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Alcohol Sales · Beer Industry · Constellation Brands · Consumer Trends
Constellation Brands, the U.S. importer of Corona and Modelo, significantly lowered its fiscal year outlook for beer net sales to a decline of 2% to 4% and operating income to a 7% to 9% decline, citing a challenging macroeconomic environment and dampened consumer demand.
CEO Bill Newlands attributed the revised guidance to decelerating high-end beer buy rates, with both trip frequency and spend per trip decreasing. Notably, Hispanic consumers exhibited more pronounced declines in high-end beer purchases, disproportionately affecting Constellation's portfolio.
Bump Williams, CEO of Bump Williams Consulting, identified several factors driving the broader beer consumption decline, including increased health concerns, fewer social gatherings, and younger consumers' preference for organic products, cannabis, and health drinks. Economic pressures, such as higher retail prices, are also causing consumers to trade down from 24- or 30-packs to smaller beer packages like single-serve offerings and 12-packs.
The market is seeing a shift towards spirits-based ready-to-drink beverages and cannabis/THC drinks, which are capturing former beer consumers. While Constellation's Pacifico, Corona Premier, Sun Brew, Victoria, and Familiar brands show gains, these are insufficient to offset losses from its larger brands.
