Tariff on Imported Aluminum Increases Costs for Constellation Brands, Squeezing Profit Margins

Published: Jul 13, 2025 23:43

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US beverage giant Constellation Brands expects that the 50% tariff imposed by the Trump administration on imported aluminum will lead to an increase in costs of approximately $20 million for the current fiscal year (ending February 2025).

Although Mexican alcoholic beverages remain exempt, beer packaged in aluminum cans is subject to the new tariff, directly affecting the company's profit margins.

Gars Harkinson, the company's CFO, stated that although Q1 performance was unaffected, subsequent profit margins will shrink by approximately 20 basis points, and the company will struggle to fully pass on the costs.

The beer business remains Constellation Brands' primary source of profit, but rising costs and weak demand are squeezing profit margins.

Bill Newlands, the company's CEO, pointed out that the decline in consumers dining out and family social activities has led to a contraction in beer consumption scenarios, although demand itself has not decreased.

So far this year, the company's stock price has fallen by 31%. The tariff has exacerbated pressure on US companies reliant on imported aluminum, while aluminum industry investments in Canada, its main supplier, such as Aluminerie Alouette's $1.1 billion upgrade plan, may help stabilize the supply chain.

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