Tariffs and weaker beer demand are weighing on Modelo owner Constellation Brands
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Tariffs and weaker beer demand are weighing on Modelo owner Constellation Brands

July 2, 2025
03:34 PM
4 min read
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Constellation Brands missed Wall Street's estimates for quarterly earnings and revenue, as the Modelo owner saw lower demand and paid higher aluminum tariffs.

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July 2, 2025

03:34 PM

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Constellation Brands missed Wall Street's estimates for its quarterly earnings and revenue, as it saw lower demand and paid more in aluminum tariffs

The brewer reiterated its outlook for fiscal 2026

The company's stock has shed more than 20% of its value this year, fueled by concerns how tariffs would affect demand for its beer

In this TZ your favorite stocksCREATE FREE ACCOUNTCase of Modelo, a beer imported from Mexico, are seen for sale at a grocery store in Arlington, Virginia, February 3, 2025, ing the announcement of tariffs by US President Donald Trump on important goods from Canada and Mexico

Saul Loeb | Afp | Getty ImagesConstellation Brands on Tuesday reported quarterly earnings and revenue that missed analysts' estimates as beer demand slid and tariffs on aluminum weighed on its fitability

Still, the brewer reiterated its forecast for fiscal 2026, showing confidence that it can hit its financial targets despite the weaker-than-expected quarterly performance and higher duties

S of the company fell less than 1% in ext trading on Tuesday evening but rose 3% during morning trading on Wednesday after the company's conference call

The stock has shed more than 20% of its value this year, fueled by concerns how the higher duties imposed by President Donald Trump would affect demand for its beer

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:Earnings per : $3. 22 adjusted vs. 31 expectedRevenue: $2. 52 billion vs. 55 billion expectedThe report, which covers the three months May 31, includes the start of Trump's tariffs on canned beer imports in early April

He also hiked trade duties on aluminum to 25% in mid-March and to 50% in early June

Both imported beer and aluminum are crucial to Constellation's beer, which accounts for roughly 80% of the company's overall revenue

Constellation's beer portfolio only includes Mexican imports, Corona, Pacifico and Modelo Especial, which overtook Bud Light as the top-selling beer brand in the U

Constellation reported fiscal first-quarter net income of $516. 1 million, or $2. 90 per, down from $877 million, or $4. 78 per, a year earlier

Constellation's operating margin fell 150 basis points, or 1. 5%, in the quarter, in part driven by higher aluminum costs

Excluding items, the brewer earned $3

Net sales dropped 5. 52 billion, fueled by weaker demand for its beer and the company's divestiture of Svedka vodka

Constellation is still facing softer consumer demand, CEO Bill Newlands said in a statement

He attributed the weaker sales to "non-structural socioeconomic factors. " Constellation's beer saw shipment volumes fall 3. 3%, caused by weaker consumer demand

Last quarter, Newlands said Hispanic consumers were buying less of the company's beer because of fears over Trump's immigration policy

Roughly half of Constellation's beer sales come from Hispanic consumers, according to the company

But on Wednesday, Newlands demurred when asked Hispanic consumer sentiment, saying that all shoppers are concerned higher prices. "When you see a fair amount of change, both Hispanic and non-Hispanic consumers are concerned inflation and cost structure," Newlands said

He added that consumers aren't going out to eat as much and hosting fewer social occasions, which means they are drinking less beer

Still, he maintained that consumer interest in drinking beer hasn't waned; while shoppers' overall spending on beer has fallen, their relative spend on beer compared with their total grocery bill has held steady

For fiscal 2026, Constellation continues to expect comparable earnings per of $12

The company is jecting that organic net sales will range from declining 2% to rising 1%

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