Constellation Brands Eyes Price Pack Architecture to Re-Engage Cautious Consumers
- Consumer Goods & Services
Fallon Wolken
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- 4 minutes read
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Gen Z: Constellation Brands’ portfolio has a strong appeal to younger consumers, indexing at twice the industry average among 21- to 25-year-olds.
GLP-1: The company sees a negligible impact from GLP-1 drugs. Newlands says concerns are not supported by facts, as most users stop within three months and return to previous consumption patterns. The impact is primarily on wine and spirits, not beer.
Cannabis: While cannabis beverages are on the uptick, consumers who drink them also consume more beer than the industry average, suggesting a minimal negative impact on Constellation’s business, according to Newlands.
The Landscape
Constellation Brands has been keeping a close eye on its consumers, monitoring sentiment via monthly studies.
Also: Diageo creates cross-industry, AI-enabled “think party” to pin down consumer trends
In the latest check-in, the company found that 80% of surveyed Hispanic and non-Hispanic consumers continue to express concern about the socioeconomic environment, and 70% of those are specifically concerned about their personal finances.
The Hispanic segment, however, is especially vulnerable.
“One of the things that we track very carefully is ZIP code data. And the results that you are seeing in high Hispanic ZIP code areas is significantly worse than what you see in the general market,” said president and CEO William Newlands during recent earnings conversations.
The downturn is showing up in industries such as construction, where Hispanics have pulled back from jobs. It’s an industry that typically has a high correlation with beer purchasing patterns, according to Newlands.
“So part of that question is going to be, will some of those construction opportunities reinvigorate? Because that’s good for the beer business and that’s particularly good for us, given our strength in that particular market.”
Newlands stated this pull-back has also translated to people simply not going out. It’s not a lack of desire in the brands, he said, but rather that the occasions in which products are typically consumed are “radically down.”
Ongoing tariffs are adding another layer of complexity for the company. Constellation Brands expects the impact to be about $70 million this year on the beer business — and about $20 million in the wine business alone.
