Constellation Brands’ sales and volume declines accelerated in the company’s second quarter, according to its fiscal year 2026 Q2 earnings report.
The company’s beer division – which imports Modelo, Corona, Pacifico and Victoria from Mexico – posted the following declines:
- Shipments (sales to wholesalers), -8.5% (-3.3% in Q1);
- Depletions (sales to retailers), -2.7% (-2.5% in Q1);
- Net sales, -7% (-2% in Q1);
- Operating income, -12% (-5% in Q1).
Constellation’s beer division reached net sales of $2.53 billion and shipments of 128.6 million case equivalents in the three-month period ending August 31.
In a press release, CEO Bill Newlands noted that “a challenging socioeconomic environment” has continued to affect the company’s performance and “dampened consumer demand.”
“Our teams remain focused on executing against our strategic objectives, including driving distribution gains, discipline innovation and investing behind our brands,” he said. “Against that backdrop, we are pleased to continue to lead the U.S. beer industry in dollar share gains, drive continued outperformance versus the U.S. wine industry in our wine and spirits business and consistently deliver against our capital allocation priorities.”
Those socioeconomic challenges include several stressors on Constellation’s core consumer base of Hispanic drinkers, who have been targeted by immigration-related raids and arrests under U.S. Immigration and Customs Enforcement (ICE) since the second Trump administration took office earlier this year. As a result, Hispanic consumers have altered shopping and gathering habits and cut dining out by 75%, Newlands shared in June.
More so than other demographic groups, the Hispanic community is sensitive to economic pressures and experiences unemployment at higher rates than the general population, financial services firm Bernstein wrote in a report in June.
Constellation’s Q2 volume declines were driven by its largest beer brands Modelo Especial (slightly more than -4%), Corona Extra (slightly more than -7%) and Modelo Chelada (nearly -3%). Volume gains from Pacifico (nearly +14%) and Victoria (nearly +19%) could not offset the losses.
Nevertheless, Constellation found silver linings in dollar share gains, in which it led the beer category during the quarter. Modelo Especial remained the No. 1 brand in dollar sales, while Corona Extra was a top five brand in dollars. Pacifico (No. 3), Victoria (No. 11) Corona Sunbrew and Corona Familiar were among the top 15 strongest dollar share gainers, according to Circana data cited by Constellation.
Constellation reaffirmed its financial guidance of net sales declines of -2% to -4% and operating income declines of -7% to -9% for its beer division, which it shifted downward in early September.
Constellation’s wine and spirits division, which it has pared down significantly in the past 10 months with the sale of Svedka and several lower-tier wine brands, recorded depletions growth (+2%), but declines in all other metrics:
- Shipments, -76.4%;
- Organic shipments (which reflects the removal of Svedka and the divested wine brands), -7.1%;
- Net sales, -65%;
- Organic net sales, -19%;
- Operating income, -128%.
For the full fiscal year, Constellation is projecting organic net sales declines of -17% to -20% for its wine and spirits division.
The company declared a quarterly cash dividend of $1.02 per share last week. Constellation’s stock price (STZ) closed at $138.71 per share at the end of trading on October 6, but increased to $144.01 per share in afterhours trading as of press time.
Constellation leadership will discuss quarterly and H1 2026 earnings with investors and analysts early Tuesday. Look for further coverage on Brewbound.com.