Constellation Brands Inc. said it anticipates a $20 million hit from aluminum tariffs over the rest of its fiscal year, which runs through February.
President Donald Trump’s current 50% duty on imported aluminum—part of his broader U.S. trade overhaul—is having a direct impact on companies like Constellation that rely heavily on aluminum cans for packaging. While many alcohol imports from Mexico are still exempt, beer packaged in aluminum is now subject to the new levy.
The tariff didn’t impact the company’s results in the fiscal first quarter, which ended May 31, but will begin weighing on margins going forward, Chief Financial Officer Garth Hankinson told investors on a call Wednesday. He noted the company doesn’t expect to fully offset the additional costs, which will trim about 20 basis points from margins.
Constellation’s beer division remains its strongest business segment, but it has been grappling with margin pressure driven by both cost increases and weakening demand.
“Consumers are not going out to eat as much as they had, they’re having less social occasions at home,” CEO Bill Newlands said on the call. “It doesn’t change their interest in consumption of beer — it simply has been that those occasions have decreased.”
The Trump administration’s shifting trade policies have delivered a one-two punch to the industry. Constellation Brands, maker of Corona, reported net sales of $2.52 billion for the quarter ended May 31—just below the $2.55 billion average estimate from analysts surveyed by LSEG.
Tariffs on beer imports, combined with aluminum tariffs that affect beer cans, have hit producers such as Constellation Brands and Molson Coors (TAP.N). Last month, President Trump announced a plan to double tariffs on imported steel and aluminum to 50% from 25%, escalating trade tensions and adding pressure to global metal suppliers.
Constellation has also seen a slowdown in beer consumption among Hispanic consumers, a trend that has accelerated in the wake of Trump’s immigration crackdown.
The company’s beer division, which accounts for the bulk of its revenue, posted a 2.6% decline in quarterly depletion volume—the pace at which products are sold—driven by declines in key brands like Modelo Especial and Corona Extra. That compares to a 6.4% increase in depletions a year earlier.
Sequential price increases and cost-cutting efforts were not enough to offset higher aluminum costs and elevated marketing spend. Operating margins in the beer segment fell 150 basis points to 39.1%.
Constellation reported a quarterly comparable profit of $3.22 per share, falling short of the $3.31 analyst consensus. The company maintained its full-year forecast for organic sales and earnings but its stock slipped slightly in after-hours trading, trimming the stock’s year-to-date decline to over 30%.
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