Constellation Brands Inc., the parent company of Modelo Especial, has emerged as the top-selling beer in the U.S., surpassing the long-standing favorite, Bud Light, according to industry tracker Bump Williams Consulting.
In the four weeks leading up to June 3, Modelo Especial accounted for 8.4% of U.S. beer sales, while Bud Light lagged behind with 7.3%. This bodes well for Constellation’s fiscal first-quarter earnings report, which is expected to come out on Friday.
JPMorgan analysts have raised their revenue estimates for Constellation’s beers by 100 basis points to 7.5%, citing impressive tracked channel data and constructive commentary from the CEO.
However, it’s not all sunshine and rainbows for Constellation. Beer depletions, which track the number of cases sold by distributors to retailers, were up by only 6.3% in the fourth quarter, which is an improvement from the previous quarter but still below the growth seen in earlier quarters.
Despite this, equity research analysts believe that Constellation’s major weakness in the beer category is a thing of the past. With Modelo Especial at the forefront of U.S. beer sales, Constellation is poised for a strong quarter.
Beer Sales: Modelo Especial Overtakes Bud Light as America’s Number One
Recent data shows that Constellation Brands’ Modelo Especial has taken over as the highest-selling beer in the U.S. in May, surpassing Bud Light by dollar amount.
JPMorgan analysts have increased their stock-price target for Constellation Brands, citing a shift from negative investor sentiment to a relatively crowded long.
The valuation remains attractive, with shares trading at 18 times calendar 2024 price earnings compared with Molson Coors Beverage Co at 15 times, despite the latter having a more durable strong fundamental outlook.
Modelo Especial gains come amid a backlash against Bud Light which began in April in response to its partnership with trans influencer Dylan Mulvaney. Bud Light sales plunged approximately 24% YoY for the week ending June 3, while Modelo Especial continues to grow in popularity.
“Bud Light retains the title – but Modelo Especial is making a run for the title for calendar 2023,” stated Bump Williams, the consulting company’s president and CEO.
The direct competition between the two breweries may not be significant but it appears that Constellation Brands has benefitted from Bud Light’s challenges in the market.
Constellation Brands’ Modelo Oro Exceeds $2 Million in Sales, UBS Raises Price Target
Constellation Brands has received positive news regarding its beer brand, Modelo Oro, which has exceeded $2 million in sales. According to industry experts, the product launch performed well at retail. With that said, Canopy Growth, which the company invested $4 billion in back in 2018, has been generating negative press. The Canadian cannabis company has struggled to create revenue due to issues with oversupply and retail outlets.
Despite Canopy’s challenges, Constellation Brands will maintain its stake in the company while confirming it won’t provide additional capital. FactSet’s analysts forecast that for the quarter ending May 31, per-share earnings for Constellation Brands will rise from $2.33 to $2.83. Sales are also expected to increase from $2.027 billion to $2.474 billion. Currently, FactSet analysts rate Constellation Brands as a buy, with 13 out of 18 suggesting buy or equivalent and the remaining five opting for hold. Constellation Brands’ stock has increased by 6%, while the S&P 500 gained 14%.