Constellation Brands, known for its beer brands Corona and Modelo as well as wines like Robert Mondavi and Casa Noble, expects a loss of up to USD 2.5 billion in its wine and spirits division. The reason for this is the continued weak sales figures in the US wine market. The company announced on Tuesday that the non-cash goodwill impairment is to be recorded in the second quarter.

Due to this development, Constellation has significantly revised its full-year earnings forecast downward. The expected earnings per share are now between $3.05 and $7.92, compared to the previous forecast of $14.63 to $14.93. Meanwhile, the lower bound of the comparable earnings forecast has been raised to $13.60, while the upper bound remains unchanged at $13.80.

The devaluation reflects updated expectations for the wine and spirits business, where sales figures in the US wholesale market continue to be negative. For the current year, Constellation expects a revenue decline in this segment of 4% to 6%, after previously forecasting a nearly stable level compared to the previous year.

Despite these challenges, Constellation Brands reports stronger growth in its beer business, though sales here also fall slightly short of expectations. The company expects a revenue increase of 6% to 8% in this segment for the current year, which nevertheless represents a lower growth rate compared to the previous forecast.

CEO Bill Newlands emphasized that the declining trends are particularly noticeable in the five highest-revenue U.S. states, which account for more than half of beer sales. There is a slight shift towards purchases of value packs or in more cost-effective distribution channels.

Overall, Constellation has lowered its revenue expectations for the current year to a growth of 4% to 6%, after previously forecasting growth of 6% to 7%.