On October 6, Constellation Brands dropped its second-quarter fiscal 2026 earnings, spotlighting a familiar chill: net sales fell 15% to $2.48 billion as consumer wallets tightened. But adjusted EPS held at $3.63, down just 16%. Operating income, meanwhile, surged 171% to $874 million—proof that cost tweaks are buffering the blow.
This echoes September’s “Shaken Giants” wake-up on high-end beer slowdowns, especially among Hispanic buyers who fuel the Mexican import surge. No panic here, though: the beer arm outran the U.S. category by nearly 2 percentage points in dollar share via Circana channels. Year-to-date cash flow of $1.5 billion is fueling brewery expansions and brand bets. CEO Bill Newlands sums it up: “We’re executing amid headwinds, chasing distribution and brand love to lead the pack.” For the booze world, this isn’t collapse—it’s a premium pivot, where volumes wane but loyalty lingers in a “sip smarter” shift.
The beer business, fueling 94% of Constellation’s sales, took the hardest hit: sales eased 7% to $2.35 billion, shipments dropped 8.7% to 117.4 million cases, and depletions slipped 2.7% amid inventory resets and economic drag.
Modelo Especial and Corona Extra slid over 4% and 7%, with Cheladas down nearly 3%—a clear sign of fewer backyard toasts as inflation hits spending. The vibrant Modelo ritual, once a Latino staple, now feels the pinch of selective pours. Margins dipped 200 basis points to 40.6%, squeezed by aluminum tariffs and fixed costs, though pricing and marketing held the line. Still, bright spots shine: Pacifico roared 14% on coastal cool vibes, Victoria leaped 19% as a nimble challenger. Four brands snagged top-15 dollar share slots—Modelo as eternal No. 1, Corona Extra top-five with rising Familia and Sunbrew kin. Globally, this mirrors Anheuser-Busch InBev’s volume blues: premium beer demand endures, but sustaining the fiesta means blending heritage with hacks like flavor drops and TikTok tastings. With $1 billion flowing to Mexican breweries this year, Constellation’s brewing a buffer against supply storms.
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Wine and spirits, freshly trimmed by SVEDKA and 2025 divestitures, flipped to a cleaner canvas. Headline sales cratered 65% to $136 million, but organic metrics tell a subtler story: down 19%, with depletions up 2%—beating high-end peers in Circana dollars and volume.
Kim Crawford’s crisp Sauvignon, The Prisoner’s bold reds, Casa Noble Tequila, and High West Whiskey keep pulling story-seekers in a market craving “worth it” craft sips. Margins swung negative to -14.6% from 18.1%, hit by deal ripples, but shedding $220 million in low-yield volume unlocked focus. It’s spirits surgery: ditch the drag, chase the cachet where consumers curate over shelf-fillers. Full-year organic sales eye 17-20% drops, income 97-100%, yet share edges hint at rebound—ESG tales of sustainable vines aren’t just greenwashing; they’re the new pour narrative in a fragmented fine-wine fray.
CFO Garth Hankinson flags the fuel: “Efficiency gains keep brand bets robust.” Guidance sticks: organic sales off 4-6% (beer 2-4%, wine/spirits 17-20%), EPS $11.30-$11.60, cash flow $2.5-$2.6 billion. It’s a spirits survival kit—brewery builds, targeted innovation, and rooted responsibility—against Diageo’s recalibs. Tariffs and dips loom, but premium pulses with bolder, curated choices.
This Q2 lens sharpens the sector’s edge—volumes test, but shares and stories steel the spine. Constellation’s not crumbling; it’s recalibrating the beer boom for rational revelry. Can the industry match that Modelo magic in the next round? Tune in to tomorrow’s call—the pour’s just starting.