LIVE MARKETS-Retail at crossroads: Why America's favorite brands are facing a customer crisis

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RETAIL AT CROSSROADS: WHY AMERICA'S FAVORITE BRANDS ARE FACING A CUSTOMER CRISIS

America's leading consumer brands are preparing for a new reality: the U.S. population is growing at a far slower rate than in the past, Bernstein said in a research note.

The brokerage points to Congressional Budget Office data earlier this month that forecast U.S. population growth is likely to grow 0.3% until 2036 and slow further to 0.1% in the decade after, as both immigration and birth rates fall and projected to shrink thereafter.

According to Bernstein, this is a big shift for consumer businesses. Companies need people to buy their products. When population growth slows, there's less demand for almost everything.

The brokerage highlights several ripple effects across industries. Alcoholic beverage makers, especially those with brands popular among Hispanic consumers, face outsized risks.

"Categories like beer and tequila are disproportionate losers from lower net immigration over the next 5 years due to their exposure to hispanic consumers," said the brokerage.

Constellation Brands STZ.N, Heineken HEIN.AS, and Molson Coors TAP.N are among the most exposed, while European brewers like Carlsberg CARLb.CO and Royal Unibrew RBREW.CO remain insulated.

Constellation Brands, despite recent gains from Pacifico and Corona, now faces headwinds as slower U.S. population growth and lower net immigration weigh on demand from Hispanic consumers, a key market for its beers. Heineken, Molson Coors, and Carlsberg have also reported softer demand and tougher conditions due to shifting demographics, weaker consumption, and rising costs.

Packaged food companies such as Tyson Foods TSN.N and Kraft Heinz KHC.O could see higher labor costs as the pool of available workers shrinks.

Quick-service restaurants, including McDonald's MCD.N, Yum Brands YUM.N, and Domino's DPZ.O, may suffer from fewer young customers and tighter labor markets, although their international exposure offers some relief.

Retailers like Walmart WMT.O and Dollar General DG.N, which serve many lower-income and immigrant customers, might begin to feel the pinch, particularly in hiring.

Bernstein notes that luxury brands, including LVMH LVMH.PA and Hermes HRMS.PA, may actually benefit as wealth becomes more concentrated among older Americans.

While near-term effects may be limited, Bernstein expects these demographic shifts to reshape U.S. consumer demand and labor markets over time.

Top-rated stocks include retailers Costco COST.O, TJX TJX.N, Burlington BURL.N, sportswear giants On Holding ONON.N, Adidas ADSGn.DE, Nike NKE.N, luxury accessories co Tapestry TPR.N,which the brokerage believes are best positioned to navigate the changing landscape.

(Akriti Shah)

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