Is Constellation Brands Poised to Gain Share Amid Category Headwinds?

Constellation Brands, Inc. STZ faces ongoing pressure from a slowing U.S. beer category, yet its competitive positioning suggests it may still emerge as a share gainer. The overall beer consumption remained soft in the third quarter of fiscal 2026 amid cautious consumer spending and macroeconomic uncertainty. STZ continues to differentiate itself through brand strength, disciplined pricing and strong retail execution. These factors have enabled the company to outperform the broader category even as volumes trend lower, supporting relative share gains despite a challenging environment.

A key driver of this resilience is STZ’s high-end beer portfolio, led by Modelo, Corona and the fast-rising Pacifico brand. Modelo remains the top beer brand by dollar sales in the United States, while Pacifico continues to gain traction with younger consumers and expand distribution beyond its traditional West Coast base. Notably, STZ has consistently gained shelf space and distribution across most states, reflecting retailer confidence in its brands’ velocity and long-term relevance.

Strategic pricing and pack architecture further strengthen STZ’s position. Management has maintained a measured pricing strategy while adapting offerings to meet increasingly value-conscious consumers. Price adjustments across select brands and the expansion of smaller pack sizes have helped preserve demand without diluting brand equity. In parallel, ongoing cost-savings initiatives have supported profitability, allowing STZ to deliver solid beer margins despite elevated input costs and tariff-related pressures.

Despite ongoing macroeconomic pressures, particularly among Hispanic consumers, STZ’s emphasis on controllable levers continues to differentiate it from peers. The company’s ability to expand distribution, invest behind high-performing brands and capitalize on occasion-driven demand, including major sporting events, provides meaningful support to its market position. Even as the broader beer category remains challenged, Constellation Brands’ strong portfolio, disciplined execution and pricing flexibility position it to sustain share gains and reinforce its leadership in the U.S. beer market.

STZ’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have lost 7% in the past six months, underperforming the Zacks Beverages - Alcohol industry’s decline of 3.1% and the broader Consumer Staples sector’s fall of 3.7%.

STZ Stock's Six-Month Performance

Is STZ Stock a Value Play?

Constellation Brands' shares are currently trading at a forward 12-month price-to-earnings (P/E) multiple of 12.74X, representing a notable discount to the industry average of 14.89X. This valuation gap suggests the stock remains undervalued relative to peers, presenting an attractive entry point for investors seeking exposure to the consumer staples sector.

STZ P/E Ratio (Forward 12 Months)

Stocks to Consider

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The Zacks Consensus Estimate for United Natural Foods' current financial-year sales and earnings indicates growth of 1.4% and 197.2%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.

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The Zacks Consensus Estimate for Vita Coco's current fiscal-year sales and earnings implies growth of 18% and 15%, respectively, from the year-ago reported figures. Vita Coco delivered a trailing four-quarter earnings surprise of 30.4%, on average.

McCormick & Company MKC is a key manufacturer and distributor of spices, seasonings, specialty foods and flavors and has a Zacks Rank #2 (Buy) at present. MKC delivered a trailing four-quarter average earnings surprise of 2.2%.

The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS implies growth of 1.6% and 2.4%, respectively, from the year-ago numbers.

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This article originally published on Zacks Investment Research (zacks.com).

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