Hispanic Consumers Are Going Out Less Often. It’s Hurting Constellation Brands.

Constellation Brands sells Corona and Modelo beer. (RONALDO SCHEMIDT/AFP via Getty Images)

Alcohol is no longer in vogue, and it’s hurting booze companies such as Constellation Brands. Weakening demand from the Hispanic consumer base, which makes up half of the company’s business, is particularly concerning.

The beer, wine, and spirits maker’s first-fiscal-quarter earnings and sales both missed analyst expectations on Tuesday after the market closes.

For the three months ended in May, the company posted $2.52 billion in organic net sales, down 4% from a year ago, and comparable earnings per share of $3.22. Analysts polled by FactSet expected Constellation to post net sales of $2.55 billion and earnings per share of $3.31.

The company’s beer business reported a net sales decrease of 2%, driven by a 3.3% decline in shipment volumes. The company said socioeconomic headwinds are affecting consumer demand.

The wine and spirits segment continues to struggle, as net sales dropped 28% from a year ago, partially due to the divestiture from some underperforming wine brands, and ongoing weaker consumer demand, which particularly affected cheaper mainstream brands in the U.S. wholesale market.

Across all categories, Constellation maintained its outlook for fiscal 2026’s comparable earnings per share of $12.60 to $12.90, a step down from $13.78 per share in fiscal 2025.

“While we continued to face softer consumer demand largely driven by what we believe to be nonstructural socioeconomic factors, our teams remain focused on executing the key initiatives that underpinned the outlook we recently provided for fiscals 2026 to 2028,” said CEO Bill Newlands in a statement.

Investors are worried that consumers are losing interest in alcohol as they opt for healthier, nonalcoholic drinks or other recreational options such as cannabis. Younger generations, especially, are drinking less alcohol than their parents.

“We see short-term and long-term pressures on Constellation’s beer volumes,” wrote Morgan Stanley analyst Dara Mohsenian last week. “We are cautious on alcohol demand long term due to secular health/wellness pressure building with a lack of innovation answer given the difficulty in taking calories out of alcohol.”

Constellation stock has tumbled more than 26% so far this year, and are now down roughly 40% from a March 2024 peak.

There has also been a pullback in the Hispanic consumer base—the major buyers of Constellation beers—since the start of the year, JPMorgan analyst Andrea Teixeira wrote last week. Things could exacerbate following the recent immigration enforcements and protests that disproportionately impact the Hispanics.

On Wednesday’s earnings call, CEO Newlands said occasions when beer is consumed have decreased because of concerns of the socio-economic climate. “Consumers are not going out to eat as much as they had, they’re having less social occasions at home,” he told investors.

He noted that this doesn’t change Hispanic consumers’ interest in beer and that their loyalty to Constellation brands remains very strong. “I think you’re going to easily see it revert to a more-normal scenario as the macroeconomic scenario comes back to a more-normal environment.”

Still, Newlands said it is “very hard to call as to what the consumer reaction is going to be going forward.”

To be sure, Constellation is making changes to its product portfolio to adapt to the changing tastes. The company sold some of its underperforming wine brands earlier this year to focus on expensive brands with higher profit margins. Constellation’s also investing in nonalcoholic beverages, including stakes in tonic maker Hiyo and sparkling beverage firm TÖST.

Consumer interest in Sunbrew, Constellation’s alcohol-free version of Corona, is ahead of expectation, said Newlands on the earnings call. “We continue to invest against the business,” he said.

Despite the headwinds, much of Wall Street believes Constellation stock is oversold as the risks have been priced in. Nearly two thirds of analysts polled by FactSet have a Buy rating for the stock, with a consensus target price of $201, implying 15% upside.

Write to Evie Liu at evie.liu@barrons.com