Constellation Brands Inc (NYSE:STZ) stock fell 13.39% (As on January 10, 11:22:28 AM UTC-4, Source: Google Finance) after the company cut its annual sales forecast as persistently sticky inflation dents consumer spending on beers, wines and spirits. Beer, which is Constellation’s major revenue driver, saw a mere 3.2% rise in depletion growth, or the rate at which products are sold, in the third quarter, compared with an 8.2% growth last year. Overall demand for alcoholic beverages and spirits has also come under pressure as more people opt for low-calorie and lighter liquors. Last month, the company said it would sell its Svedka vodka brand to New Orleans-based Sazerac. Last week, Constellation stock dipped after the U.S. Surgeon General said alcoholic drinks should carry a warning about cancer risks on their label, signaling a shift toward tobacco-style regulation for liquor and casting further gloom on the industry.

STZ in the first quarter of FY 25 has reported the adjusted earnings per share of $3.25, missing the analysts’ estimates for the adjusted earnings per share of $3.31 per share, according to data compiled by LSEG. The company had reported the adjusted revenue of $2.46 billion in the first quarter of FY 25, missing the analysts’ estimates for revenue of $2.53 billion.

Additionally, the company generated year-to-date operating cash flow of $2.6 billion, a 9% increase, and free cash flow of $1.6 billion, a 13% increase. The company declared quarterly cash dividend of $1.01 per share Class A Common Stock

The company now expects annual net sales to grow 2% to 5%, compared with its previous forecast of 4% to 6% growth.

The company expects adjusted profit per share for fiscal 2025 to be between $13.40 and $13.80, compared with its previous forecast of between $13.60 and $13.80 per share. The company raised fiscal 2025 operating cash flow target to $2.9 – $3.1 billion and free cash flow projection to $1.6 – $1.8 billion.

In addition, the Beer Business now expects net sales growth of 4 – 7% and operating income growth outlook of 9 – 12% for fiscal 2025. The company had approximately 48 million hectoliters of capacity across its existing facilities in Mexico at the end of fiscal 2024. From fiscal 2025 to fiscal 2028, the company expects approximately $3 billion of capital expenditures to continue the development of modular additions at existing facilities in Mexico and its third brewery site at Veracruz.