From Cheers to Fears: Politics Are Spoiling the Party for Corona and Modelo

A tough quarter for Constellation Brands reveals a bigger truth: political policies are hitting the beer aisle hard

Constellation Brands, the American beer behemoth behind household names like Corona, Modelo, and Pacifico, is caught in the crosshairs of policy and purchasing power. CEO Bill Newlands isn’t mincing words—he says Trump-era tariffs and broader policy shifts are directly impacting not just the company’s bottom line, but also consumer behavior in its most critical markets.

In a candid interview on Yahoo Finance’s Catalysts, Newlands laid out the perfect storm brewing around the beer industry. Inflation, immigration fears, and a colder social climate are chipping away at the cultural cornerstone that is the beer moment. “Fortunately, beer is pretty far down the list,” Newlands remarked, “but there’s an overall concern in that [Hispanic] community. Less social gatherings... Those are beer moments. So for us, that creates a bit of a challenge.”

It’s more than just anecdotal. Constellation’s recent earnings guidance shows an EPS range between $12.60 and $12.90 for fiscal 2026, falling significantly short of Wall Street’s expectations of $13.97. Investors are rightly wary. The numbers reflect more than just consumer fatigue—they capture a structural headwind created by tariffs and policy uncertainty. The result is an earnings outlook that has been downgraded across the board, with projected growth for FY27 and FY28 now in the low- to mid-single digits, far from the earlier double-digit ambitions.

And while a temporary 90-day tariff reprieve was announced by the Trump administration, it’s barely a speed bump in the damage already done. The 25% tariff on imported canned beer and empty aluminum cans, introduced on April 4, remains firmly in place. That’s a critical blow to Constellation, which imports 100% of its beer from Mexico. In the last quarter alone, that Mexican portfolio made up 78% of the company’s net sales. When your biggest revenue engine is getting taxed, it’s not a surprise when the wheels start wobbling.

Deutsche Bank analyst Steve Powers echoed these concerns, stating the company’s guidance was “well-below our estimates across beer and wine and spirits as the current macro landscape exacerbates an already soft demand environment.” Even the wine and spirits division—heavily reliant on trade with Canada, Australia, and New Zealand—is expected to feel the sting of escalating tariff tensions as deadlines loom this summer.

Still, Newlands isn’t pulling back. In fact, he’s doubling down—on Mexico. A $2 billion investment is underway to build a new state-of-the-art brewery in Veracruz. The location isn’t just strategic; it’s symbolic. Critics questioned why such a facility wouldn’t be built on U.S. soil, especially amid rising domestic political pressures. Newlands’ answer? Brand integrity.

“You’re not making champagne in the United States,” he said. “You’re not making tequila in the United States. You’re not making New Zealand Sauvignon Blanc in the United States. We’re not going to be making Mexican beer in the United States.”

The message is loud and clear: authenticity matters, even in a climate dominated by nationalism and trade wars. And Constellation isn’t ignoring its American footprint either. The company has spent over $1 billion annually in the U.S. in recent years, supporting a vast domestic infrastructure that includes union jobs, distributor partnerships, and a far-reaching retail network.

But sentiment is a harder beast to tame than logistics. With Hispanic communities particularly affected by the political rhetoric and immigration crackdowns, the brand is facing an emotional and cultural headwind. When beer becomes collateral damage in a broader national conversation, the effects ripple across every taproom and supermarket shelf in the country.

Constellation Brands has long surfed the wave of premium imports. Its marketing prowess, brand strength, and category leadership made it a darling among investors. But now, as macroeconomic currents shift and Washington reshapes the rules of the game, even this titan is feeling the squeeze.

Tariffs may be temporary. Political winds can change. But the erosion of consumer confidence—especially in core demographics—can take much longer to repair. Newlands’ tone is one of resilience, but also realism. As Constellation braces for softer growth in the years ahead, it’s a sobering reminder that even beer isn’t immune from politics.

Conclusion

The froth is wearing off the beer boom, and it’s not just about dollars and cents. It’s about perception, policy, and people. Constellation Brands is facing a uniquely American challenge—navigating international supply chains, protecting brand identity, and surviving the ripple effects of domestic politics. Whether consumers will continue to raise a glass or pull back their wallets may depend less on taste, and more on trust in the system surrounding it.