Constellation Brands vs. Kraft Heinz: Two Giants Hitting Rough Waters

Key Points

• Constellation Brands keeps wrestling with market headwinds and shifting taste buds
• Kraft Heinz sales are sliding downward; they’re planning to split in two
• Both stocks lag behind the real market stars out there

Once Wall Street darlings, Constellation Brands and Kraft Heinz have hit a wall. They’re down bad. Meanwhile, tech titans like NVIDIA, Microsoft and friends keep soaring through 2025. Kind of surprising how these consumer staples giants lost their magic touch.

Warren Buffett still has skin in both games through Berkshire Hathaway. About $1.96 billion in Constellation (0.6% of his portfolio) and a heftier $8.8 billion in Kraft Heinz (2.9%).

But yikes. Constellation dropped over 40% in twelve months. Kraft Heinz shed 25%. The broader market? Up nearly 20%.

Constellation’s Headaches

Beer is Constellation’s bread and butter. Modelo. Corona. Pacifico.

Problem one: aluminum tariffs. They’re killing margins on 39% of Mexican beer shipments.

Problem two: younger folks just aren’t drinking like they used to. The company’s scrambling toward hard seltzers and non-alcoholic stuff. It seems their core customers in construction, farming and hospitality aren’t splurging like before.

They’ve been ditching cheaper wine brands for fancy ones. Smart long-term? Maybe. Right now? Pain.

Looking at fiscal 2026? They’re forecasting a 4% to 6% sales dive. Earnings per share dropping 16% to 18%. Ouch.

Even after the stock crash, a P/E ratio of 12 isn’t exactly screaming “bargain!”

Kraft Heinz’s Messy Kitchen

Big names everywhere. Oscar Mayer. Ore-Ida. Philadelphia. Velveeta. Maxwell House. Kool-Aid.

After the 2015 merger, they went full cost-cutting mode. Slashed budgets. Bought back shares. Brands? Left to gather dust.

They hit rock bottom in 2019. Wrote down brands by $15 billion. Since then, they’ve tried cleaning house – selling weak brands, buying growth-oriented ones. Raised prices too.

Didn’t work. Organic sales down 2% in 2024. Expected to fall another 1.5% to 3.5% in 2025. Earnings projected to tumble 13% to 18%.

Their P/E of 10? Not exactly enticing when core brands keep losing ground.

Now they want to split into two companies by late 2026. One for faster-growing brands, another for the laggards. Buffett’s not impressed. “I don’t think taking them apart will fix it,” he said. The merger wasn’t “brilliant” to begin with.

Bottom Line

Neither company feels like a blue chip these days. No stability. No growth. The market has moved on, especially toward tech and healthcare winners.

Forced to pick one? Constellation might bounce back if tariffs ease and beer starts flowing again. Kraft Heinz faces deeper existential questions. Their planned split adds fog, not clarity.

But honestly? If you want blue chip exposure, look elsewhere. These giants are still finding their footing in shifting sands.