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Constellation Brands, the parent company of Modelo and Corona, reported quarterly results on Tuesday that fell short of Wall Street expectations, largely due to rising aluminum tariffs and softened consumer demand. The disappointing earnings come as President Donald Trump’s trade policies continue to shake up key industries, including beverage and alcohol manufacturers reliant on imports.
Despite the earnings miss, the company reaffirmed its guidance for fiscal 2026, signaling confidence in its long-term financial strategy. However, the market reaction was muted, with Constellation’s stock dipping less than 1% in after-hours trading. Still, shares are down more than 20% year-to-date as investors weigh the financial strain from new trade tariffs and waning consumer spending.
Here’s how Constellation Brands performed in the three months ended May 31 compared to consensus estimates from analysts surveyed by LSEG:
That represents a 5.8% drop in net sales from the prior year, driven by weaker beer shipments and the company’s strategic divestiture of Svedka vodka. Beer shipment volumes declined 3.3%, and operating margin contracted by 150 basis points year-over-year—falling from 37.8% to 36.3%, impacted largely by soaring aluminum costs.
Net income fell sharply to $516.1 million ($2.90 per share), down from $877 million ($4.78 per share) in the same quarter last year.
The financial squeeze was amplified by escalating aluminum tariffs implemented by the Trump administration. In mid-March, aluminum tariffs were increased to 25%, and by early June, the rate had doubled to 50%—heaping significant input cost pressure on beverage companies that rely heavily on aluminum for canned products.
Constellation’s beer business, which makes up around 80% of its total revenue, is particularly vulnerable to such tariffs. The company’s entire beer portfolio—featuring top-selling brands like Modelo Especial, Corona, and Pacifico—is imported from Mexico and sold primarily in cans in the U.S. market. As aluminum prices soared, so did packaging costs, directly impacting margins.
CEO Bill Newlands acknowledged a continuing softness in consumer demand, attributing it to “non-structural socioeconomic factors.” However, the company has also linked part of the sales dip to political sentiment—particularly within its Hispanic customer base.
Last quarter, Newlands noted that immigration concerns tied to Trump-era policies were affecting purchasing behavior among Hispanic consumers, who account for approximately 50% of Constellation’s beer sales. This quarter’s results further underscore the importance of that demographic to the company’s performance.
Despite short-term headwinds, Constellation Brands maintained its full-year and long-term financial outlook. For fiscal 2026, the company projects:
This guidance suggests that leadership is confident in its cost management strategy and expects stability or modest growth as market conditions normalize.
More insights are expected during the company’s earnings call scheduled for Wednesday at 10:30 a.m. ET, where executives will elaborate on margin recovery plans and how they intend to mitigate the impact of tariffs going forward.
With shares down over 20% in 2025 alone, Constellation’s performance reflects broader investor anxieties around how global trade policy is reshaping costs and consumer habits. Analysts have flagged the beer segment's dependence on both imported products and imported packaging materials as a structural vulnerability.
While some investors may view the current dip as a buying opportunity—especially with the stock trading at a discount from its 52-week highs—others remain cautious, eyeing further geopolitical developments and commodity price swings.
Final Thoughts
Constellation Brands faces a challenging near-term environment shaped by international trade tensions, rising material costs, and shifting consumer behavior. Yet with a stable long-term strategy and strong brand portfolio, its resilience will likely depend on how effectively it can navigate this new economic landscape. The coming quarters will be critical in determining whether the brewer can overcome these hurdles or see further pressure on margins and market value.