3 Red Flags for Constellation Brands Stock and 1 Green Flag to Watch

Core Viewpoint - Constellation Brands, a major player in the alcoholic beverages market, is facing significant challenges that have led to a nearly 30% decline in its stock over the past year, contrasting with a 17% rise in the S&P 500 [1] Group 1: Red Flags - The first red flag is the declining alcohol consumption among younger Americans, with a Gallup poll indicating a drop from 72% to 59% in the last two decades, and a NielsenIQ survey revealing that 45% of Gen Z consumers over 21 do not consume alcoholic drinks [2][4] - The second red flag involves lower discretionary spending among Hispanic consumers, who account for about half of Constellation's beer sales. CEO Bill Newlands noted that these consumers are reducing spending due to immigration issues and the impact of tariffs [6][7] - The third red flag is the impact of Trump's tariffs on aluminum, which have increased from 25% to 50%, affecting the margins on Constellation's canned imported beers. Approximately 39% of beer shipments from Mexico still come in aluminum cans, leading to an expected decline in comparable EPS by 6% to 9% for the full year [9][10] Group 2: Green Flag - A positive aspect is Constellation's divestment of weaker wine and spirit brands, which supports its "premiumization" strategy aimed at attracting affluent customers and generating higher-margin revenues. The company has sold off dozens of cheaper wine brands and divested its mid-tier Svedka Vodka brand to focus on premium offerings [12]