Constellation Brands — Financial Results

Beer Segment Delivered Solid Growth While Wine and Spirits Continued to Decline

The beer business, built around imported Mexican brands like Modelo and Corona, grew net sales 5% driven by both higher shipment volumes (+3.3%) and price increases in select markets. Meanwhile, the wine and spirits side continued shrinking — organic (excluding the sold SVEDKA brand) shipment volumes fell 4.7%, hurt by a weak overall U.S. wine market and retailer destocking (stores reducing how much inventory they hold). These two halves of the business are moving in opposite directions.

Massive Write-Downs Wiped Out Reported Profit for the Year

Goodwill is the premium paid above book value when acquiring a business — when that business deteriorates, accounting rules require writing it down. The Wine and Spirits goodwill was written all the way to zero, reflecting how severely that segment has declined. Combined with the impairment tied to the pending wine brand sale, these non-cash charges flipped the company from a $1.7 billion profit to an $81 million loss. The underlying beer business remains healthy; the headline loss is almost entirely an accounting reflection of the wine business's structural struggles.

Company Is Selling Off Most of Its Remaining Wine Business for $900 Million

In April 2025, Constellation agreed to sell its mainstream wine brands, along with associated wineries, vineyards, and facilities, for $900 million. The brands being sold generated $796.6 million in net sales and $317.5 million in gross profit (revenue minus production costs) in Fiscal 2025. This deal, expected to close after the first quarter of Fiscal 2026, is part of a deliberate strategy to exit lower-margin mainstream wines and focus exclusively on higher-end, premium products that command better prices and margins.

Beer Expansion Requires Significant Ongoing Capital Investment in Mexico

Constellation is spending heavily to expand its brewing capacity in Mexico to keep up with demand for its imported beer brands. Capital expenditures (spending on facilities and equipment) totaled $1,214.1 million in Fiscal 2025, with $991.5 million of that going to Mexico Beer Projects. The company plans to spend another ~$2 billion on these projects over Fiscal 2026 through Fiscal 2028. This is a substantial long-term bet that demand for its Mexican beer portfolio will continue growing.

Operating Cash Flow Remained Strong Despite Accounting Losses

Despite the reported net loss, the company generated $3,152.2 million in cash from operations in Fiscal 2025, up from $2,780.0 million the prior year. The large impairment charges are non-cash items (no money actually left the door), so actual cash generation held up well. The company used that cash aggressively: $1,123.8 million went to buying back shares at an average price of $213.98, and $731.8 million was paid in dividends. A fresh $4.0 billion share repurchase authorization was approved in April 2025, signaling management's confidence in future cash generation.

Tariffs on Mexican Imports Represent a Meaningful Unresolved Risk

Because Constellation's most profitable products are brewed in Mexico and imported into the U.S., new or escalating U.S. tariffs on Mexican goods could directly raise the company's costs. Management flagged this explicitly as a risk that could have a "material impact" on results, and noted they may not be able to fully offset higher costs through price increases or hedging programs. This is a live uncertainty heading into Fiscal 2026 that investors should monitor.