Constellation Brands has now revealed the Q2 trends that drove the company to lower its full-year guidance last month, and the numbers stand in stark contrast to a year ago.
As reported yesterday, Constellation’s total enterprise Q2 fiscal year 2026 (FY26) net sales declined 15% year-over-year (YoY), to $2.48 billion.
Across its beer portfolio – including Mexican import brands Modelo, Corona, Pacific and Victoria – shipments (sales to wholesalers) declined 8.7%, while depletions (sales to retailers) were down 2.7%. Beer net sales fell 7%, to nearly $2.35 billion.
One year ago, Constellation was still growing, with beer shipments (+4.6%) and depletions (+2.4%) both in the black. Those trends marked a deceleration versus Q1 2025 (dollar sales +7.6%, volume +6.4%), which leadership credited at the time as a “purely near-term issue” as consumers curbed spending ahead of the presidential election.
However, macroeconomic headwinds have only accelerated since then, particularly affecting Hispanic consumers, who make up a predominant share of Constellation’s overall consumer base.
In a recent “omnibus survey,” Constellation found that 80% of overall consumers – Hispanic and non-Hispanic – had “concerns about the socioeconomic environment in the U.S.,” with more than 70% explicitly expressing concern about personal finances. That environment includes increased prices from inflation and tariffs, as well as immigration-related raids by U.S. Immigration and Customs Enforcement (ICE).
“These concerns continue to impact social occasions and shopping behaviors with respondents placing gatherings with friends and family in public spaces, gatherings with friends and family at homes, and shopping in convenience stores or gas stations in the top three activities they are doing less of during the quarter,” Constellation shared in remarks released Monday.
Despite these headwinds and the latest declines, Constellation leadership reiterated confidence in its beer brands during a call with investors and analysts Tuesday morning.
“We’re cautiously – and I would stress that word again, ‘cautiously’ – optimistic that we’ve hit the bottom here,” president and CEO Bill Newlands said. “But the volatility is unprecedented and the results are very mixed.”
Constellation’s top SKU, Modelo Especial, remains the No. 1 beer by dollar sales in Circana-tracked off-premise channels – a statement leadership reiterated several times, likely in response to recent headlines that Anheuser-Busch InBev’s Michelob Ultra is now the No. 1 beer by volume (case sales).
However, the once-growing brand remains in the red, with depletions down 4% in Q2. As is Corona Extra (-7%), which has a more mainstream consumer base than Modelo, suggesting direct impacts on Hispanic consumers are less of a factor with the former brand.
Evercore senior managing director and partner Robert Ottenstein questioned optimism around Corona during Tuesday’s call, highlighting that “Corona Extra is down more than [Molson Coors’] Coors Light and Miller Lite,” a trend that he has “never seen before.”
In Circana-tracked channels year-to-date (YTD) through September 7, Corona dollar sales (-6.2%) and volume (-7.9%) declines have outpaced Coors Light’s total losses (dollar sales -4.7%, volume -6.4%), and outpaced Miller Lite volume declines (dollar sales -6.5%, volume -7.4%).
Newlands acknowledged that Corona Extra “has been somewhat challenged recently,” but that “the broader family has done very well,” with growth from Corona Familiar, “one of the top share gainers in the category, and Corona Sunbrew, “the No. 1 new brand in dollars and the No. 4 share gainer overall in the category this year.”
“So Corona Extra continues to provide the kind of halo for us for the broader market that has been very valuable for the overall franchise of Corona,” Newlands said.
Meanwhile, sibling brand families Pacifico and Victoria each recorded double-digit depletions growth in the quarter (+14% and +19%, respectively).
Pacifico is the 15th largest beer brand family in Circana-tracked channels, with YTD growth (dollar sales +10.2%, volume +8.6%) outpacing every brand above it. Victoria does not crack the top 25 brand families list, but its flagship Victoria Lager is the 43rd largest brand, with growth (dollar sales +38.1%, volume +37.6%) well outpacing all other top 50 beer brands.
Newlands also highlighted the strength of its beer portfolio’s reputation with consumers, as the company hasn’t “flip flopped [its] positioning over time.”
“Many organizations have a tendency to flip flop their positioning every couple of years whenever there’s a change of brand management,” Newlands said. “Our approach has not been that. Our approach is to stay focused on what we feel are the strong essences of those brands, with some minor evolution as part of the marketing development.”
An example of that strategy, according to Newlands, is Corona Sunbrew, which leans into the “beach lifestyle and refreshment value” of the greater Corona brand family, but “in a new and exciting” way.
Through the first half (H1) of FY26, Constellation’s beer shipments have declined 6.2% compared to H1 FY25, while depletions are down 2.6%. Beer net sales are down 5%, to more than $4.8 billion, while gross profit has declined 6%, to nearly $2.58 billion.
For full-year 2026, Constellation expects total net sales to be down between 4% and 6%, factoring continued tariff impacts – estimated to be a $70 million on its beer business and $20 million on wine and spirits – and the loss of sales from the offloading of several wine & spirits brands earlier this year, and the sale of Svedka Vodka to Sazerac.
Constellation’s beer business is expected to record a full-year net sales loss of 2%-4%. Historically, the second half of the year contributes less volume to Constellation’s full-year trends, with H2 accounting for 44% of the company’s total shipments and 45% of its total depletions in FY25.
Depletion declines are expected to ease in the back half of the fiscal year, as the company had to “rebalance” inventories in Q2 after a softer than expected summer selling season. Newlands said inventory levels are now “at a good spot.”
Additionally, Constellation’s beer business will begin lapping softer comps in the back half of the year:
- Q3 FY25 net sales +3%, shipments +1.6%, depletions +3.2%;
- Q4 FY25 net sales flat, shipments -1.8%, depletions -1%;
- FY2025 net sales +5%, shipments +3.3%, volume +2.9%.
Constellation’s full-year guidance also includes a pricing uplift in-line with historical trends (+1% to +2%). Newlands highlighted that the company feels confident in its “price pack architecture” which it continues to implement despite recent declines, with pack sizes and prices now available for consumers wherever they shop “no matter how much you plan to spend.”
“Price pack architecture is something that we’ve said we’re going to spend a fair amount of time on,” Newlands said. “If we had known all the socioeconomic issues, would we have gotten that out sooner? I hope the answer would have been, ‘Yes.’ But the reality is this is a good long-term play for the business.
“We’re working aggressively on that in a number of fronts and with a number of brands, and that process is going to continue, because we think that it’s not only important now, but that it’s also important for the long run as well.”