In early 2025, Constellation Brands – maker of Modelo, Corona, and Pacifico – was a staple of our Aksala Dividend & Growth Portfolio. It had everything we look for: category-leading brands, consistent dividend growth, and a strong consumer following, especially among the Hispanic community in the U.S. But a pair of macro-level risks crept in this year – one on the cost side, one on the demand side – that ultimately led us to exit the position.
First, aluminum tariffs. Then, immigration policy. Added together, and even the king of beers started to wobble.
Bud Light’s misstep to Modelo’s rise
It’s worth remembering that Constellation’s flagship brand, Modelo Especial, wasn’t always No. 1 in the U.S. That spot belonged to Bud Light until 2023, when an ill-received marketing campaign involving transgender influencer Dylan Mulvaney sparked a conservative boycott. The backlash sent Bud Light tumbling from the top of the charts.
Modelo seized the moment. By June 2023, it had overtaken Bud Light as America’s best-selling beer, grabbing 8.4% of U.S. sales compared to Bud Light’s 7.3%. With a clean brand image and a fiercely loyal fan base, Modelo didn’t just enjoy a temporary bump, it planted its flag at the top.
Constellation Brands looked like a no-brainer for growth- and income-minded investors. Strong sales, top market position, and pricing power. But behind the scenes, pressures were building.
Tariffs on tap
In March 2025, the Trump administration announced steep new aluminum tariffs, raising the rate from 25% to 50% on imported aluminum and steel, including beverage cans. For beer producers like Constellation, that was a punch to the bottom line.
Roughly 39% of Constellation’s beer is shipped in aluminum cans. By the company’s own estimates, these tariffs will add at least $20 million in additional costs this year. Independent analysts suggest the full-year burden could stretch toward $1 billion if broader inputs are considered.
Aluminum tariffs are a blunt instrument. They hit everyone who touches canned beverages, domestic and importers alike. But for Constellation, with brands brewed and canned in Mexico and shipped into the U.S., the impact is magnified. Margins that were already being compressed by packaging and transport costs just got tighter.
Modelo on ICE: Immigration fears
While aluminum tariffs pinched profits, another more unusual force was quietly impacting demand: immigration enforcement. Constellation’s CEO Bill Newlands recently warned that sales are softening, especially among its core Hispanic customer base. Why? Fear.
With stepped-up ICE raids, increased deportation threats, and more visible enforcement activity across the country, Hispanic consumers, who make up roughly 50% of Modelo’s domestic beer sales, have been pulling back.
People are avoiding public spaces. Small liquor stores. Community events. Restaurants. The usual environments where beer is enjoyed socially are seeing lighter foot traffic and as a result, lighter sales.
In Q1, Constellation reported a 3.3% year-over-year decline in beer shipments and a 2.6% dip in revenue in the beer segment. That’s a notable reversal for a company that had been gaining volume steadily year after year.
Why Aksala sold
This combination of higher input costs and weakening demand triggered a decision point for our investment team.
We exited Constellation early this year – not because it wasn’t a good company, but because the landscape around it was becoming too unpredictable. For a dividend- and growth-focused portfolio, we look for companies with strong fundamentals and minimal macro exposure. When margin pressure from tariffs meets demand erosion from policy, that thesis no longer holds.
Constellation may still recover. It remains a dominant brand in the market. But as of now, both the cost to produce and the ability to sell are under pressure. That’s not the recipe we want in a consumer staples investment.
Modelo is a lesson in how seemingly unrelated policies – tariffs and immigration enforcement – can collide and reshape business outcomes.
As investors, we can’t just look at brand strength or recent sales trends. We have to zoom out. What policies are on the horizon? Where are the hidden vulnerabilities? For us, those questions led to a clear answer: step aside from this position and watch what brews next from afar.
Evan R. Guido is the founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 or eguido@aksalawealth.com. Read more of his insights at heraldtribune.com/business. Securities offered through Avantax Investment ServicesSM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory ServicesSM, insurance services offered through an Avantax-affiliated insurance agency. 6260 Lake Osprey Drive, Lakewood Ranch, FL 34240.
