Reports emerge that Constellation Brands may be close to selling some of its wine brands
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Reports emerge that Constellation Brands may be close to selling some of its wine brands

Constellation Brands is a major player in the alcohol space, and the US’s third largest beer company – and, thanks to major investments in nascent socialising trends, the company is looking to sell off the low end of its wine portfolio. According to a number of reports, it may have moved closer to achieving that goal in the last week, as outlets like CNBC, Reuters, and CNN, claimed that talks were on-going between the company and E. & J. Gallo Winery.

Constellation Brands’ share price has risen by 5% so far this year

20 03 constellation

Source: Yahoo Finance

While craft beer and premium wines and spirits are selling like hotcakes, the lower end of the wine market has been hit hard by millennials’ lack of interest. The generation does not drink alcohol as compulsively as those that came before it, preferring to drink at social occasions or when the drink in question is something really special. Hence, pricier tipples are in vogue.

According to early reports a price poi0nt of around $2 billion is expected from the sale, and talks at present are focussing on exactly which labels are going to be included. CNBC stressed the point that an anonymous source had told them talks could “still fall apart.”

Gallo, which is the largest exporter of Californian wines, could see its scale increased significantly if the deal goes through. Constellation, which claimed in January to have been “challenged by the lower end” of its wine business, has since said that its premium category is “exceeding our expectations.” Neither company was willing to comment on the story.

Disclosure

Dominion holds Constellation Brands in its Global Trends Luxury Fund.


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