©Paul Masson Grande Amber Brandy
Constellation Brands has agreed to offload its Paul Masson Grande Amber Brandy and Nobilo Wine brands in two separate transactions, for a combined price of approximately $385m.
Constellation has signed an agreement with Sazerac Company to divest its Paul Masson Grande Amber Brandy brand for $255 million, while Constellation signed a separate agreement with E & J Gallo Winery to sell the Nobilo Wine brand and certain related assets and liabilities for $130 million.
These latest divestments follow on from Constellation’s decision to sell around 30 wine brands and six winemaking facilities to E & J Gallo in 2019, as part of its efforts to transform its wine and spirits portfolio.
The deal was originally valued at approximately $1.7 billion, but the agreement was revised in December 2019 to address competition concerns raised by the US Federal Trade Commission (FTC). The revised terms meant that three Constellation-owned brands – Cook’s California Champagne, J Roget American Champagne and Paul Masson Grande Amber Brandy – were excluded from the sale, which is now valued at approximately $1.03 billion.
Of course, Constellation has now decided to offload the Paul Masson Grande Amber Brandy to Sazerac, and this presumably forms part of Constellation’s overall premiumisation strategy.
In its latest full-year results, Constellation announced that full-year net sales registered by its Wine and Spirits division fell 6% year-on-year to $2.72 billion, with wine sales dropping 7% and spirits sales falling 6%. Despite this, the company stated at the time that the division had “outperformed the overall US wine and spirit category for the year”, due in part to this premiumisation plan.
Commenting on these latest divestments, Bill Newlands, president and CEO at Constellation Brands, said: “These agreements represent another step forward in our efforts to transform our wine and spirits business.
“Thanks to the continued hard work of our Constellation team members, together with our distributor and retailer partners, our strategy continues to gain momentum. We look forward to closing these transactions in the coming months.”
© FoodBev Media Ltd 2020