New York, April 10, 2025 – Constellation Brands Inc. announced on Wednesday it would sell off its remaining lower-end wine brands in a move to focus on more upscale offerings, but the company’s profit forecast for the year fell short of Wall Street expectations, sending its stock down 4% in after-hours trading.
The beer and wine maker, known for brands such as Corona and Modelo, revealed plans to unload its “mainstream” wine portfolio, which includes related vineyards and facilities, to The Wine Group. This transaction is expected to close after Constellation’s first fiscal quarter, ending May 31. The company stated that the remaining wines under its umbrella would consist primarily of products priced at $15 or above.
CEO Bill Newlands commented, “This transaction is part of our strategy to focus on higher-end wine and craft spirits brands that align with evolving consumer preferences.”
As part of its broader strategy to streamline operations and cut costs, Constellation also announced an ongoing review of its organizational structure, which is expected to yield over $200 million in annual savings by fiscal 2028.
While the company is committed to focusing on premium products, its earnings forecast for fiscal 2026, which runs through February, disappointed analysts. Constellation expects earnings per share between $12.60 and $12.90, below the consensus estimate of $13.94. The company attributed the lower-than-expected guidance to the anticipated effects of tariffs announced by both the U.S. and Canadian governments in early April and March. Constellation operates breweries and a glass-production facility in Mexico, which may be impacted by these tariffs.
TD Cowen analyst Robert Moskow noted that Constellation’s outlook signals a potential slowdown in the demographic and distribution growth that had previously fueled its business. Newlands, during the earnings release, also acknowledged a softer consumer-demand environment over the past year as inflation and high living costs have taken a toll on shoppers.
Despite these challenges, Constellation reported fourth-quarter sales of $2.16 billion, surpassing analysts’ expectations. Adjusted earnings of $2.63 per share also beat the forecast of $2.27. The company’s beer business, particularly brands like Corona, has seen a boost, driven by an increased marketing push, even as the wine segment, especially lower-priced offerings, has faced difficulties.
In a move to further expand its beer business, Constellation revealed plans to invest approximately $2 billion in new facilities in Mexico between fiscal 2026 and fiscal 2028. This includes the construction of a third brewery in Veracruz, with the aim of increasing production capacity to 55 million hectoliters by the end of fiscal 2028 to support growth in its premium beer brands.
As Constellation continues to reshape its portfolio, its focus remains on premium products in both the wine and beer sectors to meet shifting consumer preferences.
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