Trend details
Generation Z: Constellation Brands’ portfolio has strong appeal to younger consumers, indexing twice the industry average for 21-25 year olds.
GLP-1: The company believes that the impact of GLP-1 drugs is negligible. Mr Newlands said the concerns were not supported by facts, as most users stopped using the service within three months and returned to their previous spending patterns. The impact primarily extends to wine and spirits rather than beer.
Cannabis: Cannabis beverages are on the rise, Newlands said, but cannabis consumers also consume more beer than the industry average, suggesting the negative impact on Constellation’s business will be minimal.
landscape
Constellation Brands pays close attention to consumers and monitors sentiment through monthly surveys.
Also: Diageo creates cross-industry, AI-enabled ‘thinking party’ to uncover consumer trends
In its latest research, the company found that 80% of Hispanic and non-Hispanic consumers surveyed continue to express concerns about their socio-economic environment, with 70% specifically concerned about their personal finances.
However, Hispanic populations are particularly vulnerable.
“One of the things we track very closely is ZIP code data, and the results we see in areas with high Hispanic ZIP codes are significantly worse than what we see in the general market,” President and CEO William Newlands said on a recent earnings call.
Hispanics are leaving the workforce, and the economic downturn is also evident in industries such as construction. Newlands said the industry typically has a high correlation with beer purchasing patterns.
“Part of that question will be, will some of these construction opportunities be activated? Because that’s good for the beer industry, and it’s especially good for us given our strength in that particular market.”
Mr Newlands said the setbacks were also leading to people simply not going out. It’s not a lack of appetite for brands, he said, but rather a “fundamentally diminished” opportunity for products to be consumed in general.
Continuation fee It adds another layer of complexity for businesses. Constellation Brands expects the impact on its beer business to be about $70 million this year, and the wine business alone to be about $20 million.
