Constellation beats on EPS and revenue as shipments outpace depletions by 6.1 points
Constellation Brands beat estimates at $3.74 a share as beer shipments rose 5.5% while distributor sell-through fell 0.6%. With restocking done, the second half depends on September's better depletions holding up as Modelo and Corona shrink.
The Investor · Invest desk
What happened
- Modelo Especial depletions fell about 2% and Corona Extra about 5%, while Pacifico rose about 19%, Victoria 15% and the Modelo Chelada brands 5%.
- Constellation raised its full-year reported EPS outlook to $11.85-$12.55 and reaffirmed its comparable EPS outlook of $11.20-$11.90.
- The company bought SpikedAde, a spirit-based ready-to-drink brand, for $75 million upfront plus up to $278 million in performance-based payments.
Why it matters
- What it limits constraint Once distributor stocks are rebuilt, shipments lose their 6.1-point lead over depletions and have to follow a consumer sell-through rate that fell in the second quarter.
- Who's exposed exposure Constellation's beer revenue is about 2.7 times as dependent on Hispanic consumers as the category's, so pressure on that group's jobs and household budgets weighs more on its depletions.
- Who has to decide decision CFO Garth Hankinson kept price increases at the low end of the usual range, so Constellation has set aside price as a lever while Modelo and Corona volumes fall.
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Put the two volume figures side by side and 6.1 percentage points of the quarter's shipment growth went into distributor stock [17]. Beer was about 94% of revenue [18], so the beer line and the company's quarter are close to the same thing. Revenue grew slightly slower than shipments, 5% against 5.5% [5]. On those rounded figures, beer revenue per unit shipped slipped about half a point [16].
Nicholas Fink, the chief executive, was direct about where the volume went. "We have spent much of the first half rebuilding distributor inventory levels," he said on the earnings call [9]. Adjusted earnings beat the consensus by 18 cents, about 5% [19], and the reported EPS range rose 35 cents at each end [20]. The comparable range did not move [14]. I think a management team confident that the quarter's volume would repeat would have raised that one too.
Nielsen data cited by CNBC showed U.S. beer down 1.8% in the two weeks to September 19 [8], steeper than Constellation's 0.6% quarterly decline in depletions [6] (a fortnight and a quarter are different windows). That fortnight falls inside the September that Fink said was improving [1].
If September's improvement holds, depletions turn flat or positive and shipments settle near that rate: far below 5.5%, but repeatable. If it fades, shipments fall back to a negative depletion rate once distributors stop adding stock, and reported beer volume declines. The third route is mix, with Pacifico and Victoria growing fast enough to cover Modelo and Corona [7]. The reports do not give brand volumes, so that offset cannot be sized from them.
I think the second outcome is the likeliest. The restocking is finished by the chief executive's own account [9], and Modelo and Corona were still falling in the quarter [7]. The case against me is Fink's claim that September's gain went beyond the Labor Day calendar effect [1]. Third-quarter depletions above zero, with shipments close behind, would mean the beat came from retail sell-through and the unchanged comparable range is conservative.
Spending outside beer is small and mostly deferred. About 79% of SpikedAde's $353 million maximum price is contingent on performance [22], and the upfront payment is under 3% of one quarter's revenue [23]. Fink called the brand a "long, wide-open runway" for Constellation's distribution [12]. Premixed cocktails, spirits-based ready-to-drink included, sold $3.8 billion in 2025, up 16.4%, according to Distilled Spirits Council figures cited by CNBC [13].
What to watch
- Any change to the comparable EPS range at the third-quarter report, now that distributor restocking is complete.
- Whether club stores, where Constellation saw strength among cost-conscious shoppers, keep carrying volume as the year goes on.
- Disclosure of SpikedAde contingent payments, which would show whether the brand is meeting its performance targets.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
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- [1]
CEO Nicholas Fink said September depletions were trending in the right direction, with improvement beyond the calendar benefit of a later Labor Day.
- [2]
CFO Garth Hankinson said Constellation kept price increases at the low end of its typical range given the spending environment.
- [3]
Constellation Brands reported second-quarter fiscal 2027 adjusted earnings of $3.74 per share on $2.63 billion in revenue.
- [4]
Wall Street had expected $3.56 per share and $2.54 billion in revenue.
- [5]
Beer revenue rose 5% to approximately $2.47 billion, with shipment volumes up 5.5%.
- [6]
Depletions, a measure of how much distributors sell through to retailers, slipped 0.6% during the quarter.
- [7]
Modelo Especial depletions fell about 2% and Corona Extra about 5%; Pacifico, Victoria and the Modelo Chelada brands gained roughly 19%, 15% and 5%.
- [8]
The overall U.S. beer market contracted 1.8% year over year in the two weeks ended September 19.
- [9]
"We have spent much of the first half rebuilding distributor inventory levels."
- [10]
Hispanic consumers account for about 40% of Constellation's beer revenue versus roughly 15% of the overall beer category; the group has faced pressure from labor market conditions and household finances.
- [11]
Constellation acquired SpikedAde, a spirit-based ready-to-drink brand, for $75 million upfront plus as much as $278 million in contingent payments based on future performance.
- [12]
"long, wide-open runway"
- [13]
Premixed cocktail sales, including spirits-based RTDs, were $3.8 billion in 2025, up 16.4%, the fastest-growing segment of the spirits industry.
- [14]
Constellation raised its full-year reported EPS outlook to $11.85-$12.55 from $11.50-$12.20 and reaffirmed its comparable EPS outlook of $11.20-$11.90.
- [15]
Constellation saw strength in club stores as cost-conscious shoppers sought value on fuel and groceries.
- [16]
On rounded figures, beer revenue per unit shipped fell about half a percentage point.
- [17]
Shipment growth exceeded depletion growth by 6.1 percentage points in the quarter.
- [18]
Beer was about 94% of Constellation's quarterly revenue.
- [19]
Adjusted EPS beat consensus by $0.18, about 5%.
- [20]
The reported EPS outlook rose $0.35 at each end of the range.
- [21]
Constellation's beer revenue is about 2.7 times as concentrated in Hispanic consumers as the overall category.
- [22]
SpikedAde's maximum price is $353 million, about 79% of it contingent on performance.
- [23]
The $75 million SpikedAde upfront payment is under 3% of one quarter's revenue.
Sources
2 independent publishers whose own reporting we read for this story.
- qz.comAmericans are drinking less beer. Modelo's owner has a plan
1 article · October 7, 2026
- seekingalpha.comConstellation Brands, Inc. (STZ) Q2 2027 Earnings Call Transcript
1 article · October 7, 2026
Topics and entities
Topics
- Beverage alcohol earnings
- U.S. beer market
- Ready-to-drink cocktails