Beer Industry Takes a Hit From Trump Tariffs

Constellation Brands Inc. issued downbeat guidance as new US tariffs and muted demand weigh on the beer, wine and spirits maker. Bloomberg's Ken Shae reports.

The company expects earnings of $12.33 to $12.63 per share in the 2026 fiscal year, which reflects the expected impact of US tariffs imposed last week. Wall Street had estimated adjusted earnings for the year of $13.39 to $15.29.

Already struggling with lackluster sales, Constellation is now facing a 25% tariff on goods such as imported canned beer that could be extended to other formats like bottles. The company imports popular Mexican beers and has previously disclosed that it’s reliant on limited facilities to produce those brands.

Truist Securities analyst Bill Chappell said he was surprised that the company offered guidance at all, given the uncertainty created by the tariffs. And what Constellation did provide on its beer unit — expecting sales to be little changed to growth of 3% — gave him “limited confidence,” he wrote in a note.

Constellation Brands is bracing for more uncertainty around consumer behavior this year, especially as economic concerns weigh on key beer-drinking demographics.

“The consumer sentiment and the consumer’s desire to get back out and shop and be comfortable in the socio-economic environment is probably the single biggest variable that’s tough to predict,” Chief Executive Officer Bill Newlands said on a call with investors. He also pointed to rising concerns among Hispanic consumers, who are a significant audience for Constellation’s Mexican beer brands, about inflation, immigration and job losses.

Facing a Reckoning

Alcohol companies are facing a reckoning as younger generations increasingly opt for low or no-alcohol alternatives, part of a broader trend toward health-conscious consumption. Earlier this year, the former US Surgeon General proposed adding cancer warning labels to alcoholic beverages. Economic concerns are also leading consumers to cut back on various forms of discretionary spending.

Constellation reported earnings of $2.63 per share for the quarter, above analysts’ estimates of $2.29 per share. Revenue was $2.2 billion, just above analysts’ expectations of $2.1 billion.

In the beer division, which includes brands such as Modelo Especial, Corona and Pacifico, net sales were flat as lower shipments were largely offset by higher prices.

The wine and spirits segment, which includes Kim Crawford and Casa Noble tequila, saw sales rise 11%, helped in part by more sales of higher-end bottles and rising demand in the US and Canada.

Constellation also on Wednesday announced that it is selling a batch of its less expensive wine brands, including Woodbridge and Robert Mondavi Private Selection, to The Wine Group. Terms were not disclosed.

The move is part of a strategy to focus on higher-priced, higher-margin wines, and will be accompanied by a review of its organizational structure expected to help deliver more than $200 million in annual cost savings by fiscal year 2028, the company said.

In the previous quarter, Constellation missed sales estimates and reduced its growth outlook for the second time that the fiscal year due to weak demand. That weakness in demand means the company may end up absorbing the cost of tariffs rather than pass it along to customers, analysts said.

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