Constellation Brands has offloaded more wine brands – and again US peer The Wine Group is the buyer.
In a deal announced yesterday (9 April), Constellation said it had sold six brands, including Woodbridge, Meiomi and Cook’s. The brands are “mostly positioned in the declining mainstream segment”, the group said. It added the deal is “expected to generate circa $900m in proceeds” in its new financial year.
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The sale is Constellation’s latest move to reshape its range to pricier products.
Three years ago, the group sold a clutch of wine brands including Cooper & Thief, 7 Moons and The Dreaming Tree brands to The Wine Group.
Constellation retains a position in wine with brands – including Robert Mondavi Winery, NZ’s Kim Crawford and Italy’s Ruffino Estates – “predominantly priced $15 and above”, it said.
“This transaction reflects our multi-year strategy to reconfigure our business, resulting in a portfolio of higher-end wine and craft spirits brands that are aligned to evolving consumer preferences and help bolster our competitive position,” Constellation president and CEO Bill Newlands added.
Nadine Sarwat, an analyst covering Constellation for investment bank Bernstein, said investors should welcome the disposal.
“A divestment of the wine business, or a portion of it, has been desired by investors for a long-time, and this news should be taken positively,” she said.
The deal includes three facilities and 6,600 either leased or owned vineyards in California.
In a statement, The Wine Group said the deal “will bring the company several popular, premium and ultra-premium brands, additional on-premise volume, an expanded retail presence [and] new in-house operational capabilities”.
John Sutton, The Wine Group’s CEO, added: “The addition of these assets will build on our commitment to being a consumer-led company, delivering a diversified portfolio that offers consumers exceptional taste, quality and value – for any occasion.”
Alongside the transaction, Constellation announced the financial results for its 2024/25 fiscal year, which closed at the end of February.
Reported net sales grew 2% to $10.21bn. Operating income fell 89% to $355m, contributing to a net loss of $81m.
The Casa Noble Tequila owner recorded a range of impairment and restructuring items in its accounts.
Constellation provided “comparable” numbers, which translated to a 2% increase in revenue, a 7% rise in operating income to $3.48bn and a 10% growth in net income to $2.51bn.
The Modelo brewer also provided its forecasts for the new financial year.
In the 2025/26 fiscal period, Constellation is predicting its net sales will be in a range of 1% growth to a 2% decline.
The group sees net sales from its beer business being flat at best up to 3% higher year on year.
From wines and spirits, Constellation predicts its organic net sales will fall 17-20%.
It has forecast its comparable operating income will fall by 1-3%.
Constellation also provided guidance to investors for the 2027 and 2028 financial years. The company sees its net sales growing by around 2-4% each year. Beer net sales are forecast to rise at the same amount, versus an earlier prediction of growth of 7-9%.
The wines and spirits division is forecast to see net sales be, at worst, flat and at their strongest, up 3% each year.
Constellation is also looking to make “enterprise-wide restructuring actions” it expects to “deliver over $200m net annualised cost savings by FY28”.
“Many, including ourselves, thought that guidance would not be provided. Instead, management boldly ripped off the band-aid and provided a wealth of information while doing it. The clear negative was lower F26 and F27-28 beer guidance, though it cautiously assumes no dramatic improvement in consumer behaviours on current macro pressures,” Sarwat said.
