By Jack Hough
Are immigration raids hurting Mexican beer sales? The question might sound both indelicate and frivolous at a time when Americans are hotly divided over the tactics of the Immigrations and Customs Enforcement agency, or ICE. But on Wall Street, it's at the center of a debate on whether to buy the beaten-down shares of Constellation Brands, brewer of Corona and Modelo.
More than half of Constellation's beer customers are Hispanic. The company had long bucked an industry slump with splashy growth, but lately it has been slipping. Shares had fallen by one-third in a year leading up to this past Thursday's quarterly earnings report. On the call, an analyst asked CEO Bill Newlands squarely about something that the company had mostly only alluded to. If the Trump administration launched high-profile immigration raids about a year ago, shortly after Inauguration Day, and if those raids have made some Hispanic consumers pull back on social gatherings where beer is enjoyed, then "once we lap that initial shock...is it possible that it just gets a little bit less bad?" In other words, might easier sales comparisons return Constellation to growth?
Newland's response: "We hope you are correct. That would be a lovely outcome." And he offered a new piece of evidence. Barclays, however, is skeptical. More on all of that in a moment.
For investors who wonder why a company from New York's Finger Lakes region sells Mexico's best-known beer, some quick history: In 1945, Marvin Sands, the son of a Queens, N.Y., vintner, took over a sauerkraut factory turned bulk winery in Canandaigua, a half-hour drive from Rochester. He needed a hit brand to squeeze higher profits from his grapes. King Solomon kosher wine failed to take off. But Richard's Wild Irish Rose, a cheap, sweet, and effective screw-cap affair named for Marvin's son, minted money. Decades later, Richard and his brother led Constellation into premium spirits and wines and would eventually dump "Rosie" and other cheap bottles.
In 2013, Constellation struck gold a second time -- in beer, of all things. When Budweiser parent Anheuser-Busch InBev bought Grupo Modelo, it had to sell U.S. rights to Corona, Modelo, and the company's other brands as part of an antitrust agreement. Constellation's limited beer exposure made it a safe buyer. The Corona brand at the time was a rare combination of iconic and woefully undermarketed, which was easy for Constellation to fix -- its innovations included putting the stuff in cans. A fast-growing U.S. Hispanic population added to growth. Two years ago, amid a Bud Light boycott, Modelo became America's best-selling beer. An investor who held Constellation stock over the decade through 2022 made 22% a year, versus 13% for the S&P 500, 4% for Molson Coors Beverage, and a 2% yearly loss for Anheuser.
So what went wrong? Theory No. 1 is that Constellation has simply tapped its growth opportunity with Modelo and now looks more like other big brewers. On Thursday, the company reported fiscal third-quarter results with "depletions," an industry term for brewer shipments, down 4% for Modelo and 9% for Corona. This was partially offset by smaller brands Pacifico and Victoria, which are growing nicely, but depletions for the whole beer category fell 2.2%. Management noted that its beer still has 20% less distribution than that of industry heavyweights. That doesn't sound like a company that has run out of room for growth.
Theory No. 2 is that the stock was simply priced for perfection, and perfection ended. Shares routinely went for 22 to 23 times earnings leading up to two years ago, while other big brewers often traded at price/earnings multiples in single digits. Now the stock is down below 13 times earnings. In recent years, it has fallen on earnings day more often than not, but on this past Thursday it gained 5%. Wall Street called the results good enough, considering that the case for shares rests on a future return to normal conditions, with maybe a little help from the World Cup of soccer this summer, which will be co-hosted by the U.S., Canada, and Mexico.
Theory No. 3 is that Hispanic customers are buying less beer because of economic concerns, and Theory No. 4 is that they're doing so because of immigration fears. These are difficult to disentangle. Back in April 2025, CEO Newlands cited company research showing that two-thirds of its Hispanic customers were concerned about higher prices for food, gas, and other essentials, and half about "immigration issues." He also mentioned concerns about job losses in "industries that have a high Latino employment base." These were leading to declines in "efforts to go to restaurants, to have social gatherings, things that are very much beer occasions."
Since then, Constellation management has kept most of its commentary on what's ailing its Hispanic customers to blanket mentions of socio-economic concerns, which makes Thursday's comments on lapping immigration raids interesting, if not fully illuminating. If the raids have cut into beer sales, and the effect has already been fully felt, then Constellation might be headed for better sales and growth stock performance soon. Newlands on Thursday offered this clue: The company has seen improving beer demand in ZIP Codes that are less than 20% Hispanic, but ones that are over 20% remain "very challenging."
For now, Wall Street is predicting a 16% decline in Constellation's earnings per share for its fiscal year through February, followed by a 7% rebound next year -- but next year's estimate has been sliding in recent months. Barclays writes that it has noticed "rising optimism" on Constellation stock focused on the immigration raid thesis, but it calls that a trading idea, not a long-term reason to hold the stock. "We could understand there being limited risk of additional headwinds from reduced social behavior beyond what has already transpired," it writes. "But we think it remains to be seen what 'lapping' does or doesn't mean for the category at large."
Write to Jack Hough at jack.hough@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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January 09, 2026 12:49 ET (17:49 GMT)
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