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Constellation blames lacklustre results on Trump’s aluminium tariff

New York-based Constellation Brands suggested that President Trump’s plans to increase the tax on imported aluminium by 50% was a contributing factor in its underwhelming first quarter results. 

President Trump’s tariffs are having a negative effect on US drinks companies as well as their foreign rivals.

In its first quarter results to the end of May 2025 Constellation Brands laid some blame for a poor performance on the US President’s plans to double the penalty on imported aluminium for cans to 50%. The drinks group hinted that the proposed tariff hike had been a contributing factor to its lacklustre results, especially from the group’s previously reliable Mexican beer brands Modelo and Corona.

In April, db reported that American big brewers and craft operators alike were bracing for canning costs to rise following the Trump administration decision to add a 25% tariff on all canned imported beer as well as any empty aluminium cans. The President has since suggested this might jump again, this time to 50%.

The tariff blow comes at a time when US consumers continue to pull in their horns in the face of inflation and global uncertainty.

In the same quarter Constellation was also hit by a  significant slowdown in beer consumption, particularly among its Hispanic consumers, following Trump’s immigration crackdown.

Falling short

The company reported profits of US$3.22 per share for the quarter, falling short of analysts’ estimates of US$3.31.

Overall the group fell short of its sales and profit estimates, with net sales of US$2.52 billion for the quarter compared with analysts’ average estimate of US$2.55 billion.

However, the group stuck with its full‑year profit forecast, expecting demand for its Modelo Especial and Corona beer franchises to help offset the aluminium tariff-driven cost increases.

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In a statement Constellation reiterated the industry mantra that the consumer downturn is cyclical rather than systemic.

The beer business, by far its largest revenue contributor with more than 80% of its revenues, reported a 2.6% decline in quarterly sales by its stockists driven by lower demand, especially from Hispanic consumers.

In the comparable quarter last year Constellations beer depletions rose by 6.4%.

Quarterly operating margins at its beer business fell 150 basis points to 39.1%.

Wines and spirits

The wines and spirits arm saw its net sales fall by 28% in the quarter compared with last year.

It has undergone much change in the intervening period with Svedka vodka sold off and the recent completion of the sales of underperforming wine brands. That said, sales of the remaining portfolio were 2% lower than last year.

The company’s stock has shed more than 20% of its value this year, fuelled by concerns about how tariffs would affect demand for its beer.

However, shareholders have been encouraged by the fact that legendary investor Warren Buffett has ploughed more than US$1.2 billion into the company on the basis of its longer-term prospects and strong dividend record.

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