MW Constellation Brands offloads cheaper wine brands, looks to save money as forecast sinks stock

By Bill Peters

The alcohol company's shares were down 4% in extended trading after it reported earnings

Beer and wine maker Constellation Brands Inc. on Wednesday said it would sell off its remaining lower-end wine brands and look for more ways to save money, but shares fell as the company's full-year profit forecast came in below Wall Street's expectations.

Constellation shares $(STZ)$ were down 4% after hours, after finishing regular trading 7.3% higher amid the broader market rebound. The company will hold its earnings call with Wall Street analysts on Thursday.

Constellation said it would unload the remaining "mainstream" wine brands it still had, along with related vineyards and other facilities, to the Wine Group in an effort to focus on more upscale offerings. That deal is expected to close after Constellation's first quarter, which ends on May 31.

The company said the leftover wines under its umbrella would consist of brands "predominantly priced $15 and above." Chief Executive Bill Newlands said in a statement that the deal reflects efforts to sell "higher-end wine and craft spirits brands that are aligned to evolving consumer preferences."

In its efforts to make its wine and spirits business more focused and drive growth overall, Constellation also said it was "undergoing a review of its organizational structuring." It said that review is expected to bring more than $200 million in annualized cost savings by its fiscal 2028.

The company - which sells beers like Corona and Modelo in the U.S., and wine brands like Kim Crawford - also forecast earnings per share of $12.33 to $12.63 for its fiscal 2026, which is set to run through February. However, that was below FactSet analysts' consensus forecast for $13.94.

Its guidance, Constellation said, reflected "the anticipated impact of the tariffs announced by the U.S. government on April 2, 2025 and the Canadian government on March 4, 2025." The company has breweries and a glass-production facility in Mexico, according to its most recent annual report from last year.

Newlands, in Constellation's earnings release on Wednesday, noted "a softer consumer-demand backdrop" over the past year, as shoppers grapple with higher costs of living.

The company reported sales of $2.16 billion for its fourth quarter, above FactSet forecasts.

Constellation in January said its wine segment, particularly in lower-priced offerings, had struggled. Last year, it agreed to sell its Svedka vodka brand to Sazerac. However, it said a bigger marketing push had helped demand for its beer business.

And even as President Donald Trump targets Mexico in his effort to force negotiations with U.S. trading partners, Constellation on Wednesday said that from its fiscal 2026 to fiscal 2028, it expected to spend around $2 billion to build out a third brewery site in Veracruz and other facilities in Mexico.

"By the end of fiscal 2028, we expect to increase our capacity in Mexico to approximately 55 million hectoliters to support the anticipated growth of our high-end beer brands," the company said.

-Bill Peters

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April 09, 2025 18:41 ET (22:41 GMT)

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