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After a “very strong” start to its fiscal qtr in Mar was muted by “softer volumes” in Apr and May, Constellation beer trends picked up again in Jun. But it’s “modest reacceleration,” and “not back to where we were in March,” ceo Nick Fink acknowledged during co’s FQ1 earnings call Q&A this morn. Still, Nick called the boost “very encouraging,” as it’s happening not just for the category but “around our brands.” He attributed better trends in Jun to a combo of a “somewhat more normalized environment” for consumers as “massive spike in gas prices” started to moderate alongside major events like World Cup and NY Knicks finals in one of Constellation’s “key market[s].” While co’s still trying to understand how sustainable the improvements are vs how much is attributable to short-term events, “just a few weeks in, it does seem to us to be pretty broad-based,” Nick added. There are certain on-prem accounts and geographies with “big spikes,” but looking around the rest of the country, it’s not a “vastly different result,” reinforcing the notion that “headwinds are abating” vs “one-time tailwinds.” Tho it certainly “doesn’t hurt” to have Knicks championship run in a major market and World Cup across the US either, he noted.Hispanic-Centric Mkts Still Underperforming; TX and FL “Continue to be Challenged”; CA “Pretty Good” Yet TX and FL in particular “continue to be challenged,” Nick called out, attributing that mostly to macroeconomic factors that are proving to be harsher headwinds “for our consumer in particular.” There’s still a performance “gap” in Hispanic-centric mkts across the country vs general population mkts, he shared, tho that “gap improved,” especially on-prem. Importantly, CA has “been pretty good” this year, a notable change for Constellation in its largest mkt by far. But “even that hasn’t necessarily changed as a result of the World Cup,” in his view.Changing the Playbook on Corona Extra/Scaled Brands; “Disciplined” Approach to “White Spaces”; Corona NA Shoutouts In Nick’s prepared remarks for his first quarterly earnings report as ceo of Constellation, he focused on some of the ways he wants to fine-tune co’s strategy, looking to “deploy a different playbook to sustain growth at scale” while also “explor[ing] white spaces where we have a right to win.” STZ has “an incredible track record” of sustainably scaling brands in a “disciplined” and “thoughtful” way, but brands like Corona Extra that have “great” distribution and awareness already need to explore “a different playbook” to grow thru price pack architecture, going after “the right cultural moments” and “types of occasions,” he explained on the call. So Nick aims to “sharpen that capability and get after that.” To be clear, Modelo Especial is not yet at this stage, in Nick’s view, still very much in a scaling and awareness-building mindset as it has “significant opportunity ahead of it.” And there’s “sustainability” on other scaling brands (like Pacifico, Modelo Chelada and Victoria) that are “growing as strongly as they’re growing,” he believes.At the same time, “we must deliberately, thoughtfully and choicefully explore white spaces” including in “adjacent categories” and “within our disciplined and balanced capital allocation and margin framework,” Nick spelled out in his prepared remarks. He repeatedly pointed to Corona Non-Alc as an example of this oppy, already achieving “strong double-digit growth” and #4 in the category without much investment. “Should we be putting more fuel on that fire?” and “do we want to double down on something we already have in a disciplined way?” he asked rhetorically. Co can “execute” on Corona NA “in a much more targeted way” to find the “addressable moment” or occasion, and gain “share of that moment.” No mention of recent deal to acquire remaining stake in HOPWTR but that appears to fit the “white space” mold as well. Nick avoided saying anything more about oppys to address white spaces thru M&A, but comments on the call and in prepared remarks suggest co is less interested in spending big on spirit RTDs right now. Tho doesn’t mean it’s not lookin’ at what’s out there. “The goal is to selectively pursue opportunities where we have a clear right to win, a differentiated advantage, and a path to generate profitable and sustainable growth,” Nick stated.On-Prem Depletions Up 1.5% vs Off-Prem -0.5% in FQ1; PODs Up 5% Gotta note, on-prem was already outperforming for STZ in FQ1, prior to any boosts experienced in Jun. Constellation on-prem depletions grew 1.5% vs down 0.5% in off-prem channels. Modelo Especial and Pacifico “draft distribution” are driving better trends on-prem, “as well as moderation in underperformance at on-premise accounts in zip codes with larger Hispanic populations,” Nick pointed out in prepared comments. On-prem is up to 12% of Constellation beer volume for the qtr. Yet Constellation beer points of distribution saw “mid-single digit growth,” suggesting that velocity is down both on- and off-prem to start the fiscal year. Tho co’s investing heavily in the next two fiscal qtrs to capitalize on key oppys thruout the rest of the year. Combo of programming around World Cup, MLB, NCAA Football “will drive marketing as a percent of net sales over 10% during second and third quarter,” from Jun-Nov 2026. Co still expects to finish fiscal 2027 with mktg spend at 9.5% of beer net sales, in line with its FY26 mix.

STZ Trends Picked Up in Jun, but It’s No Mar, Sez CEO Nick Fink; Hispanic Mkt vs Gen Pop “Gap”; “Changing the Playbook” for Extra; “White Spaces”

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