Dive Brief:
- Constellation Brands has normalized distributor inventory levels after cutting them too much in response to an unexpected drop in premium beer sales, CEO Nicholas Fink said on an Oct. 7 earnings call.
- The imported beer producer and its distributors overcorrected inventories in FY 2026 ended Feb. 28 and entered the current fiscal year "too light," which tested how low inventory on hand could go, Fink told investors. As a result, the company increased shipments last quarter to close distributors' order backlogs and avoid out-of-stocks.
- "So, I would expect the back half of the year to look pretty normal compared to any other year,” Fink said during the Q2 FY 2027 call. “And for the full year, we would expect ships and depletes to track within 99% of each other."
Dive Insight:
Constellation lowered inventory levels with distributors in the first half of FY 2026 in response to weaker consumer demand for premium beers. Shoppers, particularly Hispanic consumers, made fewer trips and spent less per visit, the Pacifico and Modelo Especial maker said in its September 2025 updated outlook. In its FY 2025 annual report, Constellation identified inflation, pressure on discretionary spending, and changes in immigration policy and enforcement as risks to consumption.
Once distributor inventory levels fell too low, Fink said, the company had to do extra work in the first half of the current fiscal year to move beer where it was needed and keep retail shelves stocked. Today, inventories are in a "great position," despite being lower than historical averages, according to Fink.
Fink became president and CEO in April to position the company for long-term growth amid a hyper-competitive environment. A former Suntory executive, he succeeded Bill Newlands, who stepped down from the role and the company's board of directors.
In another leadership change this year, the company named Alex Alvarez SVP and chief supply chain officer for the beer division. He replaces John Kester, who plans to retire in November.
