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Constellation Brands Faces Decline in Beer Sales Due to Immigration Policies
(Reuters) – Constellation Brands, the owner of Modelo Especial, is experiencing a downturn in beer sales as demand among Hispanic consumers in crucial U.S. markets decreases, attributed in part to immigration policies under the Trump administration, company officials stated recently.
Since taking office in January, President Trump has initiated a comprehensive immigration enforcement strategy that has placed increasing strain on Hispanic communities, who are already contending with rising costs for food and essential goods, as well as higher unemployment rates.
Modelo Especial, produced exclusively in Mexico and marketed in the United States by Constellation, has seen a surge in popularity over the past couple of years, recently surpassing Bud Light to become the leading beer brand in the U.S. as of 2023.
Nevertheless, the brand’s growth trajectory appears to be faltering, as Constellation reports a notable decline in demand, particularly in regions with significant Hispanic populations.
In a statement issued after market hours on Wednesday, the company revised its annual profit forecasts downward, indicating that anticipated tariffs could adversely impact operations.
According to Bill Newlands, CEO of Constellation Brands, Latino consumers, who comprise approximately half of Modelo’s customer base, are reducing their participation in social gatherings—traditionally a strong driver of beer sales.
“Engagement in restaurants and social events, which are significant occasions for beer consumption, has shown a decline in recent times,” Newlands articulated during the company’s fourth-quarter earnings discussion.
Constellation Brands highlighted that their beers have a strong loyalty base among Hispanic consumers, more so than any other major beer brands in the U.S.
Research conducted by the company indicates that the Hispanic demographic is facing challenges due to job losses, especially in sectors where Latino employees are prevalent.
J.P. Morgan analyst Andrea Teixeira pointed out that the shift in the company’s outlook may reflect a broader context where relaxed immigration policies have previously benefitted the brand. “We think the quick change in tone/outlook at least partially reflects the likely reality that the company was benefiting over the past number of years from loose immigration policy,” she noted.
Additionally, the imposition of a 25% tariff on aluminum along with other tariffs enacted during Trump’s presidency poses potential risks for further price increases on these beer products.
(This story has been corrected to say ‘populations in key U.S. states,’ instead of ‘populations in Mexico and other key markets,’ in paragraph 1)
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