Constellation Brands Debuts Modelo Chelada Non-Alcoholic as Chelada Segment Set to Grow 50%
Constellation Brands has launched its first non-alcoholic Modelo Chelada Limón y Sal nationwide, featuring 60 calories per 12-oz can in six-packs line-priced with Corona Non-Alcoholic. The low- and non-alcoholic chelada category is forecast to expand 50% over 24 months, tapping demand from 14.2 million households.
1. Third-Quarter Results Exceed Expectations
Constellation Brands reported third-quarter fiscal 2026 revenue of $2.22 billion, topping the consensus estimate of $2.16 billion, while adjusted earnings per share of $3.06 surpassed the $2.64 forecast. The beer segment accounted for roughly 60% of total sales, driven by flat to modestly positive volume trends in Modelo Especial and Corona Extra. Wine and Spirits delivered mid-single-digit revenue growth, led by strong performance in The Prisoner Wine Company and Casa Noble Tequila. Operating income margin expanded by 80 basis points year-over-year, reflecting disciplined cost controls and favorable mix shifts toward higher-margin brand extensions.
2. Headwinds in Hispanic Consumer Spending and Construction
Despite the headline beat, Constellation Brands highlighted persistent softness among its core Hispanic consumer base, which represents approximately one-third of U.S. beer volume. The company cited slower household formation and reduced discretionary spending in key states such as California and Texas, where construction employment has declined by over 4% year-to-date. Management noted that beer off-premise volume in Hispanic-leaning markets contracted low single digits, offset only partially by market-share gains through expanded on-premise distribution and targeted promotional support.
3. Fiscal 2026 Guidance Reaffirmed
CEO Bill Newlands and CFO Garth Hankinson reaffirmed the full-year adjusted EPS range of $11.30 to $11.60, implying 4% to 7% growth at the mid-point. The company projects capital expenditures of roughly $550 million for fiscal 2026 and free cash flow of approximately $1.4 billion. Management emphasized that SG&A efficiency initiatives and the upcoming launch of value-added packaging for Modelo Chelada will further bolster margin expansion in the back half of the year.
4. Innovation With Non-Alcoholic Chelada
To capture the growing moderation trend, Constellation Brands introduced Modelo Chelada Limón y Sal Non-Alcoholic in leading markets including Illinois, New York, Texas, Florida and California. The new SKU contains just 60 calories per 12-ounce can and is line-priced with Corona Non-Alcoholic 6-packs. Internal forecasts estimate the low- and non-alcoholic chelada segment will grow 50% over the next 24 months, and the company expects the product to contribute incremental revenue of $25 million to $30 million in fiscal 2026.