constellation brand The company beat forecasts for quarterly profit and sales as its beer brands gained market share, but results weakened due to continued consumer caution.
Constellation is looking to special opportunities and diversification to grow sales as it deals with high food and fuel prices and picky shoppers.
Corona and Pacifico, makers of Modelo Especial, on Tuesday reported second-quarter adjusted earnings of $3.74 per share on revenue of $2.63 billion, which beat Wall Street expectations of $3.56 billion and $2.54 billion, respectively.
Beer sales increased 5% to approximately $2.47 billion, and beer shipments increased 5.5%. However, the company said beer depletion, which measures sales from distributors to retailers and other customers, fell slightly in the quarter, indicating consumer demand is softer than shipping demand suggests.
“We spent the majority of the first half of the year rebuilding our distributor inventory levels,” Constellation Brands CEO Nicholas Fink said on Wednesday’s earnings call. “There are always monthly fluctuations, but the depletion in September is moving in the right direction.”
The broader context remains a challenge for beer distributors. U.S. beer sales fell 1.8% year over year in the two weeks ending Sept. 19, according to the latest data from Nielsen.
Still, Fink said September’s beer depletion has improved beyond the post-Labor Day benefit, and the recovery is widespread across the channel. He said consumers are “all in” on the category.
Some analysts said the results showed that rising gas prices were hurting Constellation’s performance.
“(Constellation’s) progress had been accelerating toward 2026, but rising fuel costs have derailed it,” Roth Capital analyst Bill Kirk wrote, but said Constellation remains on track to meet its 2027 plan. Kirk rates the stock a buy and has a price target of $209, with the stock valued at about $116 as of Wednesday.
Fink said Constellation has particular strength in club stores, benefiting as cash-strapped shoppers seek deals on fuel and groceries. The company is also working to better align product and pack sizes across channels as consumers make different choices depending on where and on what occasion they shop.
Attention to the event also extends to younger drinkers. Fink said consumers are increasingly buying beer for specific moments rather than treating it as a default purchase, and Constellation is focusing on opportunities such as sports, music and beach activations to drive sales.
The company’s pricing strategy reflects consumers’ wariness about spending.
Chief Financial Officer Garth Hankinson said Constellation was keeping price increases selective and at the low end of its normal range, considering “the macroeconomic context and its impact on consumers.” “It’s much more cost-effective to retain consumers than to try to win them back,” Hankinson said.
Price sensitivity is especially important for Constellation, which relies on Hispanic shoppers. About 40% of Constellation’s beer spending comes from Hispanic consumers, compared to about 15% for the beer category overall, according to company data.
This group faces additional economic concerns, including labor market and household pressures caused in part by President Donald Trump’s mass deportation policies. Constellation previously said demand for beer was weak in areas with large Hispanic populations, but also noted that trends were improving in some markets.
Constellation is also working beyond its core beer business. The company announced Tuesday that it will acquire SpikedAde, a spirits-based ready-to-drink brand, for $75 million upfront, with the potential for up to an additional $278 million based on future performance.
The deal gives Constellation a foothold in a new area that is increasingly of interest to consumers. Fink said the company aims to “remain relevant to consumers and customers,” adding that distributors are pushing Constellation to move into growth categories beyond beer.
Some analysts also approved the move.
“We think this acquisition is attractive and gives[Constellation]exposure to the fast-growing RTD subcategory,” said Piper Sandler analyst Michael Lavery, noting that Stateside Vodka’s competing brand Super Light is also off to a “very strong start” on the East Coast.
Lavery has a neutral rating on Constellation stock and a price target of $161.
While beer remains the company’s primary source of value creation, Fink called Spiked Aid a “long, wide-open runway” for Constellation’s brand building and distribution capabilities.
Sales of premixed cocktails, including spirit-based RTDs, will increase 16.4% to $3.8 billion in 2025, making it the spirits industry’s fastest-growing category, according to the Distilled Spirits Council of the United States.
Correction: Constellation reported earnings on Tuesday and held a conference call on Wednesday. Previous versions listed these dates incorrectly.
