On Thursday, Constellation Brands Inc (STZ  ) touted the strong performance of its beer portfolio as the Corona beer maker raised its annual guidance upon delivering a fiscal second quarter sales and profit beat. Like its peer, Brown-Forman Corporation (BF.B  ), Constellation benefited from increasing prices, helping offset steeper raw material costs.

Constellation's beer business benefitted from the backlash its rival Anheuser-Busch Inbev (BUD  ) faced due to its partnership with transgender influencer Dylan Mulvaney. Although concerns about Constellation's other liquor offerings sent shares lower 3.2% on Thursday, they were still 6% up year-to-date.

Fiscal Second Quarter Highlights

Constellation's quarterly sales rose 7%, to $2.84 billion, topping analysts' average estimate of $2.82 billion, as per IBES data from LSEG. Earnings per share amounted to $3.70. Beer sales rose 12% while shipments rose 8.7%.

Post earnings, Constellation Brands CEO Bill Newlands highlighted the beer success a as he explained the company is shifting from mainstream to higher-end brands. While Corona remains a solid success, Modelo Especial that overtook the America's best-selling beer crown from Bud Light following the Mulvaney partnership is up almost 9%, Pacifico 15% and the Chelada business rose an impressive 42%.

But while the beer portfolio experienced a double-digit sales growth, wine and spirits brands reported a slumping demand with a 14% decline in sales with the number of cases sold from distributors to retails dropping 7.8%.

A Lifted Fiscal 2024 Outlook

Constellation raised the annual sales forecast for its beer business as it expects fiscal 2024 comparable earnings per share in the range between $12.00 and $12.20, while it previously guided for a range between $11.70 and $12.00 per share.

Full-year EPS outlook is in the range between $9.60 to $9.80, also rising from the previously guided range between $9.35 to $9.65.

Beer did its magic but the failure of Constellation's rival also did its part in boosting the results.

The demand for Modelo Especial and Corona brand beers and premium wine labels such as Meiomi and Kim Crawford remains strong despite a broader U.S. consumer slowdown owed mostly to the sticky inflation. The downfall of Anheuser-Busch also played its part. The backlash that Anheuser-Busch faced did not lose steam which is usually the case and Bud Light picked a fight it cannot win. More importantly, the failure of the campaign showed not only that Anheuser-Busch does not understand its consumers, but also reflected a seismic shift in consumer behavior.

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