WINE UNITS ARE GOING, GOING . . .
It’s official: Constellation Brands is selling 8O percent of its British and Australian wine operations to a private equity firm in Australia for $23O million. With the deal, which includes Hardy’s, Banrock Station, Leasingham, and Chateau Reynella, the company will lose its status as the world’s largest wine company measured by sales volume. It will now be No. 2 behind E&J Gallo Winery of California. Constellation Brands continues to own Robert Mondavi wines, Toasted Head, Clos du Bois and other labels, along with such brands as Svedka vodka and beers such as Corona, Tsingtao and St. Pauli Girl. The deal was expected to close by the end of January. It will include almost all of Constellation’s Australian, British and South African brands. Constellation will retain a stake of about 2O percent interest in the business.
In addition to the Constellation deal, 2O1O was certainly the year for cutting wine losses. Brown-Forman Corp. recently put its wine business, which includes Fetzer, Bonterra and Sonoma-Cutrer, up for sale. Private-equity firms and other global wine and spirits firms are expected to consider the business, which is unlikely to fetch much more than a few hundred million dollars. It’s also possible that only part of the business will be sold. Additionally, Remy-Cointreau is trying to sell its Champagne business which includes Piper-Heidsieck and Charles Heidsieck. Some spirits companies have found the wine business challenging because it is capital intensive and wine consumers tend to experiment with different brands, making it harder to build the brand loyalty enjoyed by many liquor products. Some have shed big wine brands in recent years. Fortune Brands Inc. sold its US wine business to Constellation, for $885 million, about three years ago. Foster’s Group Ltd., the Australian wine and beer maker, earlier last year rejected a bid for its sluggish wine operation.