Constellation Brands (STZ): How Concerning Are Constellation’s Wine and Spirits Struggles Amid Slowing Beer Growth?

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Shares of Constellation Brands fell 17% after flat Q3 revenue of $2.5 billion missed growth expectations, with beer sales slowing to 3% and wine and spirits declining 14%. Despite near-term headwinds, beer remains a bright spot, driven by 3.2% depletion growth, led by Modelo Especial (+3%) and Pacifico (+20%), underscoring the success of strategic market expansion and brand equity investments. The company’s premiumization strategy is evident in the wine and spirits segment, with fine wine and flagship brands like Meiomi and Kim Crawford growing 6%-7%, though broader declines due to retailer destocking and price sensitivity weigh on margins. Constellation’s disciplined execution is evident in its progress toward a 500,000-point distribution goal, beer innovation (e.g., Modelo Oro and Cheladas), and supply chain efficiency. Revised guidance reflects macroeconomic pressures, lowering sales growth to 2%-5%, but confidence remains in beer’s structural tailwinds and operating margin targets (~39%). While wine and spirits struggles persist, divestitures and portfolio shifts toward higher-margin offerings align with long-term priorities. With CPG-leading dollar share performance and demographic tailwinds from younger drinkers, can Constellation effectively balance its beer-driven momentum with overcoming challenges in the wine and spirits segment to sustain its premiumization and long-term growth narrative?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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