May 14, 2025 (MarketLine via COMTEX) --
Last month, the Pacifico brewer had said economic and immigration concerns among Hispanic shoppers had weighed on sales.
The sentiment among Hispanic beer drinkers in the US, concerned about the economy and immigration policy, is showing signs of improving, Constellation Brands has said.
Last month, the Modelo and Pacifico brewer said unease among Hispanic consumers in the US had put pressure on its sales of beer, with, for example, fewer visits to bars and restaurants. ConstellationaEUR(TM)s comments at the time were also echoed by Dutch brewing giant Heineken.
Speaking at the Goldman Sachs Global Staples Forum in New York yesterday (13 May), Jim Sabia, the president of ConstellationaEUR(TM)s beer business, said retail outlets had seen custom decline significantly in recent months but suggested the anxiety among shoppers was easing.
aEURoeIaEUR(TM)ve been out of retail a lot recently going out to California, going to some of these accounts where two years ago at one o'clock it was packed,aEUR Sabia said. aEURoeThis year at one o'clock, very few people.
"There is a fear of the ICE [Immigration and Customs Enforcement] raids. ThereaEUR(TM)s a fear out there, so these consumers are changing their behaviour. ThataEUR(TM)s in the off-premise trade. In the on-premise trade, theyaEUR(TM)re cutting back on social events. TheyaEUR(TM)re cutting back on restaurants.aEUR
Sabia said 35% of ConstellationaEUR(TM)s beer sales, when measured in volumes, were to Hispanic consumers. That increases to around 50% for Modelo Especial.
aEURoeWeaEUR(TM)re starting to see it get better,aEUR Sabia said. aEURoeEven the day labourers weaEUR(TM)re starting to see come out more. WeaEUR(TM)re confident that this is non-structural and our brands are healthy, consumers love our brands and weaEUR(TM)re going to continue to do what we control.aEUR
In Constellation's current 2025/26 financial year, the company sees net sales from its beer business being flat at best up to 3% higher year on year.
Last month, the company also provided guidance to investors for its 2027 and 2028 financial years. The company sees its net sales growing by around 2-4% each year. Beer net sales are forecast to rise at the same amount, versus an earlier prediction of growth of 7-9%.
Modelo beers. Credit: Elen V / ShutterstockSabia said Constellation was continuing to invest in advertising. aEURoeWe spent more money in marketing last year,aEUR he said. aEURoeWeaEUR(TM)re going to continue to do what weaEUR(TM)ve done that has made us successful for the last fifteen years. When this consumer comes out and which we think they will aEUR" the Hispanic consumer but also the general market consumer aEUR" weaEUR(TM)re going to be positioned in a really good spot.aEUR
Bonnie Herzog, the Goldman Sachs analysts who hosted ConstellationaEUR(TM)s session at the event, asked if the company thought its beer business could aEURoeultimately return to the high single-digit net sales growthaEUR it had generated in recent years. aEURoeIs that just unrealistic given the base has become so large?aEUR she asked.
aEURoeThe base has gotten large, agreed,aEUR Sabia said. aEURoeIn 2010, we had, like, six [per cent market] share and now we have, like, a 19 share. However, if you think about our share, you think about convenience stores, usually 94% of beer is sold cold. We have about a 24 share of dollars.
aEURoeHowever, in grocery, we have 14, so thereaEUR(TM)s a nine-point spread from convenience to grocery. ThataEUR(TM)s the opportunity. You go to some of these markets and grocery stores have an assortment with a lot of craft and specialty and a lot of other brands where weaEUR(TM)re starting to gain some traction, not just with Corona and Modelo but now weaEUR(TM)re starting to see Pacifico, Victoria, Familiar, Sunbrew. We donaEUR(TM)t think itaEUR(TM)s the size of our portfolio and the volume. We just think this consumer needs to get healthy again.aEUR
Sabia also outlined the opportunity he says to gain more on-trade listings for Modelo Especial on draught.
aEURoeOn-premise is a huge opportunity for Modelo Especial. Draught handles are so incredibly important. WeaEUR(TM)re the fourth-largest draught handle in the country aEUR but, as you move east, coming from California with Modelo Especial, as you go into Chicago and Texas and New York and New Jersey and Florida, Modelo Especial still has so much runway in terms of distribution.aEUR
Nevertheless, Constellation has been seeing pressure on sales of Corona Extra and the companyaEUR(TM)s management was asked how it planned to return the brand to growth.
aEURoeThe goal is to return it to growth, but itaEUR(TM)s not mandatory to hit our guidance without it,aEUR Sabia said.
He pointed to Corona Extra as aEURoethe number one beer brandaEUR by volume in New York City and Miami but said there had been aEURoecannibalisationaEUR of sales in California by fellow Constellation brands Modelo and Pacifico. Price increases had weighed on sales, he added.
aEURoeThose are the drags but what are the drivers? The drivers are getting back to the essence of the brand and the marketing team did a great job of getting back to the beach, getting back to the essence of the brand,aEUR he said. aEURoeAnd then, as we think about it, what are the [accounts] that we have to win in and do we take more of a regional approach? Always do some national overlays but take a more tactical regional approach.
aEURoeAnd then what do we do with price-pack architecture? ThereaEUR(TM)s a lot we can do with Corona Extra, but making our plan short term, long term is not predicated getting back to flat.aEUR
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