Decrease in consumer interest for beer, as reported by a distributor of Corona and Modelo brands
In a significant shift, consumers are turning away from traditional beer and towards alternatives such as health-focused beverages, energy drinks, spirits, and cannabis-derived refreshments. This trend has had a noticeable impact on Constellation Brands Inc., a leading player in the alcoholic beverage industry.
The stock price for Constellation Brands (STZ) currently stands at 151.26, a percentage change of -6.60%. This dip is partly due to the company's revised outlook for its current fiscal year, which has been affected by weakening consumer demand for beer, particularly high-end beer purchases.
Bill Newlands, CEO of Constellation Brands, has reported that high-end beer buy rates have decelerated sequentially, with both trip frequency and spend per trip declining. Key offerings in the company's portfolio, like Modelo Especial beers, have not been immune to this trend.
In response to these challenges, Constellation Brands has revised its operating income for beer downward to a decline of 7% to 9%. The company has also adjusted its net sales forecast for beer, projecting a decline of 2% to 4%, citing incremental macroeconomic headwinds affecting consumer demand as the key driver of the change.
Bump Williams, CEO of Bump Williams Consulting, attributes this decline in beer consumption to increased health concerns, fewer social gatherings at public venues, and consumers' interest in organic, natural products like cannabis and health drinks. He notes that beer brands with flavor, healthier attributes, and non-alcoholic brands are finding ways to succeed in the market.
Not all is lost for Constellation Brands, however. The spirits-based ready-to-drink business and cannabis/THC drinks are among the biggest winners of lost beer shoppers. Even in the face of declining sales for older, legacy beer brands like Bud, Miller, and Coors (with Coors Banquet being an exception), major players like Anheuser-Busch InBev, which leads the US beer market with numerous popular brands, and Constellation Brands, the largest alcoholic beverage supplier in the US across beer, wine, and spirits categories, continue to show success under current economic conditions.
As the beer market evolves, Constellation Brands, the U.S. importer of Corona and Modelo, will need to adapt to these changing consumer preferences to maintain its position in the industry.
