In April 2024, Salvador Gutierrez got a big surprise.
The Oxnard, California-based food vendor, who made his living selling sweet drinks called Agua Frescas, received a new customized street cart and $5,000 to elevate his business. The check came courtesy of a new product line from the Modelo beer brand, according to a press release from the company. “I started this business to make ends meet but what I wasn’t prepared for was the amount of love and support I received from my community. They rallied behind me to support my business and my dream,” said Gutierrez, who thanked Modelo and said he would use the new cart to “make my daughters proud.” Later that year, Modelo created a ghost kitchen in New York City to commemorate Día de Los Muertos, featuring dishes like beer battered fish tacos and pollo asado in a beer citrus marinade. All of the dishes were developed by Hispanic chefs to celebrate the legacy of their loved ones who have died.
The efforts to reach the Latino community and their wallets over the years have paid off: In 2023 Modelo scored a major coup, becoming the most popular beer in the U.S., beating out Bud Light. But there are signs that Trump-era immigration anxiety and fears over ICE raids are changing the spending habits of Latino consumers, spelling trouble for brands that appeal to that cohort. (Constellation Brands, the company that controls Modelo in the U.S., declined Fortune’s request for an interview, and declined to comment for this story.)
Constellation, which also distributes Corona and Pacifico, comes in at Number 418 on the Fortune 500 list. Net beer sales for the company remained relatively unchanged for the fourth quarter of 2024. But shipments to retail customers were down around 1%, largely driven by decreases in Modelo Especial, Corona Extra, and the Modelo Chelada, according to the company. Constellation has also lowered its beer net sales growth rate outlook for fiscal year 2026 to between 0% and 3%, down from 4% to 7% for 2025.
The backdrop: As ICE activity heats up, Latino shoppers seem to be out and about less. According to a mid-May report from Kantar, a marketing data and analysis company, supermarket shopping among Latinos was down 11.3% in the first quarter of 2025, compared to the same time last year. Drug store visits were down 7.5%, and convenience store visits were down 9.7%. That’s compared to declines of 1.9%, 1.5% and 2.3% for of non-Hispanic shoppers, respectively. Meanwhile, more Hispanic shoppers are turning to online shopping instead of showing up in stores; online shopping has increased 7% among this group between the fourth quarter of 2024 and the first quarter of 2025.
“Modelo is over 50% Hispanic in terms of its demographic base,” William A. Newlands, President and CEO of Constellation Brands, said on an April earnings call. “So this decline in efforts to go to restaurants, to have social gatherings, things that are very much beer occasions, have softened in the more recent term. And it’s going to be key to watch as to how that impact continues, or doesn’t continue, as we go forward.”
How Modelo took first prize
Bud Light’s collaboration with trans influencer Dylan Mulvaney in 2023 resulted in an anti-trans backlash and a beer boycott, knocking Bud Light out of the number one spot among U.S. consumers. That left an opening for Modelo Especial to nab the top spot.
A big factor in the brand’s success has been its resonance with the increasingly powerful U.S. Latino consumer. While Newlands has said the customer base for Modelo is around 50% Hispanic, executive vice president and president of the beer division, James A. Sabia, said at the company’s conference presentation in May that around 35% of its overall sales volume across all of its different brands goes to Hispanic customers.
The company has been the growth powerhouse of the beer industry for well over a decade, Benj Steinman, president of Beer Market Industries, the leading trade publisher on the brewing industry, tells Fortune. Between 2014 and 2024, Constellation increased U.S. beer production by 137.9%, going from 13 million barrels to 31 million barrels over the course of the decade. In that same period of time, the company also jumped from a 6.1 market share to 15.8 market share, gaining almost 10 share points.
“Constellation had this strong Hispanic tailwind that’s absolutely one of the major factors in its growth,” Steinman says.
Gerald Pascarelli, managing director of equity research at Needham and Company, agrees. “Modelo would have overtaken Bud Light, just given the growth trajectory that they had,” he says. “Hispanics are typically a very good cohort to have exposure to.”
Around 19.3% of the country identifies as Hispanic or Latino, according to the U.S. Census, a group that has dramatically increased its spending power over the past decade. The economic output of this cohort went from $1.6 trillion in 2010 to $4 trillion in 2023, according to the U.S. Latino GDP Report released by California Lutheran University and UCLA Health. But the group has seen a significant decline in year-over-year spending compared to non-hispanic shoppers, according to the Kantar report.
“It doesn’t necessarily appear to be that it is an economic concern that’s driving this behavior,” says Mary Brett Whitfield, a senior vice president at Kantar Retail. “We do see Hispanic shoppers holding back because of what’s happening in the broader socio-political environment. There are a lot of tension points for them.”
To be sure, business is still good for Constellation. Consolidated net sales are up 2.41% for the latest fiscal year, and beer sales are up 4.6%. Analysts are bullish on the company’s prospects, and Pascarelli calls the long-term buying power for Latinos in the U.S. “very favorable.” But Constellation still must weather this moment in time, he adds, and the “outsized pressure given to the demographic makeup of their portfolio.”
How Trump’s policies are affecting businesses
Constellation isn’t the only major brand closely watching how Trump’s immigration crackdown affects business. Several major consumer-facing companies, including Keurig Dr Pepper, Walmart, and Coca-Cola, have publicly discussed how immigration policies could impact their bottom line.
Newlands recently said at a company conference presentation that it had already diversified the customer base for brands like Modelo, and would continue to do so moving forward. “Modelo was 80% Hispanic several years ago. Today, it’s 55%. So we’ve spent a lot of time, a lot of energy, a lot of media dollars developing in that consumer marketplace. And I think we’re in a good position to continue to see that develop as time goes forward,” he said.
Executives at Constellation have also said they will continue to spend on marketing, something that industry-watchers say will be important. Paying attention to how shoppers are buying differently will also be key, according to Whitfield.
“I think part of the solution may be not focusing on trying to get Hispanic shoppers necessarily back into the store, but to keep Hispanic shoppers within the retailer ecosystem,” she says. “It may be an opportunity for retailers or brands to target those shoppers on apps…sell[ing] via online mechanisms…I certainly anticipate that brands will start to think about [that].”
Constellation seems to be thinking about this as a short term problem, and Newlands has referred to “near term headwinds” on a recent earnings call.
“We believe there’s still a lot of opportunity for our business going forward that most of what is going on is socioeconomic issues that we believe will moderate over time,” he said. “The question is, what’s that time horizon? That’s a bit of a difficult one to answer.”
