Will Constellation pull out of Australia altogether?
A range of quality vineyards and winery assets in the Clare Valley, Coonawarra, McLaren Vale, Padthaway and Wrattonbully regions in South Australia and Mt Barker in West Australia has been offered for sale on behalf of Constellation Wines Australia. The relevant winemaking and fruit-supply arrangements are subject to negotiation. In Adelaide, persistent ‘grapevine’ rumours suggest that Constellation is set to pull out of Australia completely if the market for Australian wines does not improve.
In August, Constellation Wines Australia has announced the sale of three wineries and 23 vineyards as part of a major restructuring scheme. U.S.-based Constellation bought the Australian wine company BRL Hardy for AUD 1.9 billion in 2003 which produces 25.4 percent of Australian-made wine.
The restructuring is expected to cost about AUD 153.64 million, but Constellation says proceeds from asset sales will provide a net gain of AUD 50 million after expenses, which include the costs connected with the 350 jobs that will be axed.
The jobs, which represent 22 percent of the company’s workforce, are mostly in the winemaking, packaging and viticultural divisions.
Constellation will quit two South Australian wineries – the 115-year-old Leasingham winery at Clare Valley and the 12,000-tonne Stonehaven winery at Padthaway.
Goundrey Wines, at Mount Barker in Western Australia, is also to be put on the market. The winery was acquired by Constellation in 2006 when it took over Canada’s wine company Vincor.
Constellation, however, will retain all three brands.
Constellation said it will also drop 30 percent of its stock-keeping units (SKUs – individual wines under certain brands), increase prices, and close its bottling plant at the Houghton winery near Perth.
Head of Constellation Wines Australia, John Grant, was quoted as saying that the company was repositioning itself to focus on “high-quality, higher-value wines to suit global consumer demands”.
The changes will leave the company with seven wineries, about 1,000 ha of vineyards and close to 1,200 employees throughout Australia. Constellation hopes that the 350 jobs put on the block by the restructuring would be retained by the new owners.
