Is Constellation Brands' Premiumization Strategy Paying Off?

Constellation Brands, Inc. STZ appears to be seeing tangible benefits from its premium-focused strategy, even in a challenging macro backdrop. In third-quarter fiscal 2026, the company delivered an earnings beat despite year-over-year revenue pressure, underscoring the resilience of its high-end beer portfolio. Strong brand equity, particularly across Modelo, Corona and Pacifico, continues to support pricing power and margin discipline.

Premiumization is further supported through price-pack architecture, including the rollout of smaller 7-ounce formats to address affordability concerns. Management highlighted improved trends for Modelo Oro and Corona Premier following price adjustments aimed at aligning with consumer expectations, suggesting that thoughtful price-pack architecture can protect both volumes and brand perception. Meanwhile, Pacifico’s growing distribution and share gains reflect the success of investing behind differentiated, premium brands with strong social and on-premise momentum.

Additionally, the success of its premiumization strategy is demonstrated by the accelerated growth of its Power Brands. The Wine and Spirits business has been transitioning its portfolio toward higher-end brands that align better with consumer-led premiumization trends. Key growth drivers included the company's high-end Power Brands, such as The Prisoner Brand Family, Kim Crawford and Meiomi. The company is investing in its Power Brands through innovation and capitalizing on priority consumer trends with successful product introductions.

That said, macroeconomic pressure, particularly among Hispanic consumers, remains a headwind for category growth. However, Constellation Brands’ focus on “controlling the controllables” — distribution expansion, disciplined pricing and targeted marketing — is helping it outperform the broader beer category.

Overall, while near-term volatility persists, the company’s premiumization strategy is reinforcing brand strength, supporting margins and positioning it to capture upside in key consumption moments like major sporting events.

The Zacks Rundown for STZ

In the past three-month period, STZ’s shares have gained 19.8% compared with the industry’s growth of 21.3%. STZ presently carries a Zacks Rank #3 (Hold).

Image Source: Zacks Investment Research

From a valuation standpoint, STZ trades at a forward price-to-earnings ratio of 12.63X, lower than the industry’s average of 16.57X.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for STZ’s fiscal 2026 earnings implies a year-over-year decline of 15.5%, while the same for fiscal 2027 earnings suggests year-over-year growth of 6.5%.

Image Source: Zacks Investment Research

Key Picks

Some better-ranked stocks have been discussed below:

Carlsberg A/S CABGY, a brewing company, has operations in Northern & Western Europe, Eastern Europe and Asia. CABGY currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CABGY's current fiscal-year sales and earnings indicates growth of 34.9% and 17.8%, respectively.

Anheuser-Busch InBev SA/NV BUD, produces and sells beer in North America, Middle Americas, South America, Europe, the Middle East, Africa, and the Asia Pacific. BUD currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for BUD's current fiscal-year sales and earnings indicates growth of 5.5% and 10.7%, respectively. BUD delivered a trailing four-quarter earnings surprise of 4%, on average.

Heinyken N.V. HEINY is engaged in producing and distributing beverages. HEINY currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for Mission HEINY's current fiscal-year sales implies a decline of 10.4%, and the same for current fiscal-year earnings implies growth of 14.1% from the year-ago actuals.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research