Modelo maker Constellation Brands pops off as Americans pick foreign brews over domestic staples
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Raise a glass… and your annual guidance if you’re Constellation Brands. The big beer co was cheers-ing this week after growing its quarterly profit by more than 6x from last year. The booze giant, which sells Mexican brews like Modelo and Corona in the US, said profits foamed up after beer sales surged 8% and costs fell. But overall sales grew at a slower pace as wine and spirits continued to leave a stain.
Wine-no: Constellation’s non-beer sales (it owns brands like Meiomi wine and Mi Campo tequila) fell 7%, continuing declines.
Especially good: Modelo Especial sales rose 11% last quarter, and Pacifico, which Constellation says has become a fave in US “beach towns,” spiked 21%.
Modelo behavior… Mexican beers have taken over Americans’ BBQ coolers. Modelo Especial overtook AB InBev-owned Bud Light as the US’s top-selling beer last year after conservative consumers boycotted Bud over an influencer partnership. More than a year after the Budcott, AB InBev’s US sales dropped 9% annually in the first quarter of this year (it blamed Bud Light).
Worldwide: While the US was a weak spot for AB InBev, international consumers paying higher prices boosted its total revenue to a record last year (and sales bubbled up again last quarter).
FYI: AB InBev is the world’s largest beer co and owns the rights to sell Modelo Group beers like Corona and Modelo Especial outside the US.
Brand recognition is double-edged… Constellation’s struggling to stand out in the wine-and-spirits aisle while its Mexican brews are becoming household names. Meanwhile, Bud Light’s brand now leaves a bad taste for some consumers. One analyst said Bud’s lost a generation of drinkers that could take a decade (and a lot of Clydesdales) to win back.