Constellation Brands update: sale of wine brands confirmed to E. & J. Gallo
Constellation Brands, the company behind some of the world’s favourite alcoholic beverages (including Corona Beer) has confirmed that it’s selling about 30 of its less-expensive wine brands to E. & J. Gallo winery. The sale, which has been in the offing for the last month or so, will bring in $1.7 billion for Constellation, which will be looking to reinvest in other areas.
Constellation Brands’ share price has appreciated by 17% so far this year
Source: Yahoo Finance
Constellation’s president and CEO, Bill Newlands, made the announcement last Wednesday, saying that the company could now devote itself more fully to the success of its premium wine brands – a more lucrative area. The company, which also makes Modelo beer, Svedka vodka, Kim Crawford wines, and more, is not alone in finding that modern drinkers have a preference for pricier tipples.
Newlands said: “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,” adding that “Gallo is acquiring a collection of great brands that complement their operational model and business strategy.”
The premium side of Constellation’s business is outperforming. Corona Premium, Corona Familiar, and Modelo Especial gained significant market share among high-end beers last Labour Day and Thanksgiving, with Newlands calling Corona Premium a “phenomenal success”. More generally, premium alcohol is surging in popularity. According to the Distilled Spirits Council, super premium liquors (defined as costing $35 per bottle or more) grew by double digits last year.
Dominion holds Constellation Brands in its Global Trends Luxury Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.