Constellation Brands, a major producer of beer, wine, and spirits, has seen its stock fall by 8% over the past five years, while the S&P 500 rose 86%.
The company’s beer business, which includes popular brands like Modelo, Corona, and Pacifico, accounts for the majority of its revenue. However, its wine and spirits segments have shrunk due to divestments of lower-margin brands.
From 2020 to 2025, overall revenue grew at 4% annually, driven solely by beer sales, which have slowed recently due to supply issues in Mexico, tariff impacts, and declining alcohol demand among younger consumers.
Constellation’s profits have been volatile, with losses in 2022, 2023, and 2025 mainly due to investment write-downs and brand divestitures.
The company expects flat sales growth in 2026 and faces pressure from 25% tariffs on Mexican imports, which hit its canned beer sales hardest. While it may shift some sales to glass bottles, this change is limited by product quality concerns. Price increases to offset tariffs could be risky given weak demand.
Looking ahead to 2026-2028, analysts forecast a slight revenue decline as Constellation continues to streamline its portfolio but expect a return to profitability and 7% annual EPS growth.
If these trends hold and the stock trades at a 14 times forward earnings multiple by 2030, the stock could rise about 45% over five years. However, it may still lag behind other consumer staples stocks and the broader market.
Investors should weigh the company’s challenges against its efforts to focus on premium brands and navigate tariff impacts before deciding to invest in Constellation Brands now.
Read more:
