CONSTELLATION ACQUIRES ITS FIRST SOUTH AFRICAN WINE LABEL, RESULTING IN POSSIBLE JOB CUTS

When Constellation bought out Vincor, they agreed to take on their first South African wine brand, Kumala, the largest wine export for the country. Developed by UK-based group Western Wines in South Africa and the UK, Kumala was bought by Vincor in 2004 and is the largest wine brand by volume in their portfolio. Western Wines chief Paul Sullivan appears optimistic about the takeover, believing wider global distribution opportunities will help the brand grow. Paul was quoted in a local newspaper saying, “Apart from the staff issues, it will be interesting to see if Constellation makes wholesale changes to Kumala’s business model. When Vincor bought out Western Wines there were not many changes.” Kumala is an export-driven brand with wines produced under contract in South Africa by Origin Wines, a local company. Vincor’s added networks already proved beneficial to the brand helping Kumala’s volume grow 75% in Canada and 25% in the UK, beating the overall South African wine category growth of only 2% in the UK. However, Vincor had been seriously considering cutting Kumala’s production costs by shipping wine in bulk and centralizing packaging in the UK. Constellation’s takeover makes the cuts more likely which could result in job losses, particularly on the bottling side.