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Constellation Brands (STZ.B) , which owns popular beer brands such as Corona and Modelo, has just shared a grim outlook on its future sales as the company recently noticed a sharp change in consumer behavior.
In its latest earnings report, the company said that while net sales for its beer brands increased by 3% year-over-year during the third-quarter of fiscal year 2025, its wine and spirits net sales declined by 14% year-over-year.
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In the report, Constellation Brands stated that the decline in wine and spirits sales was driven by “ongoing weaker consumer demand” and “continued retailer inventory destocking” in the U.S. wholesale market.
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During an earnings call on Jan. 10, Constellation Brands CEO Bill Newlands said that the company has noticed that its customers have shown “value seeking behavior” across goods. He blames this change in behavior on “macroeconomic headwinds.”
“We've seen higher uptick in unemployment, even though the overall unemployment rate was pretty consistent, 31 states actually saw an increase in unemployment,” said Newlands during the call. “And that always affects.”
Constellation brands makes a grim prediction
Because of the surprising shift in consumer behavior, Constellation slashed its sales outlook for fiscal year 2025.
The company is now predicting that its sales will grow 2% to 5%, which is lower than the previous forecast of 4% to 6% growth.
The company expects its wine and spirits sales to shrink by 5% to 8%, compared to the previous expectations that sales will either decline by 0.5% or grow up to 0.5%.
“When we decided on this particular range, this range reflects risks that we see that could potentially occur,” said Newlands during the earnings call. “That would include things like unemployment, potential tariffs, things of that nature. And the opportunity is just the opposite of that. The upper end reflects if things improve and we start to see some of these macroeconomic headwinds go the other direction, then you could see improvement in a wider range.”
Constellation Brands' stock has now fallen a full third from its 52-week high of $274.87 it reached in April 2024. The stock declined 17.1% to $181.81, the worst daily performance of any stock in the Standard & Poor's 500 Index.
The lower sales forecast also comes during a time when Americans are starting to develop a negative attitude toward alcohol consumption.