Constellation Brands buys Fortune Brands’ wine operations
Constellation Brands, the world’s major wine company, is staking a bigger claim in the more profitable segment of the U.S. wine market by taking over Fortune’s Clos du Bois wine brand to add to its collection of USD 8 to USD 11 bottles of wine.
In November, Constellation Brands, which is the world’s biggest winemaker with about 110 million cases of wine produced last year, announced it was paying USD 885 million for the U.S. wine business of Fortune Brands Inc. Constellation will pay cash.
Last year, Fortune Brands’ wine brands sold 2.6 million cases, generating sales of USD 214 million including excise. The bulk of that sales volume came from the wine brand Clos du Bois, which sold 2 million cases. In addition to top-selling Clos du Bois, the buyout will give Constellation the Wild Horse and Geyser Peak brands, five California wineries and more than 1,500 acres of vineyards in the Napa, Sonoma and Los Carneros grape-growing regions, it was reported.
According to media reports, with this latest acquisition Constellation will still only control 4.5 percent of the highly fragmented global wine market. But its share of the U.S. market will expand 1 percent to around 20 percent. Three years ago, Constellation had spectacularly snapped up wine company Robert Mondavi Corp. for more than USD 1.3 billion. Last year, it bought Canada’s wine company Vincor International Inc. for nearly USD 1.1 billion.
Fortune Brands said that it will generate a net profit of USD 50 million to USD 60 million from the sale. Fortune Brands makes consumer products ranging from Jim Beam bourbon to bathroom faucets and golf equipment. Two years ago, Fortune joined Pernod Ricard to buy Allied Domecq, a coup, which landed Fortune with many of its wine brands.
Recently, Fortune expressed an interest in acquiring Sweden’s Absolut vodka brand, should it come on the market. Although Fortune will now focus on its higher-margin spirits brands, it is nevertheless holding on to its Harveys sherry and Cockburns port brands.
The only question marks remaining are: what will happen with the wine brands Fortune was importing into the U.S., such as New Zealand’s Wither Hills and Australian brands Petaluma and St. Hallett, all three of which are owned by Australian beverage group Lion Nathan. The future of those brands in the U.S. will be up to Constellation and Lion Nathan.
The sale is expected to close by the end of the year.
Constellation’s 300-plus brands run from jug wines to coveted California reds such as Ravenswood and Estancia, beer imports such as Corona Extra and St. Pauli Girl and liquors like Fleischmann’s vodka, Skol gin and Black Velvet Canadian whiskey.
