As Constellation Brands navigates uncharted stormy waters, the company’s leadership remains focused on “controlling the controllables,” CEO Bill Newlands said Tuesday.
Newlands and CFO Garth Hankinson took part in a fireside chat with Barclays managing director Lauren Lieberman during the investment bank’s annual Consumer Staples Conference.
Constellation – the country’s largest importer of Mexican beer and the second-largest beer category vendor by off-premise dollar sales according to market research firm Circana – has seen uncharacteristic declines in volume as its core consumer base of Hispanic shoppers has altered behaviors in response to immigration-related raids and arrests by U.S. Immigration and Customs Enforcement (ICE) as directed by the Trump administration.
During their conversation, Lieberman noted that the company has “an elegant way of articulating some of the political dynamics” at play and asked Newlands how Constellation can weather several more years of the “constrained behavior.”
“It’s very tough to predict how the consumer is going to behave,” he said. “The thing that we’re spending our time on is controlling the controllables. That’s execution, that’s working in the market place and doing the shelf sets that we just talked about. It’s winning distribution. It’s continuing to invest in the category.”
Hispanic consumers account for half of Modelo’s dollar sales and 35% of Corona’s sales, according to a slide deck that accompanied the fireside chat. More broadly, the community makes up about 40% of all dollars spent on Constellation’s beer portfolio, which also includes Pacifico and Victoria. Comparatively, Hispanic consumers account for 15% of all beer category spend, according to data from Numerator.
The fireside chat happened hours after Constellation lowered its financial guidance for the rest of its 2026 fiscal year. Shifts include projected beer net sales decline of 4% to 2% (previously flat to +3%) and beer operating income loss between 9% and 7% (previously flat to +2%).
In addition to concerns about ICE raids, Newlands cited economic factors driving Hispanic consumers’ behavior, including a decline in “4,000 calorie jobs” – physical work that often ties to beer sales.
“Construction is a great example,” he said. “That’s down year-on-year (YoY). Those things tend to be positive for the beer industry.”
In California, Constellation’s strongest market, construction employment was down 2% in July, compared to 1.2% growth nationwide, according to the deck.
Three-quarters of Hispanic shoppers are worried about “their personal finances,” Newlands said. As a result, beer occasions have declined on- and off-premise across all channels.
Across the board, consumer sentiment sank to an index of 59, 41 points below neutral (100), according to University of Michigan data cited in the deck. Consumer sentiment has been negative all year, but has declined 13 points since its January peak of 72.
“It’s a very challenging, broad environment,” Newlands said.
Even as consumers pull back, their loyalty to Constellation products has grown, particularly among Hispanic consumers and 21- to 25-year-olds, which “are a disproportionate amount of our business versus the category,” Newlands added.
“We are fairly comfortable with being unable to predict exactly when, but we are fairly comfortable that as the socioeconomic environment gets back to something resembling normalcy, that you’ll see a category that does the same,” he said.
This year, buy rates have declined across all ZIP codes in Constellation’s top five states, which account for about half its volume, “with additional challenges on those ZIP codes that were heavily Hispanic,” Newlands said. However, buy rates during Q2 in the company’s key markets of Texas, New York and Florida “sequentially [look] better than the prior.”
“It’s been very, very hard to predict, and we’re seeing a lot of volatility in the marketplace,” he said. “You’ve seen the consumer basket shrink – that’s been a big factor. The percentage of alcohol in the basket hasn’t changed any, which again gives us comfort that as time goes on and consumer behavior hopefully returns to something [resembling] normalcy that you’ll see a return to more normal category dynamics as well.”
Another force driving the lowered guidance is updated tariffs, Hankinson said. Constellation’s can suppliers have estimated tariffs will add up to $25 million in costs, bringing the company’s tariff obligation to $70 million for the beer division, and $20 million for its wine business, he said.
Nevertheless, Newlands and Hankinson called out bright spots during their conversation. They reiterated that broader bev-alc’s current bugbears – GLP-1 drugs and legal cannabis beverages – appear to have little impact on beer consumption. Newlands also called out the popularity of Constellation’s brands with Gen Z consumers may prove the youngest legal-drinking-age consumers’ tendency to eschew alcohol is overblown.
“We are bringing new people into the category, so we really don’t see this as a long-term, structural thing,” he said.
In addition, Constellation has maintained its investment in paid media and used some of the $445 million in cost savings between FY 2024-FY 2026 Q1 to capture incremental share of voice. Modelo has the largest share in U.S. media, closely followed by Corona at No. 3. Pacifico, which skews younger, has the No. 1 share of voice in U.S. social media, according to the deck.
Additional brand-level highlights include:
- Corona Sunbrew Citrus Cerveza is the No. 1 new beer brand, the No.1 new 12-pack bottle and the No. 6 dollar share gainer, according to Circana data cited in the deck.
- Corona Non-Alcoholic (NA) was the second-largest dollar share gainer in the NA segment overall, and its new can 12-packs gained the second-most dollar share among all NA SKUs.
- Modelo Oro, the Michelob Ultra challenger launched in 2022, was the No. 2 new SKU among 12-pack bottles and No. 1 SKU among new 24-pack cans.