U.S. sales of Mexican beers Corona, Modelo and Pacifico have recently dropped and this drop may result from Donald Trump’s policies.
All 3 beer brands are made by Mexico’s Modelo group and distributed in the United States by Constellation.
Modelo Especial, by the way, is the best-selling beer in the U.S.A.
So what do Trump’s policies have to do with it?
According to CNBC:
“Constellation Brands’ beer sales fell 2% in its latest quarter as President Donald Trump’s deportations and consumers’ broader economic fears weighed on demand.”
“In April, Constellation CEO Bill Newlands said that Hispanic consumers are spending less due to their concerns about Trump’s hard-line immigration policy and possible job losses in industries with high Latino employment bases. During Wednesday’s [July 2nd’s] earnings conference call, Newlands acknowledged that raids by U.S. Immigration and Customs Enforcement were making it difficult to predict consumer behavior moving forward, although he demurred about tying the beer division’s slowdown to Hispanic shoppers specifically during the company’s fiscal first-quarter call.”
“ ‘When you see a fair amount of change, both Hispanic and non-Hispanic consumers are concerned about inflation and about cost structure,’ Newlands told analysts.”
“Hispanic consumers are a core part of Constellation’s customer base. The brewer, which owns Modelo, Corona and Pacifico, says that roughly half of its beer sales come from Latinos in the U.S.”
“Constellation’s earnings and revenue for the quarter ended May 31 fell short of Wall Street’s estimates, hurt by weaker beer demand and higher aluminum costs from Trump’s tariffs. Still, the company reiterated its full-year outlook, signaling confidence that it can achieve its financial targets despite economic uncertainty.”
Another article on the same topic on the U.K.’s Independent reported more of what CEO Newlands said:
“Newlands said its Hispanic customers are ‘very interested in beer,’ but ‘occasions on which beer is consumed have decreased,’ Yahoo Finance reported.”
“The CEO said Hispanic consumers are ‘not going out to eat as much as they had, they’re having less social occasions at home.’ ”
“Constellation Brands’ worse-than-expected earnings and revenue were also caused by President Donald Trump’s tariffs on aluminum, according to the company.”
I wrote about that here on Mexico News Report back in March and here in April.
“Trump’s mass deportation plan is in full swing. Last month, the White House announced ICE had made more than 100,000 arrests since Trump took office for the second time.”
“The Trump administration’s immigration crackdown has put fear into America’s Latino and Hispanic populations, with some too afraid to leave their homes.”
According to The New York Post “The giant brewer of Modelo and Corona said it has suffered a double whammy from the White House as its margins got squeezed by President Trump’s tariffs — and its sales have been slammed by the immigration crackdown.”
“Constellation Brands, whose Modelo brand is the top-selling beer in the US, on Tuesday [July 1st] reported adjusted earnings per share of $3.22, below LSEG analysts’ expectations of $3.31, in the first quarter ended May 31.”
“Trump hiked levies on aluminum to 25% in March and raised them again to 50% in early June, threatening to raise costs for products like beer, soda and energy drinks sold in cans.”
“Rochester, NY-based Constellation sells only imported Mexican beers like Corona and Pacifico – which also left it heavily exposed to 25% tariffs that Trump imposed on foreign beer imports in April.”
“While the tariffs hit margins, the company also reported disappointing revenue — just $2.52 billion in the latest quarter, versus Wall Street’s forecast of $2.55 billion.”
“The beer maker blamed the sales shortfall on weaker demand ‘largely driven by…non-structural socioeconomic factors,’ as well as its divestiture of Svedka voda [sic], according to CEO Bill Newlands.”
“In April, Newlands said that Hispanic customers – who make up roughly half of Constellation’s beer sales – had pulled back on buying from the brand amid Trump’s immigration crackdown. ”
“ ‘The fact is, a lot of consumers in the Hispanic community are concerned right now,’ Newlands said during a company conference call.”
“ ‘Over half are concerned relative to immigration issues and how those impact [them]. A number of them are concerned about job losses in industries that have a high Latino employment base.’ ”
“As a result, Hispanic consumers have cut back on discretionary spending, including goods and services like restaurants, clothing, travel – and beer, Newslands [sic] said.”
“Shipment volumes in its beer business dropped 3.3% during the latest quarter on the slump in demand.”
“Its operating margin fell 150 basis points, or 1.5%, during the same period due, in part, to the aluminum tariffs, the company said.”
“Shares in Constellation have fallen 25% so far this year. The stock plunged in January after the company reported weak fourth-quarter earnings and revealed a full-year forecast below expectations.”
“Constellation also sells wine and craft spirits, but its beer business is the real money maker, accounting for roughly 80% of total revenue.”
“Constellation reported first-quarter net income of $516.1 million, or $2.90 per share, down from $877 million, or $4.78 a share, the year before.”
“However, Constellation maintained its full-year forecast, including comparable earnings per share of $12.60 to $12.90.”