
Constellation noted in a press release that the company’s outlook for FY26 through FY28 includes “the anticipated impact of tariffs announced by the U.S. government on April 2, 2025, and the Canadian government on March 4, 2025.”
Recall, President Trump announced several new tariffs on April 2, including a 25% tariff on imported beer and aluminum cans (put into effect April 4), and a minimum 10% tariff on imports from all countries except for Russia, Cuba, Belarus and North Korea, with even stiffer levies on some countries, such as China and the European Union. However, Trump announced Wednesday that he will pause all new tariffs for 90 days, except for tariffs on China, which have been increased to 125%.
Trump’s tariffs plans for Canada and Mexico are up in the air, after several delays and negotiations between the U.S. and the two countries. But all eyes have been on how Constellation would respond in the past few months, as the company’s beer portfolio is made up of major Mexican import brands, including Modelo, Corona, Pacifico and Victoria.
“Looking ahead, in a tough socioeconomic environment, we are taking decisive actions designed to continue to support our industry-leading beer business, reset our cost base and redefine our portfolio,” Constellation president and CEO Bill Newlands said in the release. “We remain focused on: driving distribution gains, disciplined innovation, and increased marketing investments in our beer business; enhancing efficiency across our enterprise; and repositioning our wine and spirits business to be entirely in higher growth, higher-end segments.”
For FY25, Constellation recorded a 2% year-over-year (YoY) increase in net sales, with a 1% increase recorded in Q4 (ending February 29). Net sales for the company’s beer business were flat in Q4 and increased 5% for the full year, while wine and spirits net sales increased 5% in the quarter and ended the year down 7%.
Beer shipments, or sales to wholesalers (-1.8%) and depletions, or sales to retailers (-1%) were both in the red in Q4, but maintained growth for the full year (+3.3% and +2.9%, respectively).
Beer operating income increased 10% YoY, to $3.094 billion, exceeding the higher end of the company’s full-year guidance, which was raised in Q3 from between +6% and +7%, to between +7% and +8%. Q4 operating income increased 7%, to $585.4 million.
Full-year depletions growth was driven largely by Constellation’s No. 1 beer brand Modelo Especial (FY25 depletions +5%), with growth also recorded by Pacifico (+20%) and Modelo Chelada (+2%), the company shared in the release. Corona Extra depletions declined 3%.
Constellation’s total beer business gained 1.1 share points of total off-premise beer dollars in FY25, making it the No. 1 dollar sales share gainer “across all of beverage-alcohol in Circana channels,” according to the release.
Figures were less sunny for Q4, with Modelo Especial (-1%), Corona Extra (-6%) and Modelo Chelada (-3%) each recording YoY depletions declines in the quarter, the company reported. Pacifico bucked the trend, recording 16% depletions growth.
Still, Constellation’s beer portfolio “outperformed the total U.S. beer category in both dollar and volume sales growth” for the quarter in Circana-tracked off-premise channels, and gained 0.5 share points of total beer dollar sales, according to the release.
Constellation plans to continue to invest in its beer business, announcing a $2 billion capital expenditures investment to be dished out between FY26 and FY28, which will be used to continue to expand and enhance Constellation’s production facilities in Mexico, including the development of a third brewery site in Veracruz. The company’s total capacity in Mexico is expected to reach 55 million hectoliters (nearly 46.9 million barrels) by FY28.
Meanwhile, Constellation’s wine and spirits business ended FY25 in the red, with full-year net sales declining 7% and shipments (-7.1%) and depletions (-9.3%) both down YoY. Full-year operating income declined 18%.
In a reverse trend to beer, Constellation’s wine and spirits division recorded a more positive Q4, with net sales increasing 5% and depletions growing 3.5%. Depletions declined 2.4% in the quarter, while operating income fell 10% YoY.
Note, Constellation’s wine and spirits financials include adjusted numbers for the volume it lost from Constellation’s divesture of Svedka. Constellation offloaded the vodka brand to Sazerac on January 6, in a deal announced in December.
Minutes before Wednesday’s earnings release, Constellation also announced the divestiture of several wine brands. The company has signed an agreement with The Wine Group to offload “primarily wine brands and related vineyards and facilities,” in an effort to transform Constellation’s wine business into a high-end portfolio.
The deal, which includes Woodbridge, Meiomi, Robert Mondavi Private Selection, Cook’s, SIMI and J. Rogét Sparkling Wine, is expected to close “immediately following the end of Constellation’s first quarter of its fiscal year 2026.” Financial details were not disclosed.
Constellation’s remaining wine portfolio will consist of wines “predominantly priced $15 and above,” including Napa Valley brands Robert Mondavi Winery, Schrader, Double Diamond, To Kalon Vineyard Company, Mount Veeder Winery, and The Prisoner Wine Company; My Favorite Neighbor; Kim Crawford from New Zealand; Ruffino Estates and Ruffino Prosecco and more.
“This transaction reflects our multi-year strategy to reconfigure our business, resulting in a portfolio of higher-end wine and craft spirits brands that are aligned to evolving consumer preferences and help bolster our competitive position,” Newlands said in a separate press release announcing the deal.
“Concentrating our wine and spirits portfolio in higher-growth segments remains an important element of our overall business strategy and complements our higher-end beer portfolio, aiming to ensure we continue to participate in more consumer occasions across beer, wine and spirits,” he continued.
Constellation’s restructuring of the wine and spirits division is not over. The company said it will be reviewing its organizational structure “to help ensure the company’s enterprise-wide structure, resources, and investments are aligned to help optimize the performance of the business and drive accelerated growth.” The review is expected to be completed within FY26 and result in an estimated $200 million in “net annualized cost savings” by FY28.
Note, Constellation’s aforementioned medium-term projections exclude “$613 million of net sales and $210 million of gross profit less marketing for the June 1, 2024, to February 28, 2025,” that will no longer be a part of its business due to the wine divestures. Similarly, projections do not include “$98 million of net sales and $35 million of gross profit less marketing for the March 1, 2024, to January 5, 2025,” that are no longer a part of the business due to the Svedka divesture.