Constellation Brands Q1 FY2027: Beer Now Carries 94% of the Business as Wine Sales Halve

One of Constellation Brands' divisions just saw sales fall 47% in a single quarter. The stock went up almost 4%. That gap tells you what Constellation has become: a Mexican beer company that still sells a little wine on the side.

The Modelo and Corona owner posted net sales of 2.43 billion dollars for the three months to the end of May, the first quarter of its 2027 financial year. That was down 3.3%, but it beat the 2.39 billion dollars analysts expected. Comparable earnings came in at 3.43 dollars a share, up from 2.90 a year earlier and ahead of the 3.20 forecast. Investors liked the beat, and the shares rose almost 4%.

Beer is almost the whole company now

Beer brought in 2.28 billion dollars of that 2.43 billion, roughly 94% of the entire business. Beer sales grew 2%, helped by price cuts and by shipping more product to distributors. Look closer, though, and sales to retailers actually fell 0.3%. Modelo Especial and Corona Extra slipped, offset by growth in Pacifico, Victoria and the Modelo Chelada line. In other words, the growth came from cutting prices and pushing stock into the pipeline, not from more people buying at the shelf.

Wine sales halved, and that was the plan

The wine and spirits division looks like a disaster at first glance: sales down 47% to 149.2 million dollars. But most of that drop is a choice. Constellation sold off a large slice of its mainstream wine in 2025 to focus on higher-end labels. Strip out the sold brands and the like-for-like picture flips: organic wine and spirits sales rose 8%, and depletions climbed 6.6%. The fastest growth in the whole company is hiding in its smallest division, where the Mi Campo tequila brand jumped 62%.

The concentration bet

Focus has a price. Nearly all of Constellation's revenue now rides on imported Mexican beer sold to a value-conscious, heavily Hispanic US shopper. New chief executive Nick Fink, who took over from Bill Newlands in April 2026, said lower-income households turned more cautious during the quarter as fuel prices and inflation bit. That is the exact group Constellation leans on hardest. When one product line carries 94% of your sales, your fate is tied to one consumer and one border.

There is a supply angle too. The beer is brewed in Mexico and sold in aluminum cans, so both trade policy and metal prices hit the margin directly. A 50% US tariff on aluminum was removed in April, which eases canning costs. The relief is welcome, but the exposure to the next tariff headline has not gone away.

What could carry it through the year

A few things are breaking Constellation's way. The World Cup, co-hosted in the US, is lifting on-premise beer. Sales in bars and restaurants rose 5.5% nationally in the week ending 20 June and 15.4% in host cities, according to the Beer Institute. Both Mexico and the USA are still in the tournament, which keeps Mexican beer front of mind for its core drinkers. Fuel prices are also cooling. Constellation held its full-year guidance, calling for comparable earnings of 11.20 to 11.90 dollars a share and a beer operating margin near 37 to 38%.

For operators, investors and buyers, the read-across is bigger than one drinks group. Constellation shows both the appeal and the danger of a concentrated portfolio. Pruning weak lines lifts margins and sharpens focus, and the wine sale was the right call. But the moment a company depends on one product, one consumer group and one supply route, every shock lands harder. The number to watch is the gap between what Constellation ships and what shoppers actually buy, because that gap is the early demand signal. The second is whether the small tequila engine can grow fast enough to matter before the next tariff or spending scare arrives.