US – Constellation Brands, one of America’s largest beer suppliers, has decided to divest a portion of its mainstream and premium wine portfolio to its peer, The Wine Group.
The labels included in the deal were Cooper & Thief, Crafters Union, The Dreaming Tree, Monkey Bay, 7 Moons, and Charles Smith Wines.
The decision to sell the wine portfolio builds on the company’s efforts to establish a bold and innovative, higher-end wine and spirits portfolio with distinctive brands and products, delivering exceptional consumer experiences.
The New York-based company that owns Napa’s Robert Mondavi Winery and Healdsburg’s Simi Winery said it is focused on competing predominantly in premium and fine wine and craft spirits segments while continuing to invest in the growth of its remaining strategic mainstream wine and spirits assets.
Robert Hanson, EVP & President of the wine and spirits division stated: “Over the past three years, we reshaped ourselves into a higher-end wine and spirits division with intentional, strategic mainstream plays and are moving our business towards becoming a leading global Premium/Fine Wine & Craft Spirits portfolio.”
This transaction will enable us to focus and shift our portfolio towards the higher end, positioning ourselves to continue delivering industry-leading growth and shareholder value with the right portfolio for our ambitions. In turn, The Wine Group is acquiring great brands that complement its current strategy of continuing to build a premium wine portfolio.”
This new sale of a set of wine portfolios succeeds a major divestment of its popular and mainstream wine and spirits portfolio in 2021.
Constellation has noted that its remaining wine and spirits portfolio contains a more focused set of leading, powerful brands aligned with consumer preferences, spanning mainstream, premium, fine wine, and craft spirits segments.
Constellation Brands posts 13.7% revenue rise in half-year results
The announcement of the deal was parallel to its second-quarter and half-year financial results, where its second-quarter net sales rose 12% to US$2.66bn, contributing to a 13.7% first-half increase to US$5.41bn.
During the three months to 31 August, the net sales from Constellation’s wine-and-spirits division had a jump of 1% to US$515.8m.
Citing IRI data, Constellation said its “wine portfolio outperformed the total US wine category and gained share”.
The company is forecasting annual net sales from its wine-and-spirits arm will be at best flat, or, at worst, down 2%.
Second-quarter group operating income inched up 10% to $813m while its first-half operating income more than doubled to US$1.63bn.
In the cannabis venture Canopy Growth Corp, Constellation booked a second-quarter net loss of US$1.15bn and a half-year loss of US$761.7m, a hit from costs and impairments from its cannabis investment.
On a comparable basis – excluding items such as the Canopy expenses – second-quarter net income rose 28% to $588.7m. Comparable half-year net income was up 19% at US$1.09bn.
Constellation also provided investors with fresh forecasts for annual earnings per share, forecasting its reported annual EPS would be between US$0.75 and US$1.15.
Constellation said its comparable basis EPS is forecast to reach between US$11.20 and US$11.60, having a consensus among Wall Street analysts on the comparable EPS forecast of US$11.52.
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