Raise a bottle of Modelo or a glass of Kim Crawford—Constellation Brands (NYSE: STZ) is toasting a fiscal 2025 that shines despite a stormy economic backdrop. With consumer spending wobbling and inflation biting, the company behind America’s favorite beers and premium wines delivered a performance that blends grit with ambition. Its latest earnings spotlight a thriving beer business, a wine and spirits segment in bold transformation, and a roadmap for 2026-2028 that’s brimming with promise. Let’s unpack the numbers, strategies, and trends that make Constellation a standout in the beverage alcohol world—and see where this dynamic player is headed next.
Fiscal 2025: A Toast to Steady Growth
Constellation Brands poured out a solid fiscal 2025, balancing growth with financial discipline. Net sales climbed 2% to $10.209 billion, with organic growth hitting 3% after adjusting for the SVEDKA vodka divestiture. Comparable earnings per share (EPS) surged 11% to $13.78, landing at the top of the company’s $13.40-$13.80 guidance range. Cash flow stole the show: operating cash flow hit $3.2 billion, topping expectations of $2.9-$3.1 billion, while free cash flow reached $1.9 billion.
Shareholders reaped rewards, too. Constellation returned over $1.1 billion through stock buybacks and more than $700 million in dividends, with its quarterly dividend rising to $1.02 per share. These numbers reflect a company not just navigating challenges but thriving amid them.
Beer Business: The Golden Engine
The beer business was Constellation’s superstar, dominating the U.S. high-end beer market. Net sales grew about 5%, driven by a 4% volume increase and a 2% price bump. Modelo Especial, the portfolio’s crown jewel, saw depletions (distributor shipments to retailers) rise nearly 5%, holding its throne as America’s top beer brand by dollar sales, per Circana data. Pacifico stole the spotlight with a 20% depletion surge, crossing 25 million cases sold—a testament to its rising popularity.
Constellation didn’t just grow; it gained ground. The company captured 1.1 points of market share in the total beer category, solidifying its lead as the #1 high-end beer supplier. Depletions rose 2.9% overall, marking 15 straight years of growth, with off-premise channels (like supermarkets) matching that pace and on-premise spots (bars and restaurants) up 2.3%. Operating margins sparkled, climbing 180 basis points to 39.7%, fueled by over $200 million in cost savings from streamlined supply chains and operations.
What’s the recipe? Strong brand loyalty—especially among Hispanic consumers, where Constellation’s beers reign supreme—paired with killer marketing. Spending 9% of net sales on ads kept Modelo Especial and Corona Extra as the #1 and #2 brands in beer “share of voice.” New offerings like Modelo Spiked Aguas Frescas and Corona Non-Alcoholic tapped into demand for flavored and lighter drinks, showing Constellation’s knack for keeping fans happy.
Wine and Spirits: A Tough Sip, But Turning a Corner
The wine and spirits business faced headwinds. Net sales fell 7% (6% organically), hit by a sluggish U.S. wholesale market. Mainstream wine volumes dropped nearly 7%, and premium brands slipped just over 1%, according to Circana’s 52-week data ending March 2, 2025. A $3.3 billion non-cash impairment charge for goodwill and assets, mostly booked in Q2, reflected the segment’s challenges as consumers tightened belts and retailers cut inventories.
Yet, there’s light in the bottle. Kim Crawford, the portfolio’s top wine brand post-divestitures, held firm and outshone its premium peers. The core brands set to stay after the 2025 Wine Divestitures Transaction—like The Prisoner—posted a healthy 4% depletion growth. International markets added 2% to net sales, led by Canada, while direct-to-consumer channels (think winery visits and online orders) grew 7%, making up 16% of segment sales. These wins signal a pivot toward a brighter, leaner future.
Strategic Moves: A Winning Playbook
Constellation isn’t just playing the hand it’s dealt—it’s reshuffling the deck. Its 2025 fiscal year showcased a clear strategy: shed low-margin brands, fuel high-growth beer, and share the gains with shareholders. Here’s how it’s pulling it off.
Shedding Weight: Streamlining the Portfolio
The biggest move was pruning the wine and spirits business. After offloading SVEDKA vodka, Constellation signed a deal to divest its remaining mainstream wine brands by the end of fiscal 2026’s first quarter, expecting to pocket about $900 million (pending adjustments). This “2025 Wine Divestitures Transaction” sharpens the focus on high-end and ultra-premium names like Kim Crawford, The Prisoner, and Casa Noble Tequila, which promise juicier margins and stronger growth.
Why cut deep? Mainstream wines are losing steam as consumers opt for budget bottles or skip alcohol entirely. By ditching these drags, Constellation is streamlining for profitability, with early signs of success: its post-divestiture portfolio already grew depletions 4%.
Fueling Growth: Betting on Beer and Innovation
On the growth front, Constellation poured $940 million into its beer empire, mostly to expand in Mexico. A new Veracruz brewery, plus upgrades to existing plants, aims to lift production capacity to 55 million hectoliters by 2028, up from 48 million. This investment banks on soaring demand for Modelo, Corona, and Pacifico, though it carries risks like supply chain snags or geopolitical turbulence.
Innovation is another ace up Constellation’s sleeve. Corona Sunbrew, a citrusy low-alcohol beer, is set for a 2026 national launch after a hot test run. Modelo Spiked Aguas Frescas cracked the top 10 in flavored malt beverages, while Corona Non-Alcoholic ranked among the top five in its booming segment. These moves show Constellation’s flair for spotting trends—lighter drinks, bold flavors—and turning them into hits.
Sharing the Wealth: Cost Cuts and Shareholder Love
Cost-cutting kept the engine humming. Fiscal 2025 saw $220 million in savings through supply chain tweaks and leaner operations. Constellation projects $55 million more in 2026 and over $200 million by 2028, crucial for offsetting new U.S. (April 2, 2025) and Canadian (March 4, 2025) tariffs that could spike import costs, especially for wine and spirits.
Shareholders are sipping the benefits, too. Beyond $1.1 billion in buybacks and over $700 million in dividends, a new $4 billion stock repurchase program through 2028 signals confidence. With a 30% dividend payout ratio, Constellation’s balancing growth and generosity like a pro.
Market Trends: Riding the Industry Wave
To get the full picture, let’s step back to the beverage alcohol landscape. It’s a mixed bag, with consumer shifts and economic ripples reshaping the game.
High-end beer is soaring, with Latin-inspired brands like Modelo winning hearts—especially among Hispanic consumers, where Constellation’s portfolio tops loyalty charts. Wine, though, is nursing a headache. Circana data shows mainstream wines slumped 7% in volume, and premium ones dipped 1%, as shoppers pivot to cheaper options or non-alcoholic drinks like mocktails. High-end spirits, like Casa Noble Tequila, still shine, aligning with Constellation’s upscale pivot.
While many global alcohol players wrestle with premiumization pressures and fragmented consumer habits, Constellation’s beer-driven, high-end focus offers a clearer path forward. Its streamlined portfolio and laser focus on growth areas set it apart in a crowded field, signaling a strategy others might emulate.
Economic bumps added friction in 2025. Unemployment spikes in key states hit beer sales, particularly in Hispanic-heavy markets. U.S. housing permits lagged from December to February, hinting at weaker construction—a beer-friendly sector. Consumer confidence, per the University of Michigan index, sank to a two-and-a-half-year low in March. Constellation sees these as temporary, “non-structural” issues, expecting demand to stabilize.
Tariffs are the latest curveball. New U.S. and Canadian levies could raise costs, especially for wine and spirits. Constellation’s counter? Trim low-margin lines, boost beer, and keep shareholders smiling—a playbook built for resilience.
Looking Ahead: 2026-2028 in Focus
Constellation’s 2026-2028 outlook blends caution with optimism, mapping a path to sustained growth.
Fiscal 2026: Bridging the Gap
Fiscal 2026 is a transition year, with organic net sales projected to range from a 2% drop to a 1% gain. The wine divestitures will shave off $613 million in sales, SVEDKA’s exit cuts another $98 million, and tariffs add pressure. Comparable EPS is expected at $12.60-$12.90, with operating cash flow of $2.7-$2.8 billion and free cash flow of $1.5-$1.6 billion.
Beer will lead, with net sales flat to up 3%, powered by high-single-digit distribution gains and Corona Sunbrew’s rollout. Operating margins should stay robust at 39-40%, despite tariff-driven cost hikes. Wine and spirits face a tough slog—net sales may fall 17-20%, with margins near zero due to divestiture fallout and contract shifts. Still, $55 million in cost savings and a high-end focus will cushion the hit.
2027-2028: Full Steam Ahead
By 2027 and 2028, Constellation expects to hit its stride. Annual net sales growth of 2-4% is targeted, with operating margins climbing to 35-36%, a 150-250 basis point jump from 2026. Beer sales should rise 2-4% yearly, driven by low-single-digit volume growth and mid-single-digit distribution gains for Modelo Especial and Pacifico. Pricing will add a steady 1-2% boost.
Wine and spirits will rebound, targeting up to 3% annual sales growth and 22-24% margins. High-end brands and a direct-to-consumer channel (set to grow 100-200 basis points) will lead the way. Cumulative operating cash flow is forecast to exceed $9 billion, with free cash flow topping $6 billion, funding $4 billion in buybacks, steady dividends, and $1.2 billion in annual capital spending—mostly for beer.
Risks like tariffs or spending dips loom, but Constellation’s cash reserves and cost discipline offer a solid shield.
A Future Worth Sipping
Constellation Brands’ fiscal 2025 was a masterclass in balancing act—brewing blockbuster beer growth, retooling its wine business, and keeping finances rock-solid with $3.2 billion in operating cash flow. By shedding mainstream brands, pumping capital into Modelo and Corona, and rolling out hits like Corona Sunbrew, it’s not just adapting—it’s shaping the future of alcohol.
Challenges await: tariffs, inflation, and shifting tastes will keep things lively. But Constellation’s recipe—trim what’s weak, double down on what’s strong, and reward investors—feels like a winner. Its focus on premium brands and direct sales could spark a broader industry shift, showing how to thrive in uncertain times.
As summer barbecues and Cinco de Mayo roll around, Constellation invites you to pop a Corona or pour some Kim Crawford. Beyond the bottle, it’s crafting a story of bold bets and big rewards—a journey that’s absolutely worth reaching for. Here’s to watching it unfold.
Constellation Brands’ 2025 Earnings Release and Financial Tables
