TD Cowen Lowers Ratings for Beer Sellers Constellation Brands and AB InBev

Analysts at TD Cowen have downgraded their ratings for Constellation Brands and Anheuser Busch Inbev.

In a note to clients issued on Tuesday, the analysts lowered their ratings for the stocks from “Buy” to “Hold.” They identified that Constellation is experiencing “broader pressures” within its beer segment, while AB InBev is dealing with ongoing demand challenges in both the US and China.

Constellation, renowned for its Corona beer, has revised its annual net sales growth projection to a range of 4% to 6%, down from a previous estimate of 6% to 7%. The analysts indicated that this revision raises concerns about the company’s fiscal year results for 2026.

Despite Constellation’s beer segment helping to mitigate declines in its wine and spirits division, the analysts noted that the company is “not immune” to downturns in this segment. They highlighted that management has linked the slowdown to rising unemployment among its Hispanic consumer base, which they believe will improve next year. However, the analysts adopt a more cautious outlook, suggesting that current unemployment rates remain relatively low historically.

On the other hand, AB InBev recently reported second-quarter volumes and revenues that fell short of expectations. While the company maintained its annual forecast for core profit growth of 4% to 8%, it acknowledged challenges posed by adverse weather and economic conditions in certain markets.

In the US, volumes are projected to have decreased by 2.5% over the past twelve weeks year-on-year, impacted in part by a boycott of the Bud Light brand earlier this year, according to the analysts’ tracking data.

Additionally, the situation in China has been unfavorable throughout the year due to macroeconomic pressures, despite some exposure to the relatively stable super-premium market. Sales in Mexico have also faced short-term setbacks from reductions in government subsidies and unfavorable rainy weather during the July-August period.