Constellation Brands’ beer division posted uncharacteristic across-the-board declines for the first quarter of the company’s fiscal year, it announced yesterday.
For the three-month period ending May 31, Constellation’s beer portfolio (Modelo, Corona, Pacifico, Victoria) declined 3.3% in shipments (sales to wholesalers) and 2.6% in depletions (sales to retailers) compared to the same period in 2024. Net sales declined 2% year-over-year (YoY), to $2.234 billion, and operating income declined 5%, to $873.4 million.
“While we continued to face softer consumer demand largely driven by what we believe to be non-structural socioeconomic factors, our teams remain focused on executing the key initiatives that underpinned the outlook we recently provided for fiscals 2026 to 2028,” president and CEO Bill Newlands said in a press release.
Constellation’s sales have been a question mark for industry investors since earlier this year when the Trump administration ramped up immigration-related raids and arrests under U.S. Immigration and Customs Enforcement (ICE). As a result, Hispanic consumers – who account for at least half of Modelo Especial’s base – have curtailed shopping trips and socialization.
The fear of deportation looms large, as only 2.4% of the U.S. population are undocumented Hispanic immigrants, but 42% of all Hispanic residents “worry that they or someone close to them could be deported,” the Societe Generale Group at financial services firm Bernstein wrote in a report last month.
These concerns have translated to Hispanic consumers changing their shopping behavior, including 75% reporting dining out less, Newlands shared during Deutsche Bank’s dbAccess Global Consumer Conference last month.
Constellation’s Q1 depletions declines were driven by its largest brand, Modelo Especial (-4%), and its second-largest brand, Corona Extra (more than 7%). Flavor-forward Modelo offshoot brand Chelada recorded 3% declines.
Fast-growing Pacifico’s nearly 13% increase in depletions could not offset its much larger siblings’ losses.
Another headwind for the beer division was one fewer selling day in Q1 2026. Adjusted to control for that, depletions declined 1.2%, Constellation noted.
Nevertheless, Constellation was able to find some bright spots in the quarter.
“Our beer business was the No. 1 dollar share gainer and had six of the top 15 dollar share gaining brands in Circana channels across the entire U.S. beer category,” the company wrote. “Modelo Especial maintained its position as the No. 1 brand in dollar sales and continued to gain share, and within the brand family, Modelo Chelada Límon y Sal was a top 15 share gainer.”
In the 12-week period ending June 15, Constellation’s dollar sales declined 1.5% and volume, measured in case sales, dropped 3.5% at multi-outlet grocery, mass retail and convenience stores tracked by Circana. Those losses accelerated to -3.8% in dollars and -5.8% in volume in the last four weeks.
Constellation’s wine and spirits portfolio also recorded losses in all metrics, including shipments (-30.4%), depletions (-8.1%), net sales (-28%) and operating income (110%). Affecting the wine and spirits division’s performance is the divestment of Svedka vodka to Sazerac, which was announced in December 2024, and the sale of several lower-priced wine brands, which closed last month.
Looking ahead, Constellation projects net sales for its beer division to be flat to +3% and operating income growth to be flat to +2% for FY 2026. The company projects organic net sales declines of 17-20% and operating income loss of 97-100% for its wine and spirits division.
Newlands and CFO Garth Hankinson are scheduled to discuss the quarter’s results with investors and analysts on Wednesday morning.