Constellation to sell 30 wine and spirits brands to Gallo for US$1.7b

USA – Corona beer maker, Constellation Brands has announced that it has agreed to sell about 30 brands from its wine and spirits portfolio to E. & J. Gallo Winery for US$1.7 billion.

The transaction which is subject to regulatory and customary approvals also includes related facilities located in California, New York and Washington.

The company is looking to offload wines principally priced at US$11 or less in retail stores, as it looks to focus on its premium beverage portfolio.

Constellation Brands said the move will enable it focus on the premium segments based on changing consumer trends, accelerate growth and increase shareholder value.

Brands included in the transaction include Clos du Bois, Black Box, Estancia, Mark West, Wild Horse, Franciscan, and Ravenswood.

“One of the hallmarks of our success over the years has been our ability to evolve and stay on the forefront of emerging consumer trends,” said Bill Newlands, Constellation Brands president and chief executive officer.

“This decision will help enhance organizational focus on a more premium set of wine and spirits brands that better position our company to drive accelerated growth and shareholder value.

“In turn, Gallo is acquiring a collection of great brands that complement their operational model and business strategy to provide quality products to consumers at every price point.”

When the deal closes at the end of the company’s first quarter of fiscal 2020, the company will remain with a collection of wine and spirits portfolio including Robert Mondavi brand family; The Prisoner Wine Company brand family; Kim Crawford; Ruffino; Meiomi and SVEDKA Vodka.

The company’s portfolio also includes high-end brands such as SIMI, Schrader Cellars and Mount Veeder Winery wine brands, and High West Whiskey and Casa Noble Tequila, as well as new premium wine innovations such as Cooper & Thief and Spoken Barrel.

In its third quarter results, the company recorded a 9.5% rise in net sales boosted by Corona and Modelo brands while, wines and spirits segment recorded 0.4% growth in sales.

During the earnings call, CEO Bill Newlands expressed his confidence in the cannabis market saying the ‘emerging cannabis space represents one of the most significant global growth opportunities of the next decade’.

Constellation Brands acquired a minority stake in US craft alcohol firm Black Button Distilling to boost its spirits portfolio.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.