Constellation predicts further slump
High West whiskey owner Constellation Brands is now expecting a 4% to 6% decline in organic net sales for fiscal 2026 (FY26).
The company’s previous outlook for FY26, which runs until 28 February next year, predicted organic net sales to decline in the region of 1% to 2%.
Its comparable earnings per share (EPS) for the full year have been adjusted from US$11.30-US$11.60 to US$12.60-US$12.90.
Constellation Brands’ president and chief executive officer Bill Newlands noted the company’s beer brands in particular – Corona and Modelo – are seeing demand dampen, particularly with Hispanic consumers in the US.
He also highlighted a “a challenging macroeconomic environment”, impacted by potential changes to trade amid new and increased tariffs.
Constellation’s wine and spirits forecast remains unchanged, with the segment expected to decline by 17% to 20%.
In the first quarter of fiscal 2026, wine and spirits sales sank by 21%.
Overall net sales for the three months to 31 May 2025 were US$280.5 million, a drop of 28%.
Nevertheless, the company’s executive vice president and chief financial officer, Garth Hankinson, said its cost savings and efficiency initiatives “continue to deliver incremental benefits for our business, supporting continued investment levels behind our brands.”
In April, Constellation said it would review its organisational structuring, in the hope of saving an excess of US$200m by 2028.
This year, the company sold Copper & Kings to Bourdon Spirits Company in August, Svedka Vodka to Sazerac in January, and a large portion of its mainstream wine brands in June.
The remaining spirits portfolio includes the Mi Campo and Casa Noble Tequilas, whiskey producers Nelson’s Green Brier and High West, and ready-to-drink brand Austin Cocktails.
Hankinson added: “We remain committed to our disciplined and balanced capital allocation priorities, including maintaining our investment grade rating; advancing our brewery investments in our beer business; and delivering cash returns to shareholders through our dividend and share repurchase programmes.
“Through the first half of this fiscal year, we have executed US$604m in share repurchases under our three-year US$4 billion share repurchase authorisation. Looking at our second quarter, we expect inventory rebalancing at the distributor level to reflect softer consumer trends, and to occur earlier than is typical for our beer business.
“As a result, we expect the change in shipments to trail the change in depletions in the second quarter by 6% to 7%, and for shipment volume to generally align with depletion volume for the second half of the fiscal year.”
Constellation is currently facing a lawsuit in the US, which alleges the group misled investors about the growth potential of its wine and spirits portfolio.
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