Constellation Brands’ down Q1 may have bucked the Mexican beer importer’s historical trends, but the declines were “expected,” company leadership shared Wednesday during its Q1 2026 earnings call with investors and analysts.
Constellation’s beer portfolio recorded a 3.3% year-over-year (YoY) decline in shipments (sales to wholesalers) and 2.6% decline in depletions (sales to retailers) during the quarter, which ended May 31. Contributors to the losses include curbed consumer purchasing behavior from continued macroeconomic trends, but also difficult comps from Q1 2024, which should ease through the rest of the fiscal year (FY26), president and CEO Bill Newlands said.
“Sequential improvement is required for us to accomplish our guidance, but it’s not predicated on significant consumer change,” Newlands said. “You may recall, in July of last year was when things started to decelerate, both for us and for the overall industry. So we’re going against easier comps as we progress into the summer months.”
Constellation adjusted its full-year FY26 guidance and medium-term projections earlier this year in response to economic and political factors, including the impact of tariffs, ICE raids, inflation and government layoffs. Those pressures have only increased since the adjustments were made. However, Constellation is maintaining its guidance, including beer net sales between flat and +3% and operating income growth between flat and +2%.
“We feel confident with our outlook for the year, which is why we affirm guidance,” CFO Garth Hankinson said Wednesday. “And we haven’t seen any changes in consumer behavior.
“That being said, there are still some macroeconomic factors, if you will, that we continue to monitor, and there continues to be some uncertainty in the macro backdrop.”
Hankinson also noted that some economists have lowered their expectations for GDP growth, inflation, interest rates and unemployment rates and “there’s a lot of guesswork” and “fair amount of uncertainty” about the extent to which those factors could impact businesses through the rest of the year.
Many of Wednesday’s questions from analysts concerned the state of bev-alc consumers, particularly Hispanic consumers, who make up “roughly half” of Constellation’s consumer base, according to Newlands.
Newlands emphasized that concerns about inflation and costs are not unique to Hispanic consumers, and that across demographics “the percentage of alcohol in the basket has remained constant, even though the basket has gotten smaller relative to what consumers are doing with consumer goods.”
Newlands also noted that Hispanic consumers are still “very interested in beer” and any declines in beer buying from that demographic group is due to a decrease in the occasions where they typically drink beer – “because of concerns of the socioeconomic area” – and not due to a decrease in category interest.
“When you look at the fact that consumers are not going out to eat as much as they had, they’re having less social occasions at home, it doesn’t change their interest in consumption of beer,” Newlands said. “It simply has been that those occasions have been decreased.”
Newlands believes that unlike after the COVID-19 pandemic, which had lasting impacts on consumer behaviors, shoppers will return to normal patterns once socioeconomic pressures ease.
In the meantime, Constellation continues to “control the controllables,” including share of shelf, which is growing.
“Our focus continues to be monitoring carefully where the consumer is and control the controllables,” Newlands said. “Do everything we can possibly do, so as the consumer hopefully returns in the near term to more normal behavior, we’re there and ready to take advantage of just that.”
Other controllables include investing in “high impact” beer occasions, such as professional sports and live events, and creating innovation that inserts Constellation into more places beyond typical beer occasions, Newlands said. Priority innovations with upward trajectory include Corona Non-Alcoholic, Modelo Oro – which was recently price-adjusted to compete with “high-end light beer” – Corona Sunbrew Citrus Cerveza and Limón y Sal Modelo Chelada.
Additionally, Constellation is “spending a lot of time” strategizing “price-pack architecture,” Newlands said.
“It’s an area where, as the consumer may be more concerned about inflationary trends, it would be important to have the right pack set at the right price points, so that no matter what the consumer has available to them to spend, we have a product available to them,” he said.
There are two ways to look at the state of Constellation right now, according to analysts at Bernstein, who called Constellation’s Q1 “ugly, but no worse than feared” in a report shared after Tuesday’s financials were released.
The first is more positive, where “the brands are not broken, but rather are being disproportionally impacted by external macro shocks.” The second, and more negative stance, is “finding the inflection is very difficult, with a lot of the causes (and potential solutions) in the hands of the Oval Office.”
It seems investors are clinging to the more positive interpretation. As of press time, Constellation’s stock (STZ) was trading up 4.64%, to $174.14, continuing to rise after the conclusion of Wednesday’s call.