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- Beer demand weakens, Corona and Modelo seller says (foxbusiness.com)
Constellation Brands, the U.S. importer of popular Mexican beers Corona and Modelo, has lowered its financial outlook for the fiscal year, citing a decline in consumer demand, particularly for high-end beer. The company now projects a 2% to 4% drop in net beer sales, a significant revision from its previous forecast of flat to 3% growth. Operating income for beer is also expected to decline by 7% to 9%, a stark contrast to the previously anticipated growth.
CEO Bill Newlands attributed the downturn to a “challenging macroeconomic environment” impacting consumer behavior and purchasing power. He noted a decrease in both the frequency of beer purchases and the amount spent per trip, particularly among Hispanic consumers, a key demographic for Constellation’s brands.
Industry expert Bump Williams, CEO of Bump Williams Consulting, offered further insight, suggesting several factors are contributing to the decline in beer consumption. These include growing health concerns, fewer social gatherings at venues where beer is typically sold, and the changing preferences of younger legal-age drinkers who are increasingly drawn to alternatives like cannabis and health drinks.
Williams pointed out that while all beer brands are facing challenges, established brands like Budweiser, Miller, and Coors are experiencing the steepest declines. Meanwhile, flavored alcoholic beverages, healthier beer options, and non-alcoholic beers are proving more resilient. He noted that Constellation’s success with brands like Pacifico and Corona Premier hasn’t been enough to offset losses from its flagship brands, Corona and Modelo.
Economic pressures, including rising prices across the consumer goods sector, are also playing a role. Consumers are increasingly price-sensitive and opting for smaller, more affordable packages of beer.
As a result, many are switching to alternative beverages like energy drinks, spirits, ready-to-drink cocktails, and cannabis-infused drinks. Williams believes these trends pose a significant long-term challenge to the beer industry.
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- Beer demand weakens, Corona and Modelo seller says (foxbusiness.com)