Constellation Brands has reported weaker-than-expected earnings for its first fiscal quarter, as tariffs on imported aluminium cans and softer demand for alcoholic beverages continue to bite.

Adjusted earnings came in at $3.22 per share, missing analyst estimates by 10 cents. The company’s beer margins were notably pressured by the ongoing 25% U.S. tariff on imported aluminium, which is a key packaging material for its Mexican beer portfolio, including Modelo and Corona.

Constellation also faces broader market challenges, including declining beer sales and a shift among some consumers toward alternatives like cannabis. Inflation and economic uncertainty have especially weighed on Hispanic consumers, who represent a significant share of Modelo’s customer base.

To counter these trends, the company is investing more in marketing to non-Hispanic consumers and focusing on premium product lines. It has also sold several lower-priced wine brands to streamline operations and save an estimated $200 million annually by fiscal 2028.

Despite a 28% decline in wine and spirits sales — partly driven by reduced shipments and the sale of Svedka vodka — Constellation’s beer division still outperformed the overall beverage alcohol market, although beer sales dipped 2% in the quarter ending May 31.

Shares of Constellation Brands have fallen around 25% year-to-date, but the company is holding steady on its full-year outlook for earnings and organic net sales growth.

Bill Newlands, President and Chief Executive Officer, said: “While we continued to face softer consumer demand largely driven by what we believe to be non-structural socioeconomic factors, our teams remain focused on executing the key initiatives that underpinned the outlook we recently provided for fiscals 2026 to 2028. Against that backdrop, we are pleased to continue to lead the U.S. Beer industry in dollar share gains, to have fully repositioned 

Garth Hankinson, Executive Vice President and Chief Financial Officer, said: ”Our cash flow generation enabled us to remain at our ~3.0x comparable net leverage and ~30% dividend payout ratio targets, while continuing to advance our modular brewery investments and returning over $300 million to shareholders in share repurchases in the first quarter of fiscal 2026. 

“As we look to the remainder of the year, our annual operating cash flow and free cash flow expectations are unchanged, and we remain our Wine and Spirits portfolio in higher-growth and higher margin segments, and to consistently deliver against our capital allocation priorities.” committed to deploying that cash in-line with our balanced and consistent capital allocation priorities.”