Constellation Brands Faces Sales and Profit Declines Amid Beer Slowdown and Portfolio Restructuring

Constellation Brands reported net organic sales of $2.48 billion for its fiscal second quarter, which ended in August. This figure represents a 15% decrease compared to the same period last year. The company’s operating income also fell, dropping 13% to $886 million on a comparable basis. The decline is mainly attributed to a slowdown in Constellation’s beer business, which has faced challenges throughout the year.

The company’s beer unit saw net sales fall 7% to $2.35 billion for the quarter, with volumes down 8.7% to 117.4 million 24-pack, 12-ounce case equivalents. Both Corona and Modelo, including Modelo Cheladas, experienced declines during the quarter. However, these losses were partially offset by double-digit gains for Pacifico and Victoria brands. Despite the recent downturn for Modelo, Constellation noted that it remains the top-selling beer brand in the United States by dollar sales, while Corona continues to rank among the top five.

Constellation has recently restructured its wine and spirits portfolio through significant divestitures. The company sold Svedka vodka to Sazerac and transferred about 12 million cases of wine volume to The Wine Group. As a result of these changes, the remaining wine and spirits portfolio—led by brands such as Kim Crawford, The Prisoner, and Robert Mondavi—showed depletion growth of 2% in the second quarter.

Following these divestitures, the wine and spirits segment saw sales drop 65% for the quarter, with shipment volumes falling by roughly 75%. On an organic basis, which adjusts for these divestitures, net sales were down 19% to $136 million. Operating income for this segment dropped by 128%. For fiscal year 2026, Constellation expects net sales in wine and spirits to decrease between 17% and 20%, with operating income potentially declining by up to 100%.

Despite these declines, some brands within Constellation’s reshaped portfolio are performing well. Kim Crawford and The Prisoner have both shown growth in IRI/Circana channels through July 2025. In the spirits category, Mi Campo Tequila has outperformed other brands in Constellation’s portfolio. According to Impact Databank, Mi Campo reached 214,000 cases last year and continued to grow in 2025, with a reported increase of 66.5% in IRI/Circana channels through July.

The company’s Mexican beer brands had previously enjoyed strong growth. Impact Databank reported that Modelo grew by 7% to reach 210 million cases in 2024, Pacifico increased by 21.5% to reach 25.2 million cases, and Modelo Cheladas rose by 5% to reach 23 million cases. All three brands received Impact “Hot Brand” awards for their performance last year. However, this momentum has slowed in 2025 due to economic challenges affecting core Hispanic consumers.

Looking ahead, Constellation expects further declines in net sales of between 2% and 4%, with operating income for its beer business projected to fall between 7% and 9% for fiscal year 2026. CEO Bill Newlands acknowledged the difficult environment but emphasized that the company remains focused on its strategic objectives: driving distribution gains, disciplined innovation, and investing behind its brands.

Garth Hankinson, executive vice president and CFO of Constellation Brands, said that cost savings and efficiency initiatives are helping support continued investment behind key brands despite current market pressures.

Constellation Brands will discuss its strategy further at the upcoming Impact Marketing Seminar in New York this week.