| By Andy Swan If you cracked open a cold one this Independence Day, you weren't alone. The Fourth of July is the top beer-drinking holiday in America, according to the National Beer Wholesalers Association (NBWA).
In fact, this June, beer distributors recorded the highest ordering levels in three years as an estimated three in four folks partaking in this year's libations added beer to their grocery list.
And their suds of choice?
You can bet it wasn't Bud Light.
After all, it's hard to forget the tragedy that befell Bud Light and its parent company, Anheuser-Busch InBev (BUD), in 2023.
It went like this: One can + one contest + one TikTok account = Major backlash and financial fallout.
Bud Light's brand never recovered.
And that's where the real story starts... Not with BUD, but with Constellation Brands (STZ) and its rising star, Modelo Especial. The Best-Selling Beer in America Good to Know: Constellation owns the exclusive rights to sell the Modelo and Corona brands in the U.S., their biggest market, while Anheuser-Busch owns the brands everywhere else they're sold in the world.
Modelo overtook Bud Light as the top-selling beer in America in 2023. But it didn't just inherit the title post-Bud Light's fiasco. It was already on an upward trajectory – and momentum is still building.
You can see consumer searches for Modelo spike in 2023 amid Bud Light marketing drama, but more important, notice how they've continued higher this year: 
Source: Google Trends In the most recent quarter, which Constellation reported on earlier this week, Modelo demand drove significant growth for the company overall.
Net beer sales were up 8% year over year, led by 11% growth in Modelo depletions, maintaining the brand's leading position as the top share gainer and leading beer by sales in the U.S. (Depletions is alcohol industry lingo for the number of cases distributors sell to retailers.)
Modelo is one big reason investors should take a hard look at STZ. But it's only one cog in the Constellation Brands machine.
Here are five other compelling reasons investors should be interested in what STZ has to offer... Beyond Modelo: 5 More Reasons to Love STZ No. 1: Growth in Non-Alcoholic Beer Segment While Constellation's latest earnings confirmed strong demand for its Beer Business, and that's not going anywhere anytime soon, the fact remains that increased awareness around the risks of alcohol use has younger generations drinking less booze than their predecessors.
A study by Berenberg Research found that Gen Z drinks 20% less than millennials per capita – and that's particularly significant when you consider millennials already indulge less than Gen X and boomers did at their age.
Constellation made sure it was ahead of this trend, too, particularly with the launch of Corona Non-alcoholic. This "NA" version of the classic Corona has been highly successful, becoming the No. 1 share gainer in the non-alcoholic segment in the last year. 
Folks seem to love that it tastes just like the "real thing," giving consumers a healthier 0.0% alcohol option they can actually enjoy drinking.
Non-alcoholic beer, wine, and spirits are quickly rising in popularity. Sales surged 35% in 2023, according to NIQ, and that trajectory is expected to continue. No. 2: Innovative Product Launches Align with Consumer Trends Moreover, Constellation Brands has successfully tapped into consumer trends for premiumization, flavor, and betterment with its latest product launches.
This includes its Modelo Chelada and Pacifico brands, which each delivered strong growth last year, and continued their momentum in the first quarter of fiscal-year 2025. 
Source: ir.cbrands.com Modelo Cheladas are like a lightened-up version of traditional brews that incorporate natural flavorings like citrus, chili, and watermelon. They come with a low 3.5% ABV, making them easy to drink. (And perfect for summer.) 
Pacifico, a classic pilsner-style beer that's been around for 125 years, is now seeing a significant revival on Main Street. It saw the highest demand growth of Constellation's beer brands: depletion volumes were up by 21% year over year. No. 3: Significant Investments in Brewing Capacity Constellation invested approximately $950 million in fiscal year 2024 to expand its beer-brewing capacity at its Mexican Nava and Obregon facilities and to continue construction at its new Veracruz site.
Over the next three years, it plans to invest around $3 billion in these brewing sites to ensure it can meet the ongoing robust demand for its beer products. No. 4: Expanded Focus in Wine and Spirits Clearly, Constellation Brands is no one-trick pony. While its beer segment led in market share gains in the first quarter of fiscal-year 2025, the company is also expanding its focus to its wine and spirits segment.
"We're going to focus on those brands that we believe have real growth potential for the long term. Frankly, we'd probably peanut buttered our efforts a little too broadly in the past," said CEO Bill Newlands during the company's April 11 earnings call.
Translation: Constellation had previously spread its resources too thinly across many areas and is now concentrating on core brands like Woodbridge by Robert Mondavi and Meiomi to drive growth and improve profitability.
The company's craft spirits portfolio posted double-digit gains in the most recent quarter. And while wine and spirits sales overall lagged by 7%, Constellation's investment in its high-end brands is likely to continue to pay off in the long run. No. 5: Balanced Cash Flow Management and Shareholder Returns In fiscal-year 2024, Constellation Brands generated over $1.5 billion in free cash flow, surpassing its previous guidance range, despite a 23% increase in capital expenditures. It also returned over $900 million to shareholders through dividends and share repurchases in the last fiscal year.
And it's off to a strong start in FY25 – logging over $240 million in shareholder returns through June 2024 and announcing a quarterly cash dividend of $1.01 per share in its July 3 earnings report. The Bottom Line Constellation posted another solid quarter this week, led by strong demand for its beloved portfolio of Mexican beer brands such as Modelo and Pacifico.
The company is delivering what consumers want with its on-trend offerings, from non-alcoholic Coronas to new lightened-up Modelo Chelada flavors, perfect for sunny days. And we can see the positive impacts in LikeFolio's Consumer Happiness metric, our best long-term lens for future growth. STZ is beating out its down-and-out competitor BUD by a whopping 13 points: 
We like the early trends we're monitoring from the peak summer season and see more upside from STZ from here. I'll toast to that. 🍻
Until next time, | 
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