• Icons in the spirits industry — Constellation Brands, Diageo and Brown-Forman — have all faced headwinds in 2025,.
• They’re pressured by shifts in consumption and trade-related risk.
• Of the three, Constellation stands out. It’s supported by Berkshire Hathaway, resilient earnings and solid fundamentals.

After a multi-year boom, the spirits industry is confronting a sobering reality. Over the past year, the share prices of some of the sector’s most iconic names — Constellation Brands (STZ), Diageo (DEO) and Brown-Forman (BF.B) — have fallen sharply, even as beer companies like Anheuser-Busch InBev (BUD) and Carlsberg (CABGY) have staged powerful comebacks. Softening global sales, shifting generational preferences and the threat of tariffs have contributed to the pressure, prompting investors to consider whether these challenges are cyclical or structural.

Adding to the uncertainty is the rise of GLP-1 weight loss drugs like Ozempic and Wegovy, which early research suggests may reduce alcohol consumption. While the long-term effect remains unclear, the growing use of these medications could accelerate shifts toward moderation, wellness and low- or no-alcohol offerings. Let’s evaluate the efforts of these three industry icons to navigate their challenging situation. We’ll explore earnings trends, trade policy risk and valuation metrics, uncovering which looks best-positioned to weather the turbulence.

Constellation: Berkshire’s vote of confidence and the case for a turnaround

After a tough 12-month stretch that’s seen shares of Constellation Brands slide more than 20%, 2025 may end up marking a turning point — not in sentiment, necessarily, but in valuation. With macro headwinds mounting, from sluggish alcohol consumption trends to mounting risk of tariffs and economic pressure on Hispanic consumers, he company has struggled to keep pace with beer-heavy peers. Yet, that very weakness has drawn attention from value-oriented investors, including Berkshire Hathaway (BRK.B), which more than doubled its stake in Constellation earlier this year. The investment thesis: A premium brand portfolio, best-in-class margins and a long-term growth runway that remains largely intact despite near-term turbulence.

In Constellation’s latest earnings report, management guided to just 0%–3% growth in beer sales in fiscal 2026 and 2%–4% in the years that follow. That’s well below the 7%–9% growth rates it had previously forecast. The company attributed the decline to softer demand among key US segments, including Hispanic consumers, who represent an estimated 35% of its beer customer base. Even so, flagship brands like Modelo and Corona remain category leaders, and beer operating margins are expected to stay firm in the 39%–40% range over the next three years. Meanwhile, restructuring in the Wine & Spirits Division has boosted profitability, and management is executing on a $4 billion buyback program while targeting $6 billion in free cash flow through fiscal 2028.

That mix of strong brand resilience and tempered growth expectations is echoed in the valuation. Constellation Brands trades at just 14.7x forward GAAP earning, well below the consumer staples sector median of 19.1x, suggesting a discount on an earnings basis. However, its price-to-sales ratio of 3.3 and price-to-book multiple of 4.8 remain elevated relative to peers, reflecting the fact that premium investors continue to place on its high-margin, brand-driven model. That dynamic highlights a tension between discounted earnings and asset-based valuation that could limit short-term upside—minus a catalyst. 

Still, analyst sentiment remains constructive: 14 of 24 analysts rate the stock a “buy” or “overweight,” with a consensus price target of $207 per share, offering meaningful room above current levels near $185. For an investor with a long-term vision, like Berkshire Hathaway might take, Constellation may therefore represent a high-quality franchise trading at a reasonable price, with upside that builds steadily as macro and policy headwinds ease. For added context, the 52-week low in the company’s stock is roughly $160 per share, while the 52-week high is $265.

Diageo: signs of stabilization — but no rush to buy

Diageo, the global spirits powerhouse behind Guinness, Johnnie Walker and Don Julio, has seen its stock slide nearly 20% over the past year. While broader investor sentiment around alcohol stocks has soured, the pullback in Diageo also appears driven less by structural deterioration than by cyclical challenges and a shifting macro backdrop. Organic sales have returned to modest growth in recent quarters, but net sales and earnings remain under pressure from FX headwinds, tariffs and elevated costs. Still, management has reaffirmed its 2025 outlook, emphasizing margin control, cost savings and long-term brand strength.

But green shoots may be emerging. In the first half of fiscal 2025, Diageo posted 1% organic net sales growth, driven largely by pricing gains. Key brands such as Guinness and Don Julio continue to show strength, particularly in the US and Europe, helping to offset softness elsewhere. At the same time, management is pursuing a $500 million cost savings initiative through 2028, with a goal of generating $3 billion in free cash flow by next year. The company is also navigating tariffs proactively — aiming to absorb or offset roughly half of the $150 million to $200 million annualized exposure through pricing actions, supply chain agility and cost discipline. Longer term, the company is betting on premiumization, digital acceleration and portfolio reshaping to outpace broader industry peers. Whether those ambitions translate into a sustained rebound remains to be seen, but regaining the $140 per share level reached in late 2024 will likely require a clear inflection in both sentiment and sales momentum.

In terms of valuation, the story looks less compelling than Constellation’s. Diageo trades at 18.9x forward GAAP earnings, right in line with the sector median of 19.1x. But its elevated price-to-sales (3.0) and price-to-book (5.9) ratios highlight the enduring value investors place on its premium brands and durable margins. 

Analyst sentiment is also underwhelming: of the 21 analysts tracking the stock, 11 rate it a “buy” or “overweight,” while the rest remain on the sidelines. The average price target stands at $130 per share, suggesting upside from current levels near $110, but only if execution improves or external conditions turn more favorable. For now, Diageo remains a fundamentally solid business in a macro holding pattern. While long-term potential is arguably intact, there’s little urgency to buy at this level. 

Brown-Forman: a tariff casualty set to rebound?

Brown-Forman, the iconic American distiller behind Jack Daniel’s and Woodford Reserve, has stumbled in 2025. Shares are down more than 20% over the past year, as the company grapples with a challenging cocktail of soft US demand for spirits, shifting generational preferences and the looming threat of rising tariffs. While its international footprint has expanded, the company remains more tethered to US policy than global peers like Constellation Brands or Diageo, exposing it to the turbulence stirred by the Trump administration’s evolving trade strategy.

Adding to these challenges is a growing boycott of American-made products in Canada, a significant market for US spirits. In response to President Trump’s tariffs on Canadian imports and his talk of annexation, several Canadian provinces, including Ontario and Nova Scotia, have removed US-made alcoholic beverages from their liquor store shelves. Brown-Forman’s leadership has described this movement as “worse than tariffs” because it’s had a catastrophic effect on sales and brand presence in Canada. 

As one might expect, Brown-Forman’s financials reflect a company in transition. On an organic basis, both revenue and operating income posted modest year-to-date gains, up 2% and 5%, respectively, but headline results tell a more sobering tale. Divestitures, currency fluctuations and narrowing margins have weighed on performance, with earnings per share down 4% over the first nine months of fiscal 2025, and gross margin contracting by 150 basis points. While management has reaffirmed its full-year outlook for 2%–4% organic growth, investor confidence remains low. 

The valuation setup for Brown-Forman offers little to get excited about. Shares trade at 18.8x forward GAAP earnings, closely in line with the sector median. But its price-to-sales ratio of 4.0 and price-to-book of 4.3 look stretched, particularly for a company facing stagnant volume and waning pricing power. Analyst sentiment underscores that disconnect: only five of the 20 covering the stock rate it a “buy” or “overweight,” while the majority remain on the sidelines.

With Jack Daniel’s ceding share in an increasingly saturated whiskey market and younger consumers showing less affinity for hard spirits, reigniting meaningful growth will be no small task. Trade policy adds another layer of complexity. The specter of renewed EU tariffs on American whiskey looms large, posing a particularly acute risk for a US-centric player like Brown-Forman. If there’s a bullish case to be made, it rests largely on external forces: a swift resolution to trade tensions or a broader consumer resurgence that lifts the entire category. Neither looks likely in the near term. The 52-week low in the company’s stock is $30 per share, while the current price is about $35. 

Takeaways

Among the three major spirits companies , Constellation Brands stands out as the most investable for long-term holders. With a dominant beer portfolio, consistent free cash flow and a shareholder-friendly capital strategy, the fundamentals remain intact despite a challenging macro backdrop. The valuation is reasonable, especially in light of Berkshire Hathaway’s increased stake, which lends weight to the idea that the company is a high-quality business trading below intrinsic value. For investors with patience and a long-term view, it offers an appealing mix of resilience and re-rating potential.

On the other hand, for those with a more tactical mindset, Brown-Forman may offer a compelling profile. The stock has lagged under the weight of whiskey oversupply, shifting generational preferences and tariff overhangs, but that same sensitivity arguably gives it the greatest torque to a macro inflection point. For traders attuned to the rhythm of trade headlines and policy pivots, the company could function not just as a trading vehicle, but as a high-beta spirits play with asymmetric upside — if geopolitical or demand dynamics begin to turn.

Andrew Prochnow, Luckbox analyst-at-large, has traded the global financial markets for more than 15 years, including 10 years as a professional options trader.

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