Trump's immigration crackdown is hurting sales of America's most popular beer

Key Points

  • Consumer Sentiment Impact: Constellation Brands, owner of Modelo and Corona, reports a decline in consumer sentiment among its core Hispanic consumer base due to President Trump's immigration crackdown, leading to reduced beer consumption occasions.**
  • Beer Volume Decline: The company experienced a 3.3% drop in beer shipment volumes in the latest quarter, slightly worse than Wall Street's expected 2.4% decline.**
  • Financial Performance: Constellation Brands missed revenue and earnings expectations for Q1 2026, reporting $2.52 billion in revenue and $3.22 per share against forecasts of $2.55 billion and $3.32 per share.**
  • Hispanic Consumer Behavior: Fears related to ICE raids and deportation scares have led Hispanic consumers to limit social activities and outings, reducing beer consumption opportunities.**
  • Market Challenges: Despite Modelo Especial being the top beer in the US, the brand faces growth challenges due to scale, alongside broader industry issues like declining alcohol consumption among younger consumers.**

Summary

Constellation Brands, the owner of Modelo and Corona, is facing significant challenges due to President Trump's immigration crackdown, which has negatively impacted consumer sentiment among its core Hispanic demographic, representing roughly half of its beer business. CEO Bill Newlands noted a decrease in social occasions and outings among these consumers, contributing to a 3.3% drop in beer shipment volumes in the latest quarter, exceeding Wall Street's expected 2.4% decline. Financially, the company missed Q1 2026 expectations with $2.52 billion in revenue and $3.22 per share against forecasts of $2.55 billion and $3.32. Experts suggest that fears of ICE raids and deportation, alongside economic pressures like slowing construction job growth, are causing Hispanic consumers to alter routines, reducing beer consumption opportunities. Despite Modelo Especial holding the top spot in the US beer market, it faces scale challenges and broader industry trends, including declining alcohol use among younger consumers and potential tariff impacts. Constellation reiterated a modest 0%-3% growth forecast for beer sales but expects a significant 17%-20% decline in wine and spirits. While the stock rose over 4.5% recently, it has fallen more than 20% this year due to these multifaceted risks.

yahoo
July 3, 2025
Stocks
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