Why Constellation Brands Lost 17% in September

Shares of Constellation Brands (NYSE: STZ) were among the losers last month after the domestic seller of Corona and Modelo cut its guidance for fiscal 2026 at the beginning of the month.

Like other alcohol stocks, Constellation has been under pressure from negative consumer trends in alcohol consumption and from tariffs. The news was just the latest challenge for Constellation, which has struggled to deliver growth despite trying to refresh its beverage portfolio.

According to data from S&P Global Market Intelligence, the stock fell 17%. As you can see from the chart below, shares fell sharply in early September on the news and continued to head lower over the first half of the month.

STZ data by YCharts

Constellation sees a dimmer year ahead

Citing a "challenging macroeconomic environment" and "dampened consumer demand," Constellation cut its guidance across the board for fiscal 2026. The company now sees beer net sales falling 2% to 4%, compared to earlier guidance of flat to 3% growth. It now sees overall organic net sales, which includes the smaller wine and spirits category, falling by 4% to 6%, and it cut its adjusted earnings-per-share forecast from a range of $12.60 to $12.90 to between $11.30 and $11.60.

CEO Bill Newlands noted that high-end beer buy rates, referring to Corona and Modelo, decelerated sequentially, and declines among Hispanic consumers were particularly sharp, another sign that the immigration crackdown is hurting its business.

In response to the update, Wall Street adjusted its forecasts on the stock, and BNP Paribas Exane downgraded the stock to underperform with a price target of $123. The firm noted structural demand issues and said long-term beer operating margins were likely to come down.

Image source: Constellation Brands.

What's next for Constellation Brands

The alcohol sector is struggling in general these days for several reasons. Reciprocal tariffs from places like Europe are challenging the export market. Gen Z is consuming less alcohol than previous young adult generations, and a weak labor market and pressure on discretionary spending also seem to be weighing on demand.

Most of these problems appear to be outside of Constellation's control. Management did note that it grew volume share in 49 of 50 states through July of this year and that research firm Circana said that its beer business was the top dollar share gainer.

While that shows the company is executing where it can, getting a higher position on a sinking ship does not make for a good investing thesis. Until the dynamics in the broader beer industry stabilize, Constellation Brands stock looks best avoided.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.