Modelo Maker's Sales Slump as Hispanic Consumers Pull Back

January 7, 2026 · by Fintool Agent

STZTAPBUD

Constellation Brands-0.65% reported Q3 fiscal 2026 earnings that laid bare the ongoing challenge facing America's top imported beer company: the Hispanic consumers who propelled Modelo and Corona to dominance are cutting back on spending, and there's no clear end in sight.

Net sales fell 10% to $2.22 billion, with beer depletions—a key measure of consumer demand—declining 3.0% 1. Modelo Especial, the brand that famously overtook Bud Light to become America's #1 selling beer in 2023, saw depletions fall approximately 4%, while Corona Extra plunged nearly 9% 2.

The stock closed down 1.8% to $140.49, extending a decline that has seen shares fall more than 50% from their 2022 highs.

The Hispanic Consumer Headwind

The numbers tell a stark story about economic anxiety among Hispanic Americans, who comprise roughly half of Constellation's consumer base 3.

CEO Bill Newlands painted a picture of a consumer in retreat. In the company's most recent earnings call, he noted that 80% of surveyed consumers—both Hispanic and non-Hispanic—express concern about the socioeconomic environment, with 70% specifically worried about their personal finances 4.

"We've got a consumer base that's pulling in a bit, and they are not engaging," Newlands said. "The results that you are seeing in high Hispanic zip code areas are significantly worse than what you see in the general market" 5.

California has been "the single biggest problem," according to Newlands, as construction jobs—the "4,000 calorie jobs" that historically correlate with beer consumption—haven't materialized as expected 6.

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A Tale of Two Portfolios

While the flagship brands struggled, smaller Mexican imports are thriving. Pacifico grew depletions by over 15% and Victoria surged 13% 1—a glimmer suggesting that consumers trading down from premium products are staying within the Constellation portfolio rather than leaving entirely.

The company maintained that its Beer Business still ranked as the #3 dollar share gainer in tracked channels, with Modelo Especial and Corona Extra holding their #1 and #5 positions in dollar sales respectively 2. Four of the top 15 share-gaining brands in the entire U.S. beer category belong to Constellation.

Guidance Holds, But Challenges Persist

Management affirmed full-year comparable EPS guidance of $11.30 to $11.60, while updating reported EPS to $9.72 to $10.02 12. Beer net sales are now expected to decline 2% to 4% for the full fiscal year, with operating income falling 7% to 9% 13.

CFO Garth Hankinson emphasized capital allocation discipline: "Through the first three quarters of fiscal 2026, we returned nearly $1.4 billion to shareholders, maintained our investment-grade rating, and consistently met our ~3.0X comparable net leverage and ~30% dividend payout ratio targets" 14.

The company repurchased $824 million of shares year-to-date through December 2025 and declared a quarterly dividend of $1.02 per share 15.

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Industry-Wide Weakness

Constellation isn't alone. The entire beer industry is under pressure, though the Hispanic consumer pullback hits imported Mexican beers disproportionately hard given their demographic concentration 1.

Recent Nielsen scanner data shows broad weakness across major brewers: Boston Beer volumes down 7%, Molson Coors+1.86% down 11%, and Ab Inbev+1.89% down 4% year-over-year 2.

*Market cap values retrieved from S&P Global

The company's Wine and Spirits segment, now significantly smaller following divestitures of SVEDKA and mainstream wine brands, saw net sales plunge 51% to $213 million, though organic sales declined a more modest 7% 3.

What to Watch

The path forward hinges on macroeconomic improvement. Newlands expressed cautious optimism that volumes may have bottomed, but acknowledged "unprecedented volatility" in consumer behavior 4.

Management highlighted several strategic responses to the affordability squeeze:

• Repositioning Modelo Lite at lower price points to capture trading-down consumers 5
• Expanding price-pack architecture to offer entry points for financially constrained shoppers 6
• Continued investment in brewery capacity despite near-term headwinds, signaling confidence in long-term demand 7

"We're sitting in a good spot as the consumer turns around and gets more comfortable with where they are," Newlands said. "At the moment, there's just a tremendous amount of concern about socioeconomic issues really across the board" 8.

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Related: Constellation Brands-0.65% · Molson Coors+1.86% · Anheuser-busch Inbev+1.89%