Shares of Constellation Brands Inc. (NYSE: STZ) stayed red on Thursday. The stock has dropped 22% year-to-date. The beer giant’s sales and profits declined in the first quarter of 2026 as the challenging economic environment negatively impacted its business. Despite sales declines in both its segments, the company’s brands remained popular and gained share within their categories.
Soft demand hurts Q1 results
In the first quarter of 2026, Constellation’s net sales decreased 6% year-over-year to $2.51 billion while organic sales were down 4%, due to soft demand caused by a difficult economic environment. Consumers, particularly those in heavy labor jobs, are facing economic pressures and this has led to a drop in social gatherings and reduced spending on beverage alcohol. STZ’s earnings per share, on an adjusted basis, declined 10% YoY to $3.22.
Beer and Wine decline
During the quarter, STZ’s beer business was impacted by volume headwinds as consumers reduced their spending and sought more value on their purchases. Sales were down 2% in Q1, driven mainly by a 3.3% drop in shipments. Depletions fell 2.6%, with decreases in the Modelo Especial, Corona Extra, and Modelo Chelada brands partly offset by growth in Pacifico.
Despite these headwinds, the company’s beer portfolio continued to remain popular with consumers, and its largest brands Modelo, Corona, and Pacifico continued to gain share. Pacifico recorded a 13% growth in depletions in Q1.
Sales in the wine and spirits business decreased 28% on a reported basis and 21% on an organic basis in Q1, mainly due to demand headwinds in the wine category, especially in lower-price segments, caused by economic pressures.
Shipments were down 30.4% while depletions were down 8.1%. Last month, STZ divested its mainstream wine brands in order to focus on its higher-end brands. Its higher-end brand portfolio delivered depletion volume growth of 2% in Q1. The company’s largest wine brand Kim Crawford delivered 4.7% volume growth in Q1.
For the full year of 2026, STZ expects net sales for the beer segment to be flat to up 3%. Organic sales for the wine and spirits segment is expected to fall 17-20%.
Outlook
For fiscal year 2026, Constellation expects enterprise organic sales to be down 2% to up 1% compared to the previous year. Reported EPS is expected to be $12.07-12.37 while comparable EPS is expected to be $12.60-12.90.
