Corona, Modelo raising beer prices over glass shortage, inflation

By Tiffany Kary | Bloomberg

Constellation Brands, the maker of alcoholic drinks including Corona and Modelo, said it expects to hike beer prices more than its typical 1% to 2% this coming year due to rising commodity costs and a shortage of brown glass.

Chief Financial Officer Garth Hankinson said on the company’s third-quarter earnings call Thursday that margins in the core beer business may suffer in the coming fiscal year in part because of inflation in commodity prices. He still expects operating margins for the beer business to be around 39% to 40% over the long term.

The glass shortage is the latest hit for beer makers, who spent the last year talking about shortages of aluminum cans as people switched from drinking at bars and keg parties to drinking at home or outside.

MKM Partners analyst Bill Kirk said in a November research note that while Constellation’s most-affected brand seems to be Pacifico, Modelo Negra beers also come in brown glass and the largest risk would be if glass availability became so severe as to limit sales of Corona or Modelo Especial.

Shares of the Victor, New York-based company fell as much as 4.2% before paring declines. The stock has risen 12% in the past 12 months, trailing an 18% gain in the S&P 500 Consumer Staples Index.