The biggest drinks acquisitions of 2019

Constellation Brands to sell US$1.1bn wine brands to E&J Gallo

In one of the major deals of the year, Constellation Brands announced plans in April to offload around 30 of its lower priced wine brands and related facilities to Californian wine giant E&J Gallo.

However, in May, the US1.7 billion deal hit a snag, after both companies received requests for additional information from the US Federal Trade Commission in connection with a review of the transactions submitted.

In a statement published this month, Constellation announced it had downgraded its deal from $1.7bn to $1.1bn due to “competitive concern primarily related to the sparkling wine, brandy, dessert wine, and concentrate categories”.

As such, Constellation will retain brands in these categories and “will pursue other opportunities to divest the brands excluded from the agreement with E. & J. Gallo”. It said it was considering offloading these brands, as well as the concentrate business, to companies “whose business strategies better align with the brands”.

The brands now not being sold to E&J Gallo include Cook’s California ‘Champagne’, J. Roget American ‘Champagne’, and Paul Masson Grande Amber Brandy, which combined, sell around five million cases per year.

In a separate deal, Constellation has also agreed to sell its New Zealand wine brand Nobilo and its related assets for $130m to Gallo. This transaction, which is also subject to regulatory approval, is expected to close in the first half of the 2021 fiscal year.

Constellation has certainly not held back this year. In August it agreed to sell Black Velvet Canadian Whisky to Heaven Hill Brands for US$266m in a deal which includes a production facility and other Canadian whisky brands made at the site.

In May it also acquired a majority stake in Tennessee Bourbon distillery Nelson’s Green Brier for an undisclosed sum, after initially investing in the business in 2016.

Most recently, however, it announced the sale of San Diego’s Ballast Point to Illinois-based Kings & Convicts Brewing Co. for an undisclosed sum. Constellation bought the brewery in 2015 for US$1 billion in 2015, but reports suggest that it is now only worth $28 million.

This year E&J Gallo also acquired Napa Valley’s acclaimed Pahlmeyer Winery, including its two brands Pahlmeyer and Jayson by Pahlmeyer, boosting its premium portfolio which includes Orin Swift, J Vineyards and Talbott.

2 Responses to “The biggest drinks acquisitions of 2019”

  1. Sam Adams says:

    No mention of LVMH buying Whispering Angel?

  2. Josh M says:

    What about the fact that Constellation just sold off Ballast Point, which they originally purchased for $1B after just 4 years??

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