The trend: After years of steady up-and-to-the-right growth, the beer industry is facing a broad correction that’s hitting brands large and small.

• Overall sales fell 1.2% YoY last year in the US, while craft beer declined 3.9%, per the Brewers Association.
• For the first time in two decades, more breweries have closed than opened over the past 18 months, including well-known names like 21st Amendment Brewery, per The New York Times.

Multiple factors are driving the downturn, including inflation squeezing consumer spending; tastes shifting toward hard seltzers, ready-to-drink cocktails, and cannabis; and a growing share of consumers cutting back on alcohol altogether.

Amid those challenges, breweries face tightening margins as tariffs are increasing costs for aluminum cans and other imported packaging and equipment.

Zooming in: The pain is particularly acute for Constellation Brands, which is also feeling the effects of the Trump administration’s immigration crackdown and its ripple impact on the Hispanic community— a key market for its Mexican beer brands.

• Hispanic consumers are feeling pinched. Four in 5 (80%) Hispanic consumers are worried about the broader socioeconomic climate, and 7 in 10 (70%) are concerned about their personal finances, according to the company’s monthly customer study, cited on its latest earnings call.
• The strain has been most pronounced in areas with large Hispanic populations. “The results that you are seeing in high-Hispanic ZIP code areas are significantly worse than what you see in the general market,” said William Newlands, president and CEO.
• The net results are steep YoY declines across Constellation’s beer lineup: Modelo Especial was down roughly 4%, Corona Extra 7%, Pacifico 14%, Modelo Chelada 3%, and Victoria 19%.

While Constellation faces no shortage of challenges, one bright spot lies in its efforts to adapt to changing drinking habits. Its Corona Sunbrew Citrus Cerveza that’s brewed with real orange and lime peels has become the year’s top new brand by dollar sales and the fourth-largest share gainer in the category, bolstered by Gen Z’s taste for bolder flavors.

Similarly, Corona Non-Alcoholic ranks as the second-largest dollar-share gainer in the non-alcoholic beer segment.

Our take: Every trend has a shelf life. That’s why brands need to keep pushing forward by testing new flavors, formats, and audiences before the old ones go flat. The key is to experiment early, listen closely, and treat change as an opportunity rather than a reason to panic.