November 8, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Constellation Brands has been realigning for a few years now. In 2018, the group made a surprising announcement that it was investing a further $4 billion in publicly traded Canadian marijuana grower Canopy Growth. 

In 2019, the group sold approximately 30 wine brands and related facilities located in California, New York, and Washington to E&J Gallo for $1.7 billion in a move that it said was driven by a strategic plan to “better align its portfolio with consumer premiumization trends”.

Constellation remained aware of industry and consumer sentiment and continued to make investments and foster aligning strategies, such as its Focus on Female Founders initiative intended to directly increase female representation and access to funding in the industry.

As part of this commitment, in August of this year, Constellation announced its acquisition of a minority stake in wine brand Archer Roose – an accessible luxury wine brand focused on consciously-crafted wine catering to a new generation of legal drinking age (LDA) wine drinkers. 

Well, the group’s work to refine its business marches on, as it was recently announced that Constellation agreed to divest a portion of its mainstream and premium wine portfolio including Cooper & Thief, Crafters Union, The Dreaming Tree, Monkey Bay, 7 Moons, and Charles Smith Wines to The Wine Group for an undisclosed sum. 

“Over the past three years, we reshaped ourselves into a higher-end wine and spirits division with intentional, strategic mainstream plays and are moving our business towards becoming a leading global Premium/Fine Wine & Craft Spirits portfolio,” said Robert Hanson, EVP & president, wine and spirits division.

The company stated that this decision was rooted in its efforts to “establish a bold and innovative, higher-end wine and spirits portfolio…” and comes after the final divestment of the majority of its popular and mainstream wine brands last year.

Moving forward, Constellation is open about the fact that it intends to focus on competing predominantly in premium and fine wines and craft spirits, while also investing in the growth of what remains of its mainstream holdings.

This pivot is supported by market activity. Premium wine sales saw growth of 21 percent in 2021, the highest rate of growth since 2007, despite losses across the overarching wine market, according to the State of the Wine Industry Report 2022, issued by Silicon Valley Bank (SVB). 

Every year SVB distributes a survey to premium wineries across the U.S. that includes the open question, “How was your year?” Discussing the responses, the bank noted in section 5 of  its report, “With restaurants and tasting rooms reopening, and with lessons learned when restricted business conditions drove innovation and evolution, 24 percent of respondents said 2021 was one of their better years, and a full 29 percent said the year was their best in history!”

And it’s clear that Constellation is also fully aware of this premiumization trend among consumers.

“A key driver of our success has been our relentless focus on consumer preferences, including long-term consumer-led premiumization trends, and remaining agile in our approach to stay ahead of evolving marketplace dynamics,” said Hanson.

“This transaction will enable us to focus and shift our portfolio towards the higher end, positioning ourselves to continue delivering industry-leading growth and shareholder value with the right portfolio for our ambitions. In turn, The Wine Group is acquiring great brands that complement its current strategy of continuing to build a premium wine portfolio.”

Constellation stated that its remaining wine and spirits portfolio is a more focused set of powerful brands that strongly identify with the consumer, including Meiomi, Kim Crawford, The Prisoner Wine Company, The Robert Mondavi family of brands, High West Whiskey, Casa Noble Tequila, Schrader Cellars, Double Diamond, To Kalon Vineyard Company, SIMI, My Favorite Neighbor portfolio of brands, Lingua Franca, Nelson’s Green Brier and others.

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.