Constellation to discontinue 40% of wine brands

Drinks giant Constellation Brands is to sell or discontinue up to 40% of its wine and spirits portfolio in order to focus on its “power brands” that retail for over $11.

Constellation owns a number of wine brands, including New Zealand label Nobilo

As reported by Wine Enthusiast, the company’s new strategy was outlined this week at the Consumer Analyst Group of New York (CAGNY) conference. Around 60% of Constellation’s wine and spirits portfolio is formed of “power brands” that command a retail price of over $11 a bottle.

Constellation owns The Prisoner Wine Company. The Snitch is one of its ‘power brands’ that sells for over $11

“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 chief financial officer, told Wine Enthusiast.

However there is one wine brand sub $11 that will be spared the chop – Woodbridge by Robert Mondavi, as it’s Constellation’s top-selling wine brand.

The Mondavi brand is selling well across the board. One of its greatest recent success stories is its Bourbon barrel-aged Chardonnay and Cabernet Sauvignon, which is now a million-case brand.

At the event, Constellation’s president, Bill Newlands, who will succeed Rob Sands as CEO on 1 March, was keen to allay investor concerns.

“We are in the process of optimising the wine and spirits business with mid-single-digit growth rates and 30%-plus operating margins. We expect to deliver at least US$4.5 billion in returns via dividends and shareholder buyback over the next three years,” he said.

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

Its spirits brands include Casa Noble Tequila, Svedka vodka, Paul Masson Grande Amber brandy and Black Velvet whisky. db first reported on the rumous that Constellation was considering selling off some of its wine brands last October.

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