Constellation Brands, the American distributor of Modelo and Corona, highlighted that it's not just tariffs that are causing beer sales to suffer, but also immigration fear, as per a report.
Analysts and distributors revealed that, in the beverage company's main markets like Southern California and Texas, many immigrants are avoiding local liquor stores and smaller retailers in Hispanic neighborhoods, they are instead shifting to larger chains that are less likely to be targeted for immigration enforcement, as per Fortune.
Newlands emphasized that, “Many consumers within the Hispanic community are quite apprehensive at this moment,” quoted Fortune. He also pointed out that, “Social events, which are typically occasions where Hispanic consumers enjoy beer, are currently on the decline due to these overarching worries,” as quoted in the report.
ALSO READ: Countries should learn from Ireland on how to handle Donald Trump's tariffs; here's what the tiny European country did
Constellation has reduced its earnings projections for the coming years, as per the report. The company now predicts only 2% to 4% yearly sales increases through fiscal 2026, down from its previous estimate of 6% to 8%, reported Fortune.
A mix of things, mainly fears around immigration enforcement in Hispanic communities and rising costs due to tariffs.
Why is immigration enforcement impacting beer sales?
Around half of Modelo’s U.S. customers are Hispanic. With heightened immigration crackdowns, many are avoiding smaller local liquor stores, places where Modelo sells really well.
Modelo’s First Sales Dip in Over a Decade
Modelo, which aqucired Bud Light a year ago to become America's bestselling beer, just reported its first quarterly sales decline to retailers in more than a decade, as per Fortune. The company is blaming the fall in demand to the increased anxiety among Hispanic consumers, who comprise roughly half of Modelo's US customers, according to the report.Fear in the Hispanic Community Is Taking a Toll
Constellation CEO Bill Newlands in an interview with The Wall Street Journal, said, “If that consumer has concerns, issues, et cetera, that’s a big deal for us,” and also pointed to heightened fears among Latino shoppers in the wake of stepped-up immigration enforcement, reported Fortune.Analysts and distributors revealed that, in the beverage company's main markets like Southern California and Texas, many immigrants are avoiding local liquor stores and smaller retailers in Hispanic neighborhoods, they are instead shifting to larger chains that are less likely to be targeted for immigration enforcement, as per Fortune.
Newlands emphasized that, “Many consumers within the Hispanic community are quite apprehensive at this moment,” quoted Fortune. He also pointed out that, “Social events, which are typically occasions where Hispanic consumers enjoy beer, are currently on the decline due to these overarching worries,” as quoted in the report.
ALSO READ: Countries should learn from Ireland on how to handle Donald Trump's tariffs; here's what the tiny European country did
Tariffs Makes the Bad Situation Worse
Adding to the pressure, Constellation is also contending with significant costs from Trump's recently implemented tariffs, as per Fortune. A 25% tariff on all imported canned beer and empty aluminum cans took effect on April 4. While the beer itself isn't being taxed directly, because Modelo, Corona, and Pacifico are exempt from tariffs on Mexican imports, the aluminum cans they are packaged in are, according to the report. This could cost the company as much as $1 billion per year, as per Fortune.Constellation has reduced its earnings projections for the coming years, as per the report. The company now predicts only 2% to 4% yearly sales increases through fiscal 2026, down from its previous estimate of 6% to 8%, reported Fortune.
FAQs
What’s causing the drop in Modelo sales?A mix of things, mainly fears around immigration enforcement in Hispanic communities and rising costs due to tariffs.
Why is immigration enforcement impacting beer sales?
Around half of Modelo’s U.S. customers are Hispanic. With heightened immigration crackdowns, many are avoiding smaller local liquor stores, places where Modelo sells really well.
