Constellation Brands to trim its wine portfolio

USA | Constellation Brands seeks to “optimise” its wine and spirits portfolio. The alcohol firm became the number three brewer in the US, thanks to brewing Mexico’s Modelo brands for sale in the United States.

Given buoyant growth in beer sales, Constellation’s wine and spirits portfolio is expected to contribute only 36 percent to group sales in the current financial year, compared with 64 percent for beer. Wine and spirits’ contribution to profits (EBIT) will be 29 percent. Missing from Constellation’s accounts is its interest in cannabis producer Canopy Growth, which will only be included in its financial year 2021.

The difference between wine’s share of sales and profits suggests that Constellation is selling a lot of cheap tipple. To rectify the imbalance, Constellation said in February 2019 that it will now focus on “power brands”, which command a retail price of over USD 11 per bottle, and represent about 60 percent of its wine and spirits portfolio.

“So everything that is not a ‘power brand,’ you can assume that we’re either going to sell it, discontinue it, or milk it very quickly over the next year or so,” David Klein, Constellation’s CFO was quoted as saying.

However, there is one wine brand that retails for less than USD 11 per bottle that will be spared the chop – Woodbridge by Robert Mondavi. It is Constellation’s top-selling wine brand.

Other wine brands currently in Constellation’s portfolio are Kim Crawford, The Prisoner Wine Company, Meiomi, Charles Smith Wines, Schrader, Clos du Bois and Ravenswood.