Food Dive reported on Wednesday that the major beverage supplier, Constellation Brands, currently faces a lawsuit over claims of deceiving shareholders over sales numbers.
“During the Relevant Period, the Individual defendants repeatedly touted the purported growth potential of its Wine and Spirits business,” the lawsuit reads according to Bloomberg Law. “However, in reality, the Company was struggling to deliver increased profitability, especially in its Wine and Spirits business due to weaker consumer demand and continued retail inventory destocking in the U.S. wholesale market.”
Food Dive reported that the lawsuit alleges Constellation planned to “inflate its performance” within the wine category before the brand’s major sell-off of brands like Meiomi, which took place earlier in April.
The lawsuit filing claims that the “truth fully emerged on January 10, 2025,” when Constellation, “published a press release to announce its financial results for the third quarter of 2025.”
“Notably, the Company revealed that it had significantly missed its target for sales performance in the Beer Segment and Wine and Spirits segment,” the lawsuit read. The lawsuit claimed that after this news reached the public, Constellation’s stock fell by about 17%.
According to The Drinks Business, some of the company’s officers were additionally accused of participating in “improper insider sales,” which led them to allegedly earn over $81.6 million in purchasing stocks at falsely inflated prices.
Constellation — like many alcohol brands — has had an admittedly rocky start to 2025. With potential tariffs hitting the brand’s most popular beer, Modelo, and fears of deportation among its heavily Hispanic consumer base, sales have already been taking a hit.
Reuters reported that the beverage supplier’s Modelo sales dropped because of President Trump’s tough tactics on immigration. According to the outlet, executives at Constellation noticed a decrease in Modelo sales in zip codes with large Hispanic communities. The company additionally claimed that Latinos may be having less social gatherings.
“We think the quick change in tone/outlook at least partially reflects the likely reality that the company was benefiting over the past number of years from loose immigration policy,” said JP Morgan Analyst Andrea Teixeira, according to Reuters.
According to The Drinks Business, Constellation made cuts to the company’s earnings forecast for the next three years.
No responses yet