In brief: Constellation Brands’ new beer supply chain chief, Alex Alvarez, takes over a distributor network the company cut too lean last year and has spent six months refilling.
Implications:
Stock floor: Your distributors’ days on hand have a floor, so cutting below it costs you shelves when sales steady.
Early signal: Watch what you ship against what distributors sell each month. Constellation’s gap hit six points in one quarter.
The News
Constellation Brands, which brews Modelo, Corona and Pacifico, shipped 237.2 million cases of beer in the six months that ended Aug. 31, up 3.7% from a year earlier, to rebuild distributor stock it had cut too far, according to its earnings release.
On the company’s earnings call, CEO Nick Fink said inventory was overcorrected in the fiscal year that ended in February, which left the company “testing the lower limits of how low days on hand can go.” That created inefficiencies in the channel, he said, so Constellation had to ship to “close out distributor order backlogs and avoid out of stocks.”
The beer division’s new chief supply chain officer, Alex Alvarez, started in September. He runs manufacturing, procurement, planning, logistics and distribution for the beer business and reports to its president, Jim Sabia, according to the company’s announcement. He spent three years running the supply chain at Suntory Global Spirits, across 18 distilleries in the US, Mexico, Canada, Europe and India, after 16 years at Brown-Forman and earlier roles at General Mills and Procter & Gamble. He replaces John Kester, who retires in November after 12 years and built a network that now produces more than 430 million cases a year.
Why It Matters
Stock at the distributors of the second-largest US beer supplier fell far faster than their sales to stores, so when sales steadied, Constellation had to ship ahead of demand for two quarters and move beer around to keep shelves full.
Still short: Days on hand are still below the company’s long-term average.
More capacity coming: Alvarez also takes over with a new brewery due to start next spring.
By The Numbers
Constellation shipped far less beer than its distributors sold in the summer of 2025, and it has shipped more since to refill them, according to its earnings releases.
The drain: In the quarter that ended Aug. 31, 2025, beer shipments fell 8.7% from a year earlier while depletions, the cases distributors sell to stores, fell 2.7%.
The refill: In the six months that ended Aug. 31, 2026, shipments rose 3.7% while depletions fell 0.5%. A Bank of America analyst estimated on the call that the gap came to about 8 million cases. That is close to a week of beer, at the roughly 9 million cases a week the company shipped, by our math.
The year: Fink said first-half shipments, set against last year’s shortfall, ran about normal, and he expects shipments and depletions for the full year to land within 99% of each other.
What It Costs
In the beer division, warehousing and obsolescence costs rose $10.3 million in the quarter that ended Aug. 31 and $18.0 million over six months, per the 10-Q. The filing doesn’t split out how much came from the refill.
Peer Insights
H&M is fixing its planning after an inventory cut that went too far, while ScottsMiracle-Gro used retailer data to make a deep cut hold. H&M cut its inventory 10% and then said the leaner stock had at times kept it from meeting demand, so it is now upgrading its planning systems. ScottsMiracle-Gro built a machine learning model on store-level and SKU-level inventory data from its retailers and used it to cut inventory from $1.3 billion to $627 million and close 13 of its 18 distribution centers.
What’s Next
November: Kester retires after 12 years with the company.
Feb. 28, 2027: Constellation’s fiscal year ends, the date by which Fink expects shipments and depletions to be back within 99% of each other.
March 2027 onward: The Veracruz brewery, about 85% built, is set to start commercial production at the beginning of fiscal 2028, adding to the Nava and Obregón breweries in Mexico.
