Constellation Brands at a Crossroads: Can This Beverage Giant Rebuild Over Three Years?

The Stunning Reversal: From Blue Chip to Struggling Stock

Constellation Brands (NYSE: STZ), the world’s leading producer of beers, wines, and spirits, has had a rough ride. While the S&P 500 soared over 70% over the past three years, Constellation’s stock plummeted more than 40%. Once considered a reliable blue chip investment, the company lost investor confidence as growth dried up, regulatory pressures mounted, and losses piled up. The question now is whether it can turn things around in the next three years.

Breaking Down the Business Decline

Constellation operates a diverse portfolio of over 100 alcohol brands across three main categories. In fiscal 2025, here’s how the revenue split shook out:

Beer segment dominates at 84% of revenue, featuring heavyweight Mexican beer brands like Corona, Modelo, and Pacifico that have long been consumer favorites. Wine accounts for 14%, with premium labels such as Kim Crawford, Ruffino 1887, and The Prisoner. Spirits make up the remaining 4%, including Casa Noble Tequila, Svedka Vodka, and High West Whiskey.

But the numbers tell a troubling story about momentum. Beer revenue growth decelerated from 11% in FY 2023 to just 5% by FY 2025. Wine revenues contracted—down 5%, then 10%, then 7%—as the company deliberately shed lower-end brands to focus on premium offerings. Spirits fared even worse, swinging from 6% growth to double-digit declines. Overall company revenue growth has withered from 7% to merely 2%.

What’s Actually Weighing on Growth?

Several headwinds have collided at once. Consumer behavior is shifting: younger Americans are drinking less alcohol than previous generations, a secular trend that’s hard to reverse. The company’s Hispanic consumer base, which represented roughly half of beer sales, pulled back spending due to immigration concerns and broader economic uncertainty during the Trump Administration.

Mexican beer brands faced specific pressures from tariff escalation on aluminum cans—nearly 40% of beer shipments from Mexico rely on these cans. Supply chain disruptions in Mexico, stemming from the government’s 2020 cancellation of a planned brewery, compounded inflation and forced price increases. These hikes, intended to protect margins, instead accelerated the slowdown by pricing out price-sensitive consumers.

To diversify away from traditional beer dependence, Constellation invested in hard seltzers and alcohol-free beverages, but consumer response has been muted. Meanwhile, by intentionally shrinking its wine and spirits businesses to focus on premium tiers, the company reduced overall revenue and paradoxically increased reliance on its struggling beer segment—a risky bet.

A Painful Reset Ahead

For the first half of fiscal 2026, the picture got grimmer. Revenue fell 10% year-over-year as all three segments contracted. Management now projects full-year beer sales to drop 2%-4%, wine and spirits to plunge 17%-20%, and total organic revenue to slide 4%-6%. Analysts expect even steeper declines of 11% for the full year.

The profit story isn’t much better. Constellation turned unprofitable on a GAAP basis in fiscal 2022 and 2023 after its investment in Canadian cannabis company Canopy Growth went sour. It briefly recovered profitability in 2024, only to post another net loss in fiscal 2025 due to massive impairment charges tied to ongoing asset sales and write-downs.

The Road to Recovery: Slow Stabilization Expected

However, there’s a glimmer of hope buried in analyst forecasts. Revenue is expected to flatten in fiscal 2027 before climbing 3% in fiscal 2028 as the right-sized business stabilizes and macro headwinds ease. Profitability should return in fiscal 2026, with GAAP earnings per share growing 18% in 2027 and 4% in 2028. On an adjusted (non-GAAP) basis—which smooths out one-time charges—earnings are projected to dip 4% in 2026, recover with 8% growth in 2027, but then decline 2% in 2028.

The path assumes Constellation successfully diversifies its Mexican beer brands and portfolio, executes the deliberate right-sizing of wine and spirits, and navigates tariff uncertainty and other policy shifts.

Valuation: Cheap but Stuck in Neutral

Here’s where the math gets interesting. Constellation trades at just 12 times forward adjusted earnings—a deeply discounted valuation—and yields a 2.9% dividend. On paper, this looks attractive and should theoretically cap downside risk.

But that low multiple reflects investor skepticism. Until management proves it can stabilize the business model and overcome near-term headwinds, the market likely won’t re-rate the stock higher. The valuation may be a value trap rather than a bargain.

The Three-Year Outlook

My assessment: Constellation’s stock will likely trade sideways over the next three years. The company has a credible plan to address its challenges—portfolio optimization, cost discipline, and adapting to consumer preferences—but execution risk is real. Investors seeking near-term capital appreciation should look elsewhere. Those with a multi-year horizon and appetite for dividend income might find value here, but patience and conviction are required. For now, the stock remains a hold for existing shareholders and a cautious wait for potential new buyers.