Hispanic consumers will likely continue buying Constellation Brands beer even as they tighten their purse strings, according to Jefferies, which can help the company as many shoppers experience economic stress. More than 40% of households purchasing Constellation’s beer brands such as Corona and Modelo are Hispanic, according to Jefferies analyst Kaumil Gajrawala. That easily trumps the 15% average seen for all beer makers. And these shoppers are continuing to purchase Constellation’s products, despite needing to cut back elsewhere as elevated inflation and interest rates pinch their pocketbooks. “The business is more resilient than it may appear,” Gajrawala wrote in a Monday note to clients. More than half of households purchasing Constellation products earn below $80,000 a year, giving the beer maker one of the highest exposures to that cohort, Gajrawala said. This would typically worry investors amid signs that the low- and middle-income consumer is slowing down. But the Hispanic consumer base is tightening its belt elsewhere within the budgets and keeping up its Constellation spending, the analyst found. Gajrawala said this makes sense given that the group is more “loyal” to the company because of its “authentic roots” within the community. Constellation has described its beers as “rooted in Mexican heritage” and pointed to its role as a major importer to America. Jefferies data shows total beer spend across brands from Hispanic buyers is down 9% from 13 weeks ago. But Constellation has bucked the trend, seeing spending from the cohort rise 4% over the same period. When looking across racial and ethnic groups, the trend becomes more pronounced. For all consumers, total beer spending has slipped 2% over the last 13 weeks. At Constellation Brands specifically, it ticked up just 1%, clearly boosted by the continued support of the Hispanic community. “This is proof of their loyalty and a rare advantage in today’s environment,” Gajrawala said. The analyst has a buy rating with a $310 price target. That target implies shares can rally about 18% over the next year. The stock jumped roughly 3.5% on Monday, notching its best session since July 2023.
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