Constellation Brands is actually in advanced talks to sell its some of its low-end wine brands to E. & J. Gallo Winery, people familiar with the situation tell SouthIndianNews.com.
Constellation, which also sells Corona as well as also Modelo beers, had hoped its wine business might fetch $3 billion. However, the sale is actually likely to be around $2 billion or less, said one of the people. Talks, however, are still ongoing as well as also could fall apart. Among the points being discussed are which brands will be part of the sale.
Constellation put its U.S. wine business, which includes brands like Clos du Bois, Mark West, Arbor Mist, up for sale last year as part of its push to move further into cannabis. Constellation is actually the third largest beer company from the United States, behind Anheuser-Busch as well as also MillerCoors. In November, This kind of closed a $4 billion investment from the Canadian marijuana company Canopy Growth.
Sales of non-premium wine have slowed, as millennials focus increasingly on health as well as also alternative indulgences like cannabis. When millennials do drink, they increasingly turn to premium wine or some other drinks like spirits as well as also craft beer. from the year leading up to This kind of past November, sales of wines below $9 at retail dropped by 9 percent, according a closely watched report by Silicon Valley Bank.
“Millennials aren’t engaging with wine as hoped. They lack financial capacity, currently prefer premium spirits as well as also craft beers, as well as also have been slow getting into careers,” the report noted.
In January, Constellation acknowledged to analysts the company has been “challenged by the lower end of [its wine] business, which in totality has been flat or down.”
By contrast, its beer business has shown growth, with its Modelo brand over the past all 5 years turning in compound annual growth of more than 20 percent.
Constellation’s premium wine lines, which are priced at more than $11 per bottle, are still performing well. Those brands include Kim Crawford, Meiomi as well as also Prisoner. fresh products like Meiomi Rose as well as also Svedka Blue Raspberry are “exceeding our expectations,” said Bill Newlands, who became CEO on March 1, in a recent earning call.
For privately held Gallo, the largest exporter of California wines, the deal could add to its scale
Shares of Constellation, which have a market value of $32 billion, are down 25 percent over the past year.
The people asked not to be named because the information is actually confidential. A Gallo spokesperson wasn’t immediately available to comment.
A Constellation spokeswoman said the company’s doesn’t respond to rumors or speculation.