Constellation Brands, the prominent beverage company known for its popular Mexican beer imports, reported quarterly earnings on Tuesday that fell short of analysts’ expectations. The company cited the impact of tariffs on aluminum as a significant factor weighing on its profitability. Despite this setback, Constellation remains confident in its fiscal 2026 forecast, asserting its ability to meet financial targets even in the face of these challenges.
The report comes amid ongoing concerns about the economic implications of tariffs imposed by former U.S. President Donald Trump on key goods from Canada and Mexico. These tariffs have particularly affected Constellation’s operations, as both imported beer and aluminum are vital components of its business. Shares of the company dipped slightly in extended trading, continuing a downward trend that has seen the stock lose over 20% of its value this year.
Financial Performance and Market Expectations
In its fiscal first-quarter report, Constellation Brands disclosed earnings per share of $3.22, falling short of the $3.31 expected by analysts surveyed by LSEG. Revenue also missed projections, coming in at $2.52 billion compared to the anticipated $2.55 billion. The earnings report, covering the three months ending May 31, reflects the early impact of tariffs on canned beer imports, which began in April, and increased aluminum duties that rose to 25% in March and 50% in June.
“Earnings per share: $3.22 adjusted vs. $3.31 expected”
“Revenue: $2.52 billion vs. $2.55 billion expected”
Net income for the quarter was $516.1 million, or $2.90 per share, a decline from $877 million, or $4.78 per share, in the same period last year. The company’s operating margin also saw a reduction of 150 basis points, attributed in part to the rising cost of aluminum.
Impact of Tariffs on Business Operations
Constellation’s beer division, which accounts for approximately 80% of its total revenue, has been particularly affected by the tariffs. The division’s portfolio includes well-known brands such as Corona, Pacifico, and Modelo Especial. Notably, Modelo Especial recently surpassed Bud Light as the top-selling beer brand in the U.S.
The company’s CEO, Bill Newlands, acknowledged the challenges posed by softer consumer demand, attributing the downturn to “non-structural socioeconomic factors.” Shipment volumes for the beer business fell by 3.3%, a decline partly driven by weaker consumer interest. Newlands also highlighted that Hispanic consumers, who represent about half of Constellation’s beer sales, are purchasing less due to concerns over Trump’s immigration policies.
Looking Ahead: Fiscal 2026 Projections
Despite the current challenges, Constellation Brands remains optimistic about its future financial performance. The company continues to project comparable earnings per share for fiscal 2026 in the range of $12.60 to $12.90. Additionally, it anticipates organic net sales to fluctuate between a 2% decline and a 1% increase.
Constellation executives are scheduled to provide further insights during a conference call on Wednesday at 10:30 a.m. ET, where they will likely address the ongoing impact of tariffs and the company’s strategies for navigating these economic headwinds.
Industry Context and Historical Parallels
The current situation with Constellation Brands is reminiscent of past instances where trade policies have significantly impacted industries reliant on international supply chains. The beverage sector, in particular, has historically been sensitive to fluctuations in trade agreements and tariff implementations, given its reliance on imported materials and products.
Experts suggest that companies like Constellation must adapt by exploring alternative supply chain strategies or negotiating more favorable trade terms. The ongoing dialogue around trade policies and their economic implications continues to be a critical area of focus for businesses operating in globally interconnected markets.
As Constellation Brands navigates these challenges, the broader industry will be closely watching for any shifts in consumer behavior and market dynamics that could influence future performance.
