Constellation Brands Rebounds as Buffett Bets on Alcohol's Enduring Demand

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Constellation Brands (STZ), the alcohol company behind brands like Modelo, Pacifico, and Corona, has struggled in recent years as consumers have focused increasingly on health. However, Warren Buffett's Berkshire Hathaway has taken a significant interest in the stock, likely as a contrarian play. Despite the sales decline, Constellation has proven it can earn a profit, fund its increasing dividend, and repurchase shares, suggesting the stock could be poised for a recovery.

Why it matters

Constellation Brands' rebound could be a testament to the enduring demand for alcohol, even as younger consumers have shown a growing preference for health-conscious products. Buffett's contrarian bet on the stock could pay off if the company can capitalize on the popularity of its Mexican beer brands and continue to adapt to changing consumer trends.

The details

Constellation Brands' net sales plunged 51% in fiscal 2026 (ended Feb. 28) for its wine and spirits business amid the divestiture of Svedka and several wine brands. Even for the beer brands that generate 91% of the company's revenue, revenue dropped by 3%, prompting a 10% overall drop in sales. However, the company's top-selling Modelo, Pacifico, and Corona beer brands have maintained their market-leading positions. Additionally, a $2.8 billion impairment charge from fiscal 2025 rolled off Constellation's books, allowing net income in fiscal 2026 to rise to almost $1.7 billion, up from the $81 million loss in the previous fiscal year. The company also announced the completion of a $924 million share buyback and expects flat sales growth at the midpoint in fiscal 2027, an improvement over last year's sales decline.

• Constellation Brands reported its fiscal 2026 results in April 2026.
• The company's new CEO, Nicholas Fink, took the helm on April 13, 2026.

What’s next

Investors will be closely watching Constellation Brands' performance under its new CEO, Nicholas Fink, as the company looks to capitalize on the enduring popularity of its Mexican beer brands and adapt to changing consumer preferences.