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This past Sunday was National Beer Day and alcoholic beverage maker Constellation Brands (STZ) had good reason to celebrate as its beer brands continue to see strong demand and outperform the competition. The strength of STZ's beer business was on display this morning when the company delivered a solid beat-and-raise Q4 earnings report as its premium Mexican beer brands, including Modelo Especial and Pacifico, were standout performers yet again.

• Overall, net sales for the beer business grew by nearly 11% with depletions up by about 9%, representing an acceleration from last quarter's net sales growth of 4%. Modelo Especial, Pacifico, and Corona Extra, which achieved Q4 depletion growth of 14%, 22%, and 1%, respectively, have been on a role over the past few years, but that momentum has hit a higher gear due to Anheuser-Busch InBev's (BUD) troubles.
• In the wake of last year's marketing controversy for BUD, Modelo Especial climbed ahead of Bud Light as the top selling beer in the U.S. STZ noted in the earnings press release that its beer business remained the top dollar sales share gainer in the category and the high-end segment.
• The company doesn't expect much of a slowdown in FY25, either, forecasting net sales growth of 7-9% for the beer business. In addition to cost savings initiatives, lower marketing expense, and favorable pricing, which pushed beer operating margin higher by 30 bps in Q4, the consistently strong demand for STZ's beer brands enabled the company to provide a bullish overall outlook for FY25.
• Specifically, STZ guided for FY25 enterprise net sales growth of 6-7% and EPS of $13.50-$13.80, which exceeded expectations. The better-than-expected outlook comes even as STZ's wine and spirts business continues to struggle.
• Wine and spirits net sales declined by 6% in Q4 due to ongoing weak marketplace conditions, especially for STZ's largest premium brands. That's discouraging because the key facet behind STZ's turnaround strategy for wine and spirits rests on its premium brands. Over the past couple of years, the company has focused on divesting its lower-priced brands, such as E.J. Gallo Winery, while prioritizing higher end brands like The Prisoner Wind Company, Meiomi, and Casa Nobel Tequila. 
• On the positive side, STZ is anticipating a stabilization for wine and spirits in FY25, guiding for a net sales decline of 0.5% to growth of 0.5%. Also, net sales in international markets are already rebounding, increasing by 14% as wholesale destocking has largely played out.

The main takeaway is that the story essentially remained the same in Q4 as STZ's beer business once again led the way, offsetting ongoing weakness on the wine and spirits side. STZ expects that momentum for beer to continue in FY25, but what's especially encouraging is that it also expects net sales to finally improve for wine and spirts.