Constellation Brands looks to sell wine portfolio for $3 billion
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Constellation Brands looks to sell wine portfolio for $3 billion

Constellation Brands, a purveyor of wine, beer and more, is looking to sell some of its US-based wine brands for as much as $3 billion. The cash raised will be used to finance investments in other areas. The company has focussed increasingly on beers in recent quarters, and this shift of some of its lower-price point wine brands would open the door to acquisitions and investments in that space, as well as others.

Constellation Brands’ share price decreased last week, as poor sentiment impacted markets

graph 3010 constellation

Source: Yahoo Finance

In an email, Constellation Brands’ spokesperson Mike McGrew sought to clarify the news, which was reported last week by Reuters. He said: “While we don’t comment on rumours/speculation, what I can say is consistent with what we said on our earnings call on October 4. We continue to focus on driving growth organically, and through acquisition and innovation at the higher end of our wine and spirits portfolio, which has consistently grown 3–4 times the U.S. market rate.” He added “We are also considering a variety of potential options to optimize and continue to grow our wine portfolio and profitability.”

Constellation Brands is no stranger to the buying and selling of assets. It purchased Fortune Brands’ “super-premium” portfolio of wines, as well as a number of vineyards, back in 2007 for $885 million, and over the next three years it sold off Geyser Peak, Buena Vista, Gary Farrell and XYZin. Before that, in 2006, the group bought Canadian wine giant Vincor – which it sold in 2016. In 2008, it sold the Almaden and Inglenook wine brands, along with the Paul Masson winery in California, to The Wine Group LLC.

Goldman Sachs, which advised Constellation Brands on a number of these deals, will return in an advisory capacity for this latest sale.

Disclosure
Dominion holds Constellation Brands in its Global Trends Luxury Fund.


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