Top Beer Modelo Owner Says Lower Sales Show Latinos Are Looking To Blend Into The Crowd

President Donald Trump's immigration policies are hurting Modelo and Corona beer sales, pushing Latino consumers to stay away from the brand, the company that owns the beverage giants said.

Along with tariffs on Mexican imports, Trump's hardline immigration policies are also hurting the Constellation's beer sales as Hispanic consumers in the U.S. spend less, company CEO Bill Newlands told analysts on the its conference call on Thursday.

"The fact is, a lot of consumers in the Hispanic community are concerned right now... Over half are concerned relative to immigration issues and how those impact [them]. A number of them are concerned about job losses in industries that have a high Latino employment base," Newlands said.

As a result, Hispanic consumers in the U.S. have pulled back their spending on restaurants, clothing and travel, according to Newlands.

"Beer is quite a ways down the list, but it's certainly on the list because things like social gatherings, an area where the Hispanic consumer often consumes beer, are declining today," he continued.

The pullback contributed to a 1% drop in Constellation's beer shipments last quarter. Constellation said that the slowdown in beer sales was most pronounced at retailers in neighborhoods with large Hispanic populations.

In an interview with the Wall Street Journal, Newlands said some Latino shoppers are shifting their shopping to large retail chains in an attempt to blend into a crowd. That means they are no longer frequenting smaller convenience stores or bodegas that primarily serve Hispanic consumers.

Tariffs are also coming for America's favorite Mexican beer. While Modelo, Corona and Pacifico are exempt from the Trump administration's 25% tariff on Mexican imports, all imported beer cans are now subject to a 25% tariff on aluminum. For Constellation, that could result in an annual cost of $1 billion, according to an estimate by TD Cowen.

Constellation's independent beer distributors have said they are concerned about the slump in purchases by Hispanic consumers and the impact of tariffs on their sales. Some said they hoped that prices wouldn't rise until after the crucial summer sales period, The Wall Street Journal reports.

At a March meeting in Orlando, Constellation used nautical-themed language and decor to try to reassure its distributors, saying it was "battening down the hatches" and 'charting the right course" to "weather the storm."

So far this year, discretionary purchases among Hispanic consumers have fallen at a faster clip than non-Hispanic customers, according to CNN Business.

A "consistent theme we have heard over the last several months has been mounting pressure among [Hispanic consumers] stemming from concerns on immigration policy," Nik Modi, an analyst at RBC Capital Markets, said in a note to clients last week. "This has manifested in pull back from retail."