Modelo's U.S. Sales Growth Outlook Cut to 3% Amid Immigration Fears

In April 2024, Salvador Gutierrez, an Oxnard, California-based food vendor, received a significant boost to his business. He was gifted a new customized street cart and $5,000 from the Modelo beer brand. This initiative was part of Modelo's efforts to support local communities and elevate small businesses. Later that year, Modelo created a ghost kitchen in New York City to commemorate Día de Los Muertos, featuring dishes developed by Hispanic chefs to celebrate the legacy of their loved ones who have died.

Modelo's efforts to engage with the Latino community have been successful. In 2023, Modelo Especial became the most popular beer in the U.S., surpassing Bud Light. However, recent immigration policies and fears over ICE raids have begun to impact the spending habits of Latino consumers, which could pose challenges for brands that cater to this demographic.

Constellation Brands, which controls Modelo in the U.S., has seen relatively unchanged net beer sales for the fourth quarter of 2024. Shipments to retail customers were down around 1%, largely due to decreases in Modelo Especial, Corona Extra, and the Modelo Chelada. Constellation has also lowered its beer net sales growth rate outlook for fiscal year 2026 to between 0% and 3%, down from 4% to 7% for 2025.

As ICE activity increases, Latino shoppers appear to be visiting stores less frequently. Supermarket shopping among Latinos was down 11.3% in the first quarter of 2025 compared to the same period last year. Drug store visits were down 7.5%, and convenience store visits were down 9.7%. In contrast, non-Hispanic shoppers saw declines of 1.9%, 1.5%, and 2.3% respectively. Meanwhile, online shopping has increased 7% among Hispanic shoppers between the fourth quarter of 2024 and the first quarter of 2025.

William A. Newlands, President and CEO of Constellation Brands, acknowledged the impact of these socio-political factors on consumer behavior. He noted that the decline in social gatherings and restaurant visits, which are significant beer consumption occasions, has softened in recent times. This trend is crucial to monitor as it may continue to affect sales.

Bud Light's collaboration with trans influencer Dylan Mulvaney in 2023 resulted in a backlash and a boycott, creating an opportunity for Modelo Especial to take the top spot. The brand's success is largely attributed to its resonance with the U.S. Latino consumer base, which makes up around 50% of its demographic.

Constellation Brands has been a growth powerhouse in the beer industry for over a decade. Between 2014 and 2024, the company increased U.S. beer production by 137.9%, going from 13 million barrels to 31 million barrels. During this period, the company's market share jumped from 6.1% to 15.8%. This growth is partly due to the strong Hispanic tailwind that has supported the brand's expansion.

Despite the challenges posed by recent immigration policies, Constellation Brands remains optimistic about its long-term prospects. The company continues to diversify its customer base and invest in marketing efforts to adapt to changing consumer behaviors. Executives at Constellation have emphasized the importance of paying attention to how shoppers are buying differently and exploring new ways to reach Hispanic consumers, such as through online mechanisms.

Constellation Brands views the current challenges as short-term issues that will moderate over time. The company believes there is still significant opportunity for growth and is focused on navigating the socioeconomic issues that are currently impacting its business.