Constellation Brands (STZ) shares tumbled more than 6% Tuesday, sinking to their lowest level since the early days of the COVID-19 pandemic.
The selloff came after the company behind Corona and Modelo slashed its fiscal 2026 outlook, citing weaker consumer demand for beer and the impact of tariffs. The stock is now down 32% year to date, underscoring the tough stretch for one of the world’s largest beer, wine, and spirits producers.
A Steep Reset on Expectations
Management now expects adjusted earnings per share of $11.30 to $11.60 for fiscal 2026, well below its previous range of $12.60 to $12.90. Beer sales, once forecast to grow slightly, are now expected to decline 2% to 4%, while operating income could sink 7% to 9%. That marks a sharp reversal from earlier projections of flat-to-modest growth.
Enterprise-wide, organic net sales are projected to fall 4% to 6%, compared to prior guidance that ranged from a 2% decline to a potential 1% increase. Free cash flow expectations were also trimmed to $1.3–$1.4 billion, down from $1.5–$1.6 billion.
The company attributed the downgrade to “incremental macroeconomic headwinds” that are weighing on consumer demand. CEO Bill Newlands highlighted a pullback in high-end beer consumption, with fewer shopping trips and smaller basket sizes. The slowdown has been particularly pronounced among Hispanic consumers—a group that represents nearly half of Constellation’s beer business.
Management now expects adjusted earnings per share of $11.30 to $11.60 for fiscal 2026, well below its previous range of $12.60 to $12.90. Beer sales, once forecast to grow slightly, are now expected to decline 2% to 4%, while operating income could sink 7% to 9%. That marks a sharp reversal from earlier projections of flat-to-modest growth.
Enterprise-wide, organic net sales are projected to fall 4% to 6%, compared to prior guidance that ranged from a 2% decline to a potential 1% increase. Free cash flow expectations were also trimmed to $1.3–$1.4 billion, down from $1.5–$1.6 billion.
The company attributed the downgrade to “incremental macroeconomic headwinds” that are weighing on consumer demand. CEO Bill Newlands highlighted a pullback in high-end beer consumption, with fewer shopping trips and smaller basket sizes. The slowdown has been particularly pronounced among Hispanic consumers—a group that represents nearly half of Constellation’s beer business.
Industry-Wide Pressure and Investor Takeaways
Constellation’s cut rippled across the sector, dragging down shares of rivals including Anheuser-Busch InBev, Molson Coors, and Boston Beer. While peers are facing similar pressures, Constellation’s reliance on high-end beer brands amplifies its exposure to shifting consumer habits.
CFO Garth Hankinson also flagged near-term distributor “inventory rebalancing” as wholesalers adjust stock levels to match softer demand. This means shipments may lag actual consumer sales in the months ahead, adding another headwind.
Still, management pointed out that through July, Constellation gained volume share in 49 of 50 U.S. states and remained the top dollar share gainer in the beer category. That suggests the company is holding its competitive ground despite weaker overall industry trends.
Constellation’s cut rippled across the sector, dragging down shares of rivals including Anheuser-Busch InBev, Molson Coors, and Boston Beer. While peers are facing similar pressures, Constellation’s reliance on high-end beer brands amplifies its exposure to shifting consumer habits.
CFO Garth Hankinson also flagged near-term distributor “inventory rebalancing” as wholesalers adjust stock levels to match softer demand. This means shipments may lag actual consumer sales in the months ahead, adding another headwind.
Still, management pointed out that through July, Constellation gained volume share in 49 of 50 U.S. states and remained the top dollar share gainer in the beer category. That suggests the company is holding its competitive ground despite weaker overall industry trends.
Bottom Line
The guidance cut is a significant blow for Constellation Brands, coming just weeks after management reaffirmed its outlook. The reversal underscores how quickly consumer spending patterns have shifted in the face of economic pressures. For investors, the steep selloff highlights both the risks of premium beer exposure in a slowing economy and the potential for recovery if demand stabilizes.
Constellation still owns some of the most powerful brands in the U.S. alcohol market—but until consumer trends turn, its stock may remain under pressure.
The guidance cut is a significant blow for Constellation Brands, coming just weeks after management reaffirmed its outlook. The reversal underscores how quickly consumer spending patterns have shifted in the face of economic pressures. For investors, the steep selloff highlights both the risks of premium beer exposure in a slowing economy and the potential for recovery if demand stabilizes.
Constellation still owns some of the most powerful brands in the U.S. alcohol market—but until consumer trends turn, its stock may remain under pressure.
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